SPE 37006

Justification of Appraisal in a Mature FieldD.M,Walsh, T. Buyok, S.Tiang, B.Ralphie, T. C.Tan, Sabah Shell Petroleum Company Ltd..

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This paper w-as prepared fof presentatmn at the 1S9S SPE Awa Paclf!c 011 and Gas

Conference held m Adela!de, Australta, 28.31 titobsr 1S96

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AbstractThis paper describes the combination of integratedpetroleum engineering studies with probabilistic decisionmaking to assess the value of information of an appraisalwell in a mature field.

The implementation of a cost effective pressure maintenancein the St Joseph Field offshore Malaysia has requiredconsideration of several options, one of which is reversedump flooding of the oil resewoir from underlyingunconnected aquifers. A reverse dump flooding schemewould require drilling of a pilot well to collect additionaldata on the aquifers. Justification of the pilot (appraisal) wellinvolved a series of studies based’on limited data to establishthat the dump flooding process had a s~lcient probability ofleading to a development with better economics than a gasinjection scheme.

The aquifer assessment used seismic, blostratigraphic,pressure, regional data, and trend data from logs to define adistribution of comected aquifer size and quality. Wellstudies defined the ranges of aquifer productivity and oil leginjectivity and resulted in a flexible well completion thatcould be converted to a production well, Full field reservoirsimulation estimated the aquifer and well performanceranges to derive a probability distribution of likely waterdump volume and incremental oil reserves. Screeningeconomics were performed and compared with gas mjectlon.Monte Carlo simulation of the many combinations alloweddefrmtlon of the probabilities as input for a decision treeanalysis, Analytical well test simulation showed thatuncertainties would remain in aquifer volumes titer a pilot

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Society of Petroleum Engineers

test, and needed to be incorporated into the decision tree.Ultimately the value of information of the pilot well wasquantitled to show an economic justification for pursuing thedump flooding option.

IntroductionSt Joseph Field (Fig. 1.) has been on production sinceFebruary 1982. At end 1995, the field had produced 105MMstb oil out of the total ultimate recovery estimated at 230MMstb. The recove~ mechanism to date has been naturaldepletion under gravity drainage with string- by stringcontrol of gas-oil -ratio imposed. Current productionpotential is 28 Mb/d. Average reservoir pressure has fallenfrom 1060 psia to about 600 psia with an expandingsecondary gas cap, and abandonment pressure under gaslifting is approximately 350 psia.

Of the 550 MMstb oil initially in place (STOIIP) in StJoseph Field, 83V0 is located in the main reservoir packagein the Northwest Flank, which is a simple structure dippingat 20 degrees and sealed by a major strike-slip fault (Fig. 2).The oil reservoirs are Miocene age sands (Stage IVC) withintercalated shales deposited in outer shelf todeltaicflagoonal environments. The resewoir package issealed against a major transverse fault. Gross reservoirhydrocmbon thickness is 1450 t? true vertical with the crestof the structure at only 1280 ft SS, Sand porosities andpermeabilities are good in the oil column, generallydeteriorating down flank into the aquifer, In addition, majorslump features have removed large reservoir sections in theaquifer. Direct aquifer influx to the main reservoir packageis weak, 3D seismic data show strong continuous reflectorsunderneath the reservoir package, indicating a thick StageIVA sequence of which the upper part has penetrated byeleven wells. Log and RFT measurements indicate that StageIVA sands are water bearing and are overpressured by 60-90psi. The Stage [VA and IVC deposits are separated by theUpper Intermediate Unconformity (U. I,U).

Pressure Maintenance OptionsThree main options for secondary recovery have beenconsidered for St Joseph:

407

2 D.M, WALSH, T. BUYOK, S. TIANG, B. RALPHIE, T.C, TAN 3700a

1. Gas injection with make-up gas from outside StJoseph

2, Sea water injection, down dip.3, Reverse dump flooding from the Stage [VA aquifers.

