Early Offshore Petroleum Development Cost Estimates Using GIS

Early Offshore Petroleum Development Cost Estimates Using GIS Narmina Lovely, GEOG 596 A Advisor: Patrick Kennelly

Outline • Introduction – the Business Challenge • Summary of Discovery to Development Process • Spatial Characterization of Prospects and GIS Methodology • Engineering Characterization of Prospects • Integration of GIS with Other Applications • Presentation of Results • Conclusion and Future Steps 2

The business challenge • Estimate petroleum development costs to guide exploration program • Automate, standardize and codify engineering cost estimation 3

The business challenge While X has bigger volume, Y might be a better value 50$ a barrel 15$ a barrel TD: 25000 TD: 20000 WD: - 5365 WD: - 4964 VOL: 310 VOL: 250 AGE: Miocene Pressure: 28378 psi Pressure: 24480 psi HC Type: Oil 4

Discovery to Development Process Appraisal well Exploration well Appraisal well Exploration • • Exploration prospect inputs − − − − Outline of prospect area Well location Reserve Size Water Depth Target Depth Fluid Type Expected Pressures Output is well cost and well timing Appraisal • • Number of appraisal wells determined by reserve size Output is well cost(s), seismic cost, and timing Field Development • Based on logic from tool which will be seen in upcoming slides • Output is all development costs and production forecast for life of field 5

Spatial characterization of developments • Well Spacing Calculation • Bottom Holes Placement • Maximum Drill Reach Calculation • Drill Center Distribution • Gathering System Alignment for Multi- 3000 feet 30 o drill Center Scenarios • Generation of Tie-Back Options 6

Spatial characteristics of developments Well Spacing Calculation INPUTS: Hydrocarbon type Prospect Area and Shape Maximum Volume per Well 7

Spatial characteristics of developments Bottom Holes Placement 8

Spatial characteristics of developments Maximum Drill Reach Calculation INPUTS: 3000 feet Target Depth Water Depth Maximum drill reach Spatial Well Distribution 30 o 9

Spatial characteristics of developments Drill Center Distribution 10

Spatial characteristics of developments Gathering System Alignment for Multi-drill Center Scenarios INPUTS: Center of the Prospect Drill centers Spatial Distribution 11

Spatial characteristics of developments Generation of Tie-Back Options INPUTS: Hydrocarbon Type Platforms Spatial Distribution 12

Engineering characterization of prospects Engineering characterization of developments • a. Drilling performance and well types • b. Completion technologies and configurations • c. Production facilities and tie-backs • d. Additional production parameters 13

Engineering characterization of prospects Drilling Performance and Completion Technologies • • Drilling performance (days to drill 10, 000 ft) • Varies by geologic target • Well tangibles vary by geologic target Drill rig day rates ($/day) – company rates • 3000 feet 30 o Rig type MODU or Platform Rig • Type of Well Exploration, appraisal, or development • Completion type Wet tree or dry tree • Maximum drill reach • Establishes number drill centers required 14

Engineering characterization of prospects Production Facilities and Tie-backs Typical Wet Tree Development • Wet Tree Local FPS host cost a function of: • Peak field production • Water injection requirements • Number of wells • Shut in Tubing Pressure • Water depth • • Dry Tree local FPS host cost a function of: • • • Peak field production • • • Number and type of wells Water injection requirements Drill rig requirements (Dry tree development only) Shut in Tubing Pressure Subsea tie-back to existing FPS host • Oil – 25 mile radius Gas – 75 mile radius Subsea cost a function of: • • Number of wells Number of drill centers Distances between drill centers Shut in Tubing Pressure Water depth 15

Engineering characterization of prospects Additional Production Parameters • Field production forecast is the sum of individual wells brought online per drilling and completion schedule. Well forecasts utilize initial rate, reserves per well, and decline by geologic age. • Water injection wells are the ratio of producing wells with well depth consideration. • Optimize facility options (dry tree versus Subsea tie-back) based on number of wells at each drill center • Export pipeline cost included to existing FPS’s within 30 miles or nearest one • Matches facility cost spending profile with first oil date • Facility abandonment and salvage cost included 16

GIS and Information Technology applied Flow of Automation Spatial characterization of developments Arc. GIS & ET Geo. Wizards Engineering characterization of developments MS Excel Organization of results MS Access Presentation of results Power. Point VBA Automation 17

Organization of results A 18

Prospect. X SS Development w Semi Host Indicators(NRI) Success Ps: 25% IRR % NPV 7 ($m) % Disc. payback (yrs) IE (NPV/WI capital) Risked BP CONFIDENTIAL Capital ($m): E&A Drilling: Dev drilling: Facilities: Cap OH: Total: Gross 607 11, 788 3, 853 WI: 9% 57 1, 107 362 16, 248 1, 525 Subsurface Data: Gross recoverable mmboe Net recoverable mmboe Reserves per well mmboe/well Number of producers Number of injectors 250 63 9 27 9

Conclusions • Manual process was automated for a batch of prospects • Took days for each prospect manually, a matter of minutes automatically with favorable results • ARCGIS was a key technology to automate the calculation • Integration of GIS Technology with Access, Excel and Power. Point • Generated results for hundreds of prospects for comparison purposes: 800+ prospects, 2, 300+ development options • Future Steps: − Incorporate an economic model for the output − Simplify cost estimate updating − Incorporate portfolio analysis toolkit 20

Acknowledgements • BP Engineering Team - Engineering Characterization of developments • Charles Fried - Flow of Automation between GIS and Excel Engine • Patrick Kennelly – Penn State Program Advisor 21