Whether a rig or a vessel is used, could well intervention do a lot more to maximise economic recovery asks Andrew Paterson, managing partner, OFS Partners
If you’re intervening, generally something’s wrong and it’s only going to get worse unless you do something about it. Is there something in the very name and nature of well intervention that is undermining its true potential in the North Sea and the wider global market? Let’s explore why interventions typically take place, what is done and what could be done differently.
If we look at a list of specific triggers for well intervention activity, they are almost all associated with remedial action. Something noticeable has happened or is happening, and this forces the expenditure decision. Leading activities at present include mechanical repair (such as valve repair, choke change-out or seal failure) and relatively little in the way of true proactive well servicing, be it data acquisition or performance-related wireline or coiled tubing interventions (zone isolation, scale squeeze and stimulations).
Instead, if we were to think creatively about all of the proactive production enhancement measures that could be undertaken on a field-wide basis, we might be able to find reasons to justify a different set of activities at different times in the life of the field. Here, the decision would be to invest and grow to improve and achieve excellence rather than spend money only to solve a problem – stimulated by the pressure of being branded reckless for doing nothing. We are currently a little too focused on ‘catastrophe aversion’ instead of thinking in terms of ‘proactive production enhancement’, that is, reaction, rather than action.
For a well known global operator, the average lifting cost per barrel across the portfolio sits at around US$30. When there is already enough evidence to suggest incremental barrels brought on stream as a result of well intervention activity sit at around US$5 or less, the argument should be compelling to undertake well servicing and proactive performance measures more frequently.
The reasons for not doing this are numerous and partly due to a shareholder emphasis on new fields and discoveries above and beyond what could be dismissed as less than newsworthy tinkering on older well stock. However, as the British cycling team proved, a lot of small tinkering can sum up to great gains overall. Can we apply the same ‘marginal gains’ logic across a field and portfolio of producing assets? The result would then be an emphasis on overall performance improvement rather than star results of individual fields or new discoveries boosting production.
There is a dated argument that says any given intervention on a specific well is no more than 50% likely to succeed. While it is certainly true that not all given intervention activities are guaranteed to succeed, conditions downhole being so complex and variable, it still isn’t fair to judge the merit of interventions on a well by well basis. Building the business case for a given campaign is often based on a remediation, as already described. However, if we expand the picture to a whole field basis, it becomes possible to design and justify a proactive programme across multiple wells over a longer timeframe that dramatically increases the chances of a favourable return.
Where given actions on specific wells don’t succeed, a capable contractor can use the well access to log, survey and sample such that the programme is dynamic and adapted accordingly based on the new information coming out of the experience. Put simply, if at first you don’t succeed, use the data acquired to perfect the action and location, ever increasing success rates, and try, try again.
Fundamentally, the opportunity for supply chain companies is there. However, this opportunity will not be realised if development is undertaken in isolation. The reactive approach so often seen in the past is not fit for purpose in the current climate.
To turn talk into RFQs, any investment or development needs to be anchored to the specific needs of a given operator or range of operators. There needs to be a very careful assessment of operator needs against company capability, and when that’s done, the decision of who to invest in a relationship with for both parties becomes easier.
There is no ‘slam dunk’ technique or technology or even light or heavy vessel solution for well intervention out there. Winners and losers will be separated based on the strength of the relationships that can be established, the level of understanding of the situation and evidence base for the solution as well as the quality of support that can be given to drive the business case within the operator on behalf of the direct contact.
There are plenty of ideas as well as plenty of early stage but proven techniques that make the efficiency and effectiveness of well intervention operations all the greater. Some methods – and vessel solutions – are somewhat predicated on a highly active drilling market, meaning using a heavy drilling asset (a full capability semi-sub or jack-up) is so expensive that it creates an incentive to explore a lighter alternative (a monohull dedicated well intervention vessel).
While that incentive may have been reduced in this lower for longer oil price environment, there are still benefits to be found in using nimbler alternatives. For those who will always want the full well control capability of a rig, the technology is there to enable interventions cheaper than ever. In the current market, general cash constraints make the case for doing anything a big challenge, so the main focus needs to be proving the case for doing anything at all, by any means, according to alignment with the operators’ needs and preferences.
Across the whole oil field services value chain, there are many repeating principles that work in terms of winning work. One is hassle reduction and reducing interfaces. Another is security of supply – offering something no one else has at a given moment in time. Finally, perhaps the most compelling of them all is offering a net saving proposition. Somehow, what you are doing saves measurably more money elsewhere – thus creating a very happy client and reducing the focus and scrutiny on your own margin.
For well intervention, some of these dynamics apply – bringing together multiple services would be of perceived value and proving the case for doing the work in the first place against not doing it or waiting (the net saving angle) would be the leading principles.
So in summary, this intervention is twofold: firstly, to raise the profile and perceived value for proactive programmes of well interventions such that there is as much pull from operators to consider these as there is push from the supply chain to offer them, and secondly, to realise the benefits of actually doing the work, bringing the incremental barrels on stream and conducting late-life operations in the most efficient way possible.
When we can see proactive diagnostic interventions directly driving actual well performance improvement work on an industry-wide basis, we will know the market is finally coming to maturity and the efforts of all to intervene have been successful.