Gas injection and sca water injection were evaluated in detailand were shown to be technically feasible. Gas injection wasassessed to be operationally and economically preferable tosea water injection. However, reverse dump flooding haspotentiality the best economics of the three options.

Reverse dump flooding involves connecting the deeper StageIVA aquifers below the U.I. U. to the shallower hydrocarbonbearing Stage IVC. The drive energy for the dump floodprocess would be the differential pressure caused bydepletion of the oil reservoirs. Dump flooding is a wellestablished technique, which is sometimes enhanced by theuse of electric submersible pumps (ESPS, Refs. 1 to 3) Theterm “reverse” is used to denote cross flow of water from adeeper level to a shallower formation. Reverse dumpflooding is potentially a more et%cient displacementmechanism than gas injection. Because the dump flood wellswould be cross flowing without fluids being handled ortreated on surface the capital costs are much lower than forsea water injection. The costs of implementing a dump floadscheme are also much lower than for a gas injection scheme.

A reverse dump flooding scheme in St Joseph has keyremaining uncertainties that would have to be addressedbefore commitment to a full scheme. This study evaluatedthe justification for drilling a pdot well to obtain data on theStage IVA aquifer and on injectivity, to reduce theuncertainties of a dump flood secondary recovery scheme.

Aquifer DefinitionThe Stage IVA sequence is a thick, agrading coastal plain tocoastal-fluvio-marine complex passing upward intoprogressively deeper marine deposits. The formations haveminor onlap and a rather constant thickness. No cores orfluid samples were recovered from the wells whichpenetrated the Stage IVA. RFT pressure data indicate theaquifer to be mildly overpressured, between 60 psi to 90 psiabove normal hydrostatic which could be attributed to“paleopressures”. The degree of communication within theStage IVA sands and over how large an area, are significantuncertainties. A biostratigraphic study suggests acoastatlfluvial environment of deposition during a period ofa eustatic low stand. Such a period, would be characterizedby incision m the coastal plain environment, with valley filldeposits dominated by amalgamated channel sand bodies.These conditions could be expected to result in reasonablycompetent pressure communication throughout the valleysystem and into the downdip shelf-edge delta systems.

Mapped volumetric ave an estimate for potential aquifer8volume of 9.5 x 101 bbki (or 170 x STOIIP). However,work on the depth dependence of rock properties suggestssignificantly lower effective aquifer volumes because ofdepth related deterioration of porosity and permeability. Thedeepest penetration of the Stage [VA formations below StJoseph was 6000 ft TVD SS.The depth related porosity trendobsemed is a decrease of 1.25 O/JIOOO ft ss (Fig. 3).Comparison with data from other offshore Sabah wellssupports this trend. A burial history reconstruction based onseismic picks (Fig 4) indicates burial to 8000 ft ss andsubsequent uplift by up to 4000 tl, The porosity trendobserved is therefore almost certainly a mature compactiontrend, It follows that the upside to this trend is whereporosity does not deteriorate in a down dip direction until8000 ft ss and then joins the original compaction trend. [nthis case the observed trend represents a compaction trendestablished at depth (approximately 1,8°/0/1000 ft isopach).This upside porosity trend was included in the upsideestimates of connected volume,

Pore volume compressibility of the Stage IVA sands wasestimated from Hall’s correlation for consolidated sandstonessince no core is available for the St Joseph Stage IVA sands.Perrneabilities were derived using a porosity-permeabilityrelationship from an adjacent field for the same reason.Mean permeability is estimated as 24 mD in the upper partof the structure, at 180/0porosity.

A probability distribution for the Stage IVA aquifer volumethat might be connected to 5 dump flood wells has beenconstructed based on the following inputs:

1. Porosity at 4000 ft s2. Porosity trend with depth3, Contributing downdip length4. Width connected along strike5. Net to gross ratio of Stage IVA formations6. Propor-uon of sands which flow at the sandface7. Permeabdity

The above factors were assumed to have triangulardistributions and were combined by a Monte Carlosimulation using commercial spreadsheet software. Theresulting distribution for effective connected aquifer size isshown in Fig. 5. This distribution has a mean of 21 YSTOIIP, a mode of 20 x STOIIP and a maximum of 48 xSTOIIP. The result of combining the available petrophysicaland geological evidence yields substantially lower potentialaquifer volumes than the mapping alone indicated.

