GEOMECHANICS Quo Vadis Aims of the Evening 1

GEOMECHANICS: Quo Vadis. . ? Aims of the Evening: 1. Establish a business case for Geomechanics' use in the industry - i. e. what are the questions it should be addressing? 2. How may knowledge be better shared to inform decision-making on engaging Geomechanical methods? 3. How to build competencies in the industry: New people into the field, enhanced skills or increased overall awareness? 4. Outline strategy for how professional associations may promote the discipline - e. g. dedicated committee, future events, knowledge share etc?

GEOMECHANICS: Quo Vadis. . ? Survey of Industry Opinion Results of series of Q&A interviews during 2014/5 GLEN BURRIDGE Lead Consultant Training Director

GEOMECHANICS: Quo Vadis. . ? Basis to Survey: • Confidential & anonymised • Mix of structured interviews & questionnaires • Started with leading geomechanics consultancies • Subsequent focus on practitioners & customers of geomechanics within E&P companies • Aims as “springboard” for further efforts

GEOMECHANICS: Quo Vadis. . ? 28 contributors Geophysics Geology Petrophysics Res Eng Prod Eng R&D IT Finance D&C Geomechanics Interviews Questionnaire Both Drilling Reservoir

GEOMECHANICS: Quo Vadis. . ? 28 contributors Consultant Operator Manager Operator Staff Consultant - Sales Operator Lead Assurance D&P Exploration

GEOMECHANICS: Quo Vadis. . ? Nature of Survey: ü ü Range from technical specialists to managers Cross-section of established disciplines Includes several corporate geomechanics leads Mix of geomechanicists & “normal” people! o o o This is the anecdotal story, not the official Select sample: 28 respondees Centred on mid-sized operators & one major × × Deficit of pure Explorationists No NOC’s Bias towards engineers & geomechanicists Centred on Europe

GEOMECHANICS: Quo Vadis. . ? Feedback themed around: 1. OBJECTIVES 2. FACTORS FOR SUCCESS 3. WHAT NEXT?

Geomechanics: Quo Vadis. . ? OBJECTIVES Section 1 Areas of Application Near-surface issues? Drillability! Effective Field Development Deliverability! Image courtesy of Schlumberger Implications for differing scenarios? “Opportunity to with predict drilling & reservoir issues with “Learning to deal stress improves your reservoir, as intelligent it does foresight” life in general!” “Hydrocarbons are sitting in the ground. You can't reach them without involving geomechanics, consciously or unconsciously. You'd better do it consciously”

Geomechanics: Quo Vadis. . ? OBJECTIVES Section 1 Assurance Operators • Make integral to field dev work • Build into long-term planning & value • • Consultants o Trend towards inclusion in planning, but only specific assets & locations o Different frames of references in models via RM/OE, plus safety KPI’s Operators creates hazard Show value from own data, case studies, o Lack of champions -> lack of focus -> analogue fields, post event reviews opportunities lost Not easy for exploration risk or reservoir o Patchy or no assurance frameworks => modelling, but should be trying! event-driven reactivity & knowledge loss Importance for WBS, completions & o Lack of in-house competencies -> sand prod, but active learning? difficulty of technically sound interaction We must lead assurance since we see o Little benchmarking to discern magnitude the bigger picture of problems: How bad is situation? “If it’s a response to a problem then it’s too late. We should be screening effectively. ”

Geomechanics: Quo Vadis. . ? OBJECTIVES Section 1 Drilling o Punctual intervention in drilling a weakness for Geomechanics (cf. predictive use in sand stability & hydraulic fracturing) o Short-term, task-focused, budgets of D&C don’t usually integrate with longerterm implications for production o However, question of value in D&C: Greater attention to remediation of issues than prevention? o Use for WBS & completion design now widespread o Fuller contribution to planning & prediction stages of drilling? o Can RTD open new avenues for active learning?

Geomechanics: Quo Vadis. . ? OBJECTIVES Section 1 Exploration o Greatest contribution likely to: 1. Drillability & Deliverability: Value of projects hangs upon them 2. Forward modelling for depletion (based on seismic attributes) o Misconception that for conv’l resv’rs, sole Exploration application is WBS? o Despite high exploration risk from seal failure, for conventional exploration topic often neglected due to oversight / ignorance / focus o Powerful impact for tight/unconventional reservoirs, where reserves only incrementally increase based on drilling? o Inclusion in assurance standards & information gathering should begin in E&A

Geomechanics: Quo Vadis. . ? OBJECTIVES Section 1 Reserves Mgmt o Uphill battle to gain buy-in to concept of geomechanical influence from RE’s (info overload? technique too uncertain? reputation fear? ) o Importance of tying results to tangible ∆reserves or their uncertainty: What happens if shows a reserves decrease? Still want to use? !? o Association with dramatic asset hazards e. g. subsidence, well integrity Vs range of production benefits e. g. IOR, lower well count, later water-cut o Complication of stress criticality for reservoir => Greater uncertainty. Welcome? o 4 D seismic for geomechanical effects within reservoir: If it’s good enough for Statoil, why not other majors? o Need to interface with numerous technical disciplines causes inertia, especially where no focal point to provide ‘activation energy’ “Ideal case of full-field 4 D seismic geomechanics acting as your ‘reservoir doctor’”

