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Shell Case Study
                   Akhil Prabhakar
                   Shiv Pratap Singh
                   Swapnil Pal
                   Puneet Seth
INTRODUCTION

GECA aspires to expand its business in Omega.

Objective:
To come up with a development strategy that aims to minimize the UDC of the
project and ensuring minimum operational requirements by GECA; at the same
time complying with the local content requirements.



Key Considerations:
Technical, Economic, Commercial, Operational and Political




            Techno-Economic-Commercio-Politico-Operational
Our Approach…
UDC minimizing                 Cost/Recovery

                          Drilling:
                          Key for decision making




 Geological Uncertainty            Recovery                               Cost of
                                                                         extraction


              Permeability Volume Extraction          Compartmentalization
                                  techniques
       Better extraction technology :: higher the cost of technique

       Cost         Recovery
       Potential large pools of hydrocarbon          better extraction
Techno-Economical
Surface and sub-surface facilities
                    Recovery factor

                  0.2mD         2mD         20mD
       Gas         10%          30%          50%             Deviated well
    condensate      5%          15%          20%

       Gas         30%          55%          70%             Horizontal well
    Condensate     10%          22%          40%


                                           Permeability   ∆RF * Volume         ∆Cost
      Cost:
                                             0.2mD            20%         25-17=8M$
      Horizontal wells: 25 M$
      Deviated wells: 17 M$                   2mD             25%         25-17=8M$

                                              20mD            20%         25-17=8M$

Constraints for decision making :
•    Type of drilling is supported by given subsurface
•    Volume & permeability
•    Surface facilities
•    Demand
Key Stakeholders

• National and Provincial government of Omega

• Marine Environment Assessment Departments

• Local Population and labour which will be trained

• Local contractors and suppliers

• Beta Oil

• Employees of GECA and its partner Beta Oil

• Communities located around pipeline sites.
Plan of Action
               •   focuses on maximum recovery
               •   one time facility cost: 100 million$  high UDC
               •   aggressive approach towards recovery for early break-even
  1st stage    •   maximum number of wells must be drilled in 1st stage.


               •   focuses on sustaining the production rate
               •   lesser number of wells drilled
               •   UDC will be less; but so will be the recoveries
 2nd stage     •   enhanced recovery techniques



               • Choice of extended operation: 1) political stability 2)
                 performance of well
                 3) relations with key stakeholders
 3rd stage


3 (2+1) stage development plan
Unit Development Cost

Volume: 200 Bscf
Recovery factor: 40%
Maximum No. of wells: 12
Total Recoverable volumes for the project: 80 Bscf = 464.04 MMBOE
Cost of each well: 20 M$
Total Cost: (240+100) = 340 M$
UDC = 0.733 M$/MMBOE
Share of the government = 40%
Total Recoverable volumes for GECA:
                                      (80 Bscf = 464.04 MMBOE) *s
                                                                       Where s = 0.6


Share of Beta Oil (x):
Total Recoverable volumes for GECA after giving Beta Oil its share :
                                    (80 Bscf = 464.04 MMBOE) *s*x
                                                                       Where x = 0.8
Commercial

                                     Gas
                     Processing

    Gas                                      Amount depends on
                     Cost = y m$             - CGR = 100 Bbl/MMscf
                                     NGL     - Volume of recoveries (V*s*x)
                                             - Selling Price in Omega market
                                             - Revenue > Cost (y)



Feasibility of the project depends on:      Chemical based industries
-    Consumers and Demand of NGL
-    Break-even point                       Export
-    Surface Facilities
-    Future Consistency (Production Rate)
Commercial-Political

Scenario in Omega
•   Short of electricity supply
•   Employment


                                                Gas/oil based plants

                                           Partnership with government
         GDP
                                  Petroleum is the
                                  cheaper source

    hydrocarbon sector
    other sources
Risk and mitigation
                                                 Risk                    Mitigation
                 Collaboration with Beta Oil              Competitor                  Negotiations
    GECA                                         Risk
                 Partnership with government                  Political instability
                                                                         Mitigation

                                                                •   Pro-people policies
                                                                •   Social upliftment
Technical :
• Uncertainty in permeability estimation, volume estimation.
• Risk of compartmentalization and extent of faulting.
• Drilling risk: directional drillers may lose their way combined with unpredictability of structural
   and stratigraphic variations.
• Risk due to variations in CGR while production.
Mitigation :
• Better imaging technologies
• combination of seismic and well log data  structural and stratigraphic details.
• Drilling uncertainties  Integrated Forward Modelling Program to build formation model and
   to simulate log response and updating it on a real time basis.
Condensate banking
• Condensate getting accumulated near wellbore:
• Reduction in effective permeability to gas
• Reduction in well productivity

Mitigation:
Reservoir Stimulation:
• By the injection of inhibited dry gas with incorporation of alcohol and surfactants
• With inhibited chemicals (e.g. diesel and alcohol) to remove liquid saturation
WAG (water alternating with Gas) method.

Mechanism to enhance gas effective permeability like miscible displacement, interfacial tension
reduction and alteration of wettability.

Social risks (health, safety and security of the employees and local communities)  regular drills
and frequent inspections. Partners, contractors and associates are made to comply with safety rules
Environmental Precautions

• Blow-out prevention

• Use of environmentally friendly mud: water-based or synthetic based.