The available produced water data and electric log data werereviewed to estimate the differences in compositions betweenformation waters in the Stage IVC and Stage IVA sands.

408

37006 JUSTIFICATION OF APPRAISAL IN A MATURE FIELD 3

These salinity estimates suggest that the two formationwaters have similar compositions and are therefore likely tobe compauble,

Pilot Well Design and Data AcquisitionA location with high reservoirinjectivity within reach of ancxlsting structure was chosen. The dump flood pilot well wasdesigned to test the ability of the Stage IVA aquifer to floodthe partially depleted Stage lVC oil reservoir. In the extremecase, a failed pilot well could be converted to an additionaloil producer, without a rig re-entry, and would produceincremental oil under gas injection conditions. Use of anESP to increase the crossflow rate and assist well cleanupwas considered but rejected because of the costs involved inprovision of electrical power supply.

The 2000 ft of aquifer interval would be completed in 8 1/2”open hole. To effectively clean up the long aquifer interval,external casing packers (ECPS) would be installed with the 51/2” slotted liner. ECPS are designed to separate the aquiferinto sections and would be set using specially cotilguredwash pipe.

The initial dump flood rate is a function of aquiferproductwity index (PI), reservoir injectivity index (II), theheight &fTerence and the friction loss (Ref. 1).The aquiferPI was calculated based on a range of aquifer permeabilitiesof 10-40 mD and using a notional sk]n of +5. The aqmfer PIis estimated to be 0.005 to 0.05 b/d/psi per R. The reservoirII was estimated from the PIs of existing wells, which aretypically between 0.05 to 0.10 b/d/psi per ft. The rangesestimated for PI and 11 were combined in a Monte Carlosimulation to give a probability distribution of initialcrossflow rate.

An imtjal pressure transient test on, and sampling of, theaquifer alone would be earned out by flowing the aquifer tosurface, assisted by the modest overpressures and theavailability of gas lift. For the subsequent extended test thealternatives of production logging tool (PLT) basedmonitoring and permanent downhole metering of total flowrate, pressure and temperature were considered. The PLTbased option was selected on cost grounds. A 4 month crossflow test period could yield data to be analysed for evidenceof the minimum aquifer volume connected to the pilot well.Drawdown data are expected to be of adequate quality foranalysls.

Analytical simulations with well test software were used toindicate the test response that might be recorded for abounded homogeneous reservoir of permeability 25 mD, Fig,6 shows the difference in derivative response between aboundav open system and a tlrlly bounded system of size 3.8x STOIIP with 3rd and 4th boundaries equidistant from the

well. This idealised response indicates the maximumreservoir size that could be detected in 4 months, Third andfourth boundaries at different distances reduce the “proved”volume. The corresponding plot for a test of 1.3 yearsduration suggests that under ideal conditions a volume ofbetween 6-12 x STOIIP might be deduced for the identitledmajor reservoir boundaries and distances.

However, such simulations do not reflect reservoirheterogeneities such as layer pinch-outs, partial barriers andtransmissibility changes away from the well (highly likely ina lower coastal plain channel sand environment). Thesewould Introduce significant changes in the transientderivative shape The resulting ambiguity in the analysis ofthe test response for aquifer size and geometry means thatthe test would likely only yield a minimum comectedvolume, while leaving considerable upside possible. It isconsidered unhkely that a single well test of over one yearduration could be analysed to definitively demonstrate theaquifer volumes required for a till dump flood scheme,

The assumption made was that that a minimum volume ofaround 2 x STOIIP could be reasonably confirmed in 4months. Extending the test by 1 year may not confirm thevolumes required for a till dump flood scheme. The impactof this expected ambiguity for the value of information of apilot well was incorporated in the decision tree.