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Practice Organisation • Subsurface vs drilling – cultural & physical divisions (budgets, frames of reference) • Many interfaces, each with databases / models / software: Who owns the story? • Inefficient communication: Agreement best approach coupling of specialist teams/focal point & widespread awareness • Lack of centres of influence in Operators: Politics, titles, activation points? Room for Improvement • Workflows in industry embryonic at best, often non-existent • Procedures to identify modelling options & influence decisions in time • Are we bringing in contextual information from basin-scale modelling & overburden? • Get information flowing across numerous disciplines early on in project’s life! • Attitude: To role in own work, to results, to uncertainty. “No-one is thinking about what’s going on above the reservoir, yet this is where much of the drilling cost is accrued: Geomech has a potentially major role to play in cost control”

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Competencies Management • Unless have a specialist team on tap, organisations run severe risk of doing wrong thing • Geomech should be “part of furniture” => awareness for managers => basis for use • Often involvement with topic will be when called in as “emergency service” General Subsurface Teams • Need min. level to know where significant & when expert help required • Should be seen as core competency. Sporadic activity should not be excuse to lose lessons • Lots of claim of expertise in industry: More honesty & sharing needed from practitioners Specialists • Demanding sweep of skills required: Have to lean toward geoscience or engineering poles • Tough apprenticeship: Ph. D, then still need exposure to range of real-life examples! • May require a less specialised collaborator to translate results for wider audience • Discipline Leads often end up working projects rather than spearheading “Lack of integration means geomech’s benefits of coherent vision often lost” “Geomechanicists must blend great detail with the bigger picture, plus deal with tons of uncertainty – a rare talent!

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Technology Current Issues # Lack of universal standards for data storage / transfer & integrated software environments # Need integrated software tools to conduct geomechanics with multi-disciplinary teams # Without internal expertise, ability for clients to know what they’re buying # Rigorous audit of models stymied by lack of corporate workflows & best practice # Unfamiliarity with use of the latest 3 D tools: Use of “Quick-Look” stress models? # Reluctance of Operators to be “first movers” on technology: More JIP’s? Collaboration? Future breakthroughs? ? Seamlessly integrated 3 D-4 D is inevitable, but on what timescale? ? Data organisation shouldn’t be an excuse. Slick run-times for fully coupled 4 D will come ? Linkages to seismic & structural geology exciting. Powerful SEM’s built as standard ? Individual technologies will depend on relevance to assets, so uneven uptake ? RTD to match WBS models with reality -> influence on safety, cost & drillability of a well? ? Discrete particle simulations & improved frac / completion design software

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Modelling • • • Select appropriate projects for pilot/QL studies to market value of techniques How to best judge efforts vs S/M/L-term value for any modelling planned Scoping extent of “unknown” risk environment presented by geomechanics Ensuring the full suite of data is retrieved from disparate disciplines Lack of understanding from technical staff about which data is relevant, e. g. : - Importance of offset wells will be related to structural regime - HPHT self-frac prediction thwarted by poor seismic resolution at depth? - Issue of sparse 3 D sampling of inputs for higher-order models • Models may only be updated when have a failure

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Perceptions • 1 -2 D use well established. Move to 3 D reservoir applications, but skills rare • Interest variable across regions & companies, since different challenges • Viewed as specialist subject of variable importance -> no strategies in E&P cos. • Trades on fear (loss aversion): Greater association with bad, punctual events than long-term asset stewardship. Need to prove it works in 3 D sense • Use in “book-ends” of well delivery activities: Early planning & post completion • Operators not sharing enough case studies due to sensitivity of outcomes: Association with induced seismicity & negative PR “Historic perception of reactive rather than proactive tool, hence lack of motivation for pilot studies & tests” “Lack of discipline definition & promotion => Lack of mission => Difficult to integrate into the greater goals of E&P activity”

Geomechanics: Quo Vadis. . ? FACTORS Section 2 Relationships Operators: • Subject needs be driven internally by our own objectives & expertise • Developing mistrust between operators & service companies in recent years • Used to be the “domain of everyone”, but now split • Information deficit among many companies => in poor position to shop for services • Service companies not always sensitive to exterior role in decision-making process • Restricted scope of work often means consultants don’t see the whole picture Consultants: • Not seen as a core business activity, so often not even on radar in many E&P cos. • Untoward events will continue to occur, risks be taken, value untapped & uncertainties carried until Geomechanics becomes incorporated properly in planning & assurance • Breadth of subject