• Closed loop drilling waste system.

• Use of non-toxic frac fluids for well preparation.

• Re-use frac flow back water.

• Reduction in gas flaring through GTL stations and reinjecting the gas back in
  reservoirs and leak detection systems.
Thank you

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Shell Case Study-How to venture into a new country for Oil and Gas exploration?

  • 1. Shell Case Study Akhil Prabhakar Shiv Pratap Singh Swapnil Pal Puneet Seth
  • 2. INTRODUCTION GECA aspires to expand its business in Omega. Objective: To come up with a development strategy that aims to minimize the UDC of the project and ensuring minimum operational requirements by GECA; at the same time complying with the local content requirements. Key Considerations: Technical, Economic, Commercial, Operational and Political Techno-Economic-Commercio-Politico-Operational
  • 3. Our Approach… UDC minimizing Cost/Recovery Drilling: Key for decision making Geological Uncertainty Recovery Cost of extraction Permeability Volume Extraction Compartmentalization techniques Better extraction technology :: higher the cost of technique Cost Recovery Potential large pools of hydrocarbon better extraction
  • 4. Techno-Economical Surface and sub-surface facilities Recovery factor 0.2mD 2mD 20mD Gas 10% 30% 50% Deviated well condensate 5% 15% 20% Gas 30% 55% 70% Horizontal well Condensate 10% 22% 40% Permeability ∆RF * Volume ∆Cost Cost: 0.2mD 20% 25-17=8M$ Horizontal wells: 25 M$ Deviated wells: 17 M$ 2mD 25% 25-17=8M$ 20mD 20% 25-17=8M$ Constraints for decision making : • Type of drilling is supported by given subsurface • Volume & permeability • Surface facilities • Demand
  • 5. Key Stakeholders • National and Provincial government of Omega • Marine Environment Assessment Departments • Local Population and labour which will be trained • Local contractors and suppliers • Beta Oil • Employees of GECA and its partner Beta Oil • Communities located around pipeline sites.
  • 6. Plan of Action • focuses on maximum recovery • one time facility cost: 100 million$  high UDC • aggressive approach towards recovery for early break-even 1st stage • maximum number of wells must be drilled in 1st stage. • focuses on sustaining the production rate • lesser number of wells drilled • UDC will be less; but so will be the recoveries 2nd stage • enhanced recovery techniques • Choice of extended operation: 1) political stability 2) performance of well 3) relations with key stakeholders 3rd stage 3 (2+1) stage development plan
  • 7. Unit Development Cost Volume: 200 Bscf Recovery factor: 40% Maximum No. of wells: 12 Total Recoverable volumes for the project: 80 Bscf = 464.04 MMBOE Cost of each well: 20 M$ Total Cost: (240+100) = 340 M$ UDC = 0.733 M$/MMBOE Share of the government = 40% Total Recoverable volumes for GECA: (80 Bscf = 464.04 MMBOE) *s Where s = 0.6 Share of Beta Oil (x): Total Recoverable volumes for GECA after giving Beta Oil its share : (80 Bscf = 464.04 MMBOE) *s*x Where x = 0.8
  • 8. Commercial Gas Processing Gas Amount depends on Cost = y m$ - CGR = 100 Bbl/MMscf NGL - Volume of recoveries (V*s*x) - Selling Price in Omega market - Revenue > Cost (y) Feasibility of the project depends on: Chemical based industries - Consumers and Demand of NGL - Break-even point Export - Surface Facilities - Future Consistency (Production Rate)
  • 9. Commercial-Political Scenario in Omega • Short of electricity supply • Employment Gas/oil based plants Partnership with government GDP Petroleum is the cheaper source hydrocarbon sector other sources
  • 10. Risk and mitigation Risk Mitigation Collaboration with Beta Oil Competitor Negotiations GECA Risk Partnership with government Political instability Mitigation • Pro-people policies • Social upliftment Technical : • Uncertainty in permeability estimation, volume estimation. • Risk of compartmentalization and extent of faulting. • Drilling risk: directional drillers may lose their way combined with unpredictability of structural and stratigraphic variations. • Risk due to variations in CGR while production. Mitigation : • Better imaging technologies • combination of seismic and well log data  structural and stratigraphic details. • Drilling uncertainties  Integrated Forward Modelling Program to build formation model and to simulate log response and updating it on a real time basis.
  • 11. Condensate banking • Condensate getting accumulated near wellbore: • Reduction in effective permeability to gas • Reduction in well productivity Mitigation: Reservoir Stimulation: • By the injection of inhibited dry gas with incorporation of alcohol and surfactants • With inhibited chemicals (e.g. diesel and alcohol) to remove liquid saturation WAG (water alternating with Gas) method. Mechanism to enhance gas effective permeability like miscible displacement, interfacial tension reduction and alteration of wettability. Social risks (health, safety and security of the employees and local communities)  regular drills and frequent inspections. Partners, contractors and associates are made to comply with safety rules
  • 12. Environmental Precautions • Blow-out prevention • Use of environmentally friendly mud: water-based or synthetic based. • Closed loop drilling waste system. • Use of non-toxic frac fluids for well preparation. • Re-use frac flow back water. • Reduction in gas flaring through GTL stations and reinjecting the gas back in reservoirs and leak detection systems.