Reserves EstimatesSimulation of the impact of a dump flood pilot well and tilldump flood schemeswere carried out with the St Joseph 3Dresewou simulation model. The model included a thicknessof 3500 ft of Stage IVA aquifer with average propertiesdeduced from the petrophyslcal data. A uniform net-to-grossratio of 0.6 was used. Permeability of 25 mD and porosity of18% , both deteriorating downdip, were input. The largevolume of the aquifer was represented with an inner area ofapproximately 25 x the volume of the oil reservoir withnumerical aquifers attached to 3 sides to represent the fullaquifer size. This aquifer description assumes extensivelateral continuity and could clearly be modified if more datawere available. It was assumed that in practice that wellscould be effectively completed in only 70°/0 of the lay6Xi

Simulated drawdowns in the aquifer are about 300 psiinitially, gradually increasing to the full available pressuredifferential over 20 years, These drawdowns suggestadequate cross flow could be achieved with the estimatedaquifer properties.

Schemes with different numbers of weIls were examined anda 5 well (pdot plus 4 additional wells) case was selected ashaving the best balance between incremental cost andincremental production benefit. If the pilot well failed andwas converted to a producer it could still yield 0,6 MMstb

409

4 D.M, WALSH, T. BUYOK, S. TIANG, B. RALPHIE, T,C. TAN 37006

under gas injection conditions which would recover 90°/0 ofthe cost of the well. The economic downside of the pilot wellis therefore small.

Reservoir performance simulations were carried out for arange of Stage IVA aquifer sizes. Only the maximum aquifercase of 48 x STOIIP would maintain reservoir pressure atcomparable levels to a gas injection scheme. However, evenincomplete pressure maintenance results in enoughincremental oil to provide positive economics in many cases.The cumulative crossflow through 5 dump flood wells andthe incremental reserves over twenty years were recorded.Crossflow rates were varied to assess the impact on crossflowvolumes and reserves. From these simulations a correlationof connected aquifer size vs. cumulative cross flow isconstructed, The Impact of initial crossflow rates wascalculated as a multiplier on the cumulative crossflow.

The simulations indicate incremental reserves from a dumpflood scheme between 40V0 and 83V0 of the incrementalreserves expected from gas injection, with a mean of 63°/0.

Economic Analyses and NPV Probability CurveThe range of incremental production profiles were combinedwith estimates of capital and operating costs in a standaloneeconomic evaluation of each simulation case. The range ofincremental Net Present Values (NW) was correlated with20 year cumulative water crossflow (Fig. 7). The crossflowrate probability curve is normalised to the mean value andmultiplied by the cumulative crossflow probability curve.Combined with the correlation of cumulative crossflow andNPV the result is a probability distribution for incrementalNW based on the main controlling parameters withsignificant uncertainties. Fig. 8 shows a schematic of thegeneration of the NPV probability curve. All NW values arenormalised to the mean gas injection scheme NPV = 100

Decision Tree and Sensitivity AnalysesGiven the mean NW/ of a gas injection scheme, which isconsidered relatively well known, the reverse dump floodNPV curve shows the cutoff required for a dump floodingscheme to be more valuable requires an aquifer volume of 8x STOIIP, The NPV cumulative probabili~ curve isdiscretised into 3, The lowest portion is not used as thisrepresents failure of a pilot weIl to indicate aquifer volumegreater than 8 x STOIIP.

Ambiguity in the results of the extended well test means thatthe initial 4 months allocated for a test is instilcient todemonstrate connected aquifer volumes greater than 8 xSTOIIP. Practically 2 x STOIIP might be positwelyindicated in 4 months. In the event of extremely low flow ofvery small connected volumes being shown by a pilot well Itwould be converted to a itilll production well and could

therefore recoup most of its costs, A further extension of thetest by about 1 year would be required, However there is acost to doing this in terms of delaying the gas injectionscheme if the dump flood pilot well fails. The value of a gasinjection scheme is lowered by any delay. Failure of the pilotwell after the 16 month test would probably result in the wellbeing of no use as an oil producer and its cost is assumedwritten off.

