22-10-03 Falling oil production at Petroleum Development Oman (PDO) -- a company in which the government of Oman is the major shareholder and Shell holds a 34 % shareholding -- has led PDO to re-evaluate the management of its wells and reservoirs. The company is examining new technologies to increase oil production from its existing reservoirs, in addition to searching for new, commercially viable reserves.
“Shell in the Middle East” visits PDO to meet Abdulsattar Al-Murshidi, Head of New Technology at PDO, to talk about the technologies which have been successfully employed in the past and the new technologies that PDO is planning to use to address its current business challenges...

"Production at PDO has fallen from its 1997 level of 846,000 bpd to today's level of around 700,000 bpd," says Abdulsattar Al-Murshidi, Head of New Technology at PDO.
"The challenge for all of us here at PDO today is to analyse the reasons for this decrease in production and to put into place really effective ways toaddress the decline. It is up to us to arrest the decline and turn around the production trend.”
"Apart from being a 34 % shareholder in the company, Shell is also PDO's Technical Adviser, providing PDO with valuable input through its global experience and technological know-how. So, supported by Shell, the New Technology Department is heavily involved in optimising the benefits of the best technologies which have been used very successfully at PDO in the past, whilst working on the introduction of new technologies to assist the company in its ambitions for the future.”

"There have been many technologies which have already been used very effectively at PDO. One of these is multilateral wells which, over the last five years, have saved the company an estimated $ 400 mm. Another very successfully employed technology which has added significant value of around $ 200 mm over the last five years, is ESPCPs [Electrical Submersible Progressive Cavity Pumps]. These pumps have enabled heavy oil production from previously economically unproductive reserves in the Mukhaizna field.”
"LWD [Logging While Drilling] is a data recovery technology that has assisted us in the better placement of new wells and has also added reserves and saved a lot of money which had previously been spent on traditional logging methods. Savings here have amounted to somewhere in the region of $ 150 mm in the last five years.”

"There are many other technologies which PDO has employed and which together have saved the company in excess of $ 1 bn over the last five years. Another one of particular note," he adds, "is MSV [Multi Selective Valves]. This was specifically designed to be used here at PDO but it is now being used throughout Shell's Exploration and Production [E&P] business. The use of MSV has reduced the number of measuring devices and valves required at a well head pad and many km of pipeline by combining the equipment and pipelines from five, six or seven well heads into a single unit."
Abdulsattar then goes on to say, "Now we have to face the future and employ more value-adding new technologies to deal with the situation we have here at PDO today, which requires us to focus sharply on cost, production and reserves. Looking at ways to reduce costs, we are mainly looking at savings in individual wells and in this area we have been examining and using several technologies, one of which is Expandable Tubulars, a Shell technology.”

"Expandable Tubulars have three uses. The first is to combat difficult-to-drill zones, such as shale and unstable formations. The second is to shut off water- producing fractures, whilst the third is to provide sand control. Expandable Tubulars were introduced at PDO two years ago but their effectiveness in preventing water ingress into the wellbore has quickly made them popular.”
"To further reduce well costs, PDO is planning the use of multilateral level six wells to reduce the overall costs in deep, hard rock drilling, whilst still providing the full functionality of a normal, single well. Automation is another way of reducing costs and PDO is gradually moving away from manual data collection, where people are required to visit individual well heads to read and record data collection and measuring devices, to automated wireless technology. Using wireless equipment, such as the V-monitor technology, pressure and temperature data can be automatically transmitted in real time to the main office, where the data can then be accessed through the PDO intranet.”

"A very exciting product which we have introduced very successfully -- and which we will hopefully be using more and more -- is reelable pipe, made of reinforced thermo-plastic. This is being used to lay pipelines with a diameter up to four or five inches and can be laid in sections of 400 metres without a joint. This offers tremendous cost savings over conventional steel pipes, which come in 10-metre lengths.”
"In fact," he says, "I believe that reelable pipe will become a game-changer once the design aspects of withstanding extreme heat and the chemical reaction of the fluids which attack the pipe have been overcome and the unit cost of the product comes down."

Moving on to considerations of production and reserves, he says, "The production of oil in Oman is not an easy job because of the complex fields and reservoirs we have in the country compared with our neighbours in the Gulf. Production costs in Oman have always been much higher than in other Gulf oil-producing countries.”
"One of the first technologies which we introduced and which brought our production costs down from around $ 6 per barrel to $ 4 per barrel was horizontal drilling," he says.
"In our E&P activities in Oman we have major problems with production water. In the south of the country we have too much water getting into the wells and in the north we don't have enough water. So in the south we are currently trialling In-line Separators to remove the oil from the water. In the north we need to have more water to support PDO's water flooding programme, which is an IOR [Improved Oil Recovery] technology. By flooding the reservoir with water we can raise the level of oil production.”

"Under Balanced Drilling [UBD] is a not a new technology to either PDO or to the oil and gas industry, but it is one which has recently been re-introduced very successfully. UBD is being used to enhance well productivity as it prevents damage to reservoirs during drilling.”
"A further advantage to the use of UBD is that we are able to characterise the well as we drill, which enables us to make earlier decisions and engineer a better completion process before bringing the well onstream. PDO has been receiving considerable support from a Shell specialist UBD team, lead by Dubai-based Ian Davidson.”

"Advances to stimulate oil flow in horizontal and multilateral wells, using various techniques, has improved in efficiency from 30 to 70 %. Techniques employed have included the application of several types self-diverting acids which disperse themselves uniformly through a long section of the horizontal well, so stimulating the entire section rather than a small area.”
"One of the most important elements of oil and gas production is the need to understand what is going on underground. This will become more and more important as PDO establishes its EOR [Enhanced Oil Recovery] programme using such techniques as steam and miscible-gas injection.”

"To understand the underground geology even better, PDO is introducing a new technology. Massive 3D VSP [Vertical Seismic Profile] is being used to enhance existing seismic data, especially in the south of Oman, where seismic resolution is poor due to a naturally occurring, energy absorbing surface layer. When using water flooding and EOR techniques, the understanding and modelling of reservoir fractures is key to the assessment of reservoir characteristics. Without this, the effective use of EOR and IOR techniques is impossible.”
"There are several other technologies which we are currently pursuing here at PDO, one of which is a software which manipulates existing data to map fractures. This is called SVS [Simple Visualisation Software]. We are also carrying out further research into a better understanding of Oman's fractured geology in association with Sultan Qaboos University, Heriot-Watt University and MIT [Massachusetts Institute of Technology].”

"Finally, I must mention Petrel, which is a 3-D static modelling software. It recently came on to the market and it has been very rapidly implemented by PDO. Petrel's versatility permits an increased integration of geo-science, petro-physics and reservoir engineering disciplines and reduces project turnaround time. In fact, 80 % of the new wells drilled every year by PDO are now supported by Petrel."
Abdulsattar concludes, "In all of this talk of technology we must not forget the sound, basic practices which need to be employed at PDO to produce a solid platform for the implementation of all these new, added-value technologies. In the search for improvement we must also look further afield, and PDO is today examining technologies from other sources to examine possible applications to aid our drive for recovery and increased production levels. It is a very exciting and demanding time for all of us at PDO, and by pulling together, and with all the technological expertise that Shell can bring to the equation, we hope to be well on the way on the road to recovery."