The decision tree as formulated is shown in Fig. 9, Successof the pilot well is assumed to result in a decision for a full 5well dump flood scheme with its outcome divided into twoequally likely NPV results, The expected monetaxy values(EMV) of gas injection and dump flooding show that theValue of Information (VOI) of drilling a pilot well is highlypositive at 55 (i.e. 55% of the gas injection scheme NPV).

Analysis of the Monte Carlo distribution of dump flood NPVshows that it is most sensitive to the connected width alongstrike, followed by Stage IVA aquifer PI As a sensitivity themean width along strike was lowered from 30000 ft to 15000R, which resulted in the mean connected aquifer volumedecreasing by 38°4. By regenerating the probability functionsa new decision tree was drawn. The VOI of the pilot wellreduced from 55 to 20 but still remains significantly positive.Similarly a sensitivity to aquifer PI was carried out, Meancontributing sand was reduced from Too/o to 40°/0 and PIreduced from 20 bid/psi to 15 bldlpsi. The outcome was apilot well VOI = 32. These sensitivities indicate that thedump flood pilot is robust to signitlcant downsides in themain parameters that control dump flood performance.

Although the dump flood pilot was found to be robust it wasdecided not to pursue dump flooding because the range ofincremental reserves was substantially below that of the gasinjection case,

Conclusions

1

2

3

4

Study of pressure maintenance alternatives in StJoseph Field Offshore Sabah shows the potential for alow cost reverse dump flooding scheme, but key dataare not available.

A pilot (appraisal) well is required to narrowuncertainties in aquifer data before commitment toreverse dump flooding instead of gas injection.

An aquifer study,statistical treatment of uncertaintiesand a decision tree approach was used to demonstratepositive and robust Value of Information of anappraisal well.

The determining factor in the final decision not to

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37006 JUSTIFICATION OF APPRAISAL IN A MATURE FIELD 5

pursue dump flooding was the maximisation ofincremental reserves. Economic considerationscaptured in the VOI of the pilot well were secondary,

AcknowledgmentsWe thank John Allen, Robert Asut, Frans van den Berg andDoug Sharp for their advice and comments during the studies.We also thank Sabah Shell Petroleum Co. Ltd. andPETRONAS for permission to publish this paper.

References1, Fuj ita,K. ,Althukair,K.A.: “Pressure Maintenance by Formation

Water Dumping for the Ratawi L]mestone Oil Reservoir,Offshore KhaQi,” paper SPE 9584, presented at the 1981 MiddleEast Technical Conference of the SPE, Bahrain, Mar 9-12.

2. E1-Hadidi,S M., A1-Rubaie, J.S., A1lam, M., and Fadak,A. :“Performance of Powered Water Injectors in Arab ‘D’Reservou of Shaif Field, Offshore Abu Dhabi,” paper SPE 9631,presented at the 1981 Middle East Technical Conference of theSPE, Bahrain, Mar 9-12.

3. Davies, C.A. .“The Theory and Practice of Monitoring andControlling Dumpfloods,”, SPE paper 3733, presented at thei 972 SPE European Spring, Amsterdam, 16-18 May 1972.

S1 Metric Conversion Factorsbbl x 1.589873 E-01 =m3ft X 3.048* E-01 =mpsi x 6.894757 E+(.)O =kPa

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Fig. 4 St. Joseph Field Stage WA aquifer marker burial history. The intra-lVA marker is37006 F4 MPE. 53196 M

the layer at which a dump flood pilot well would be expected to enter the Stage WAaquifer,

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Fig. 7. Correlation of the estimated NPV of a five well dump flood scheme with thecumulative 20 year water cross-flow volume. NPV values are normalised to a gasinjection scheme value = 100.

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Fig. 9. St Joseph dump flood pilot well value of information. NPV values arenormalised to a gas injection scheme value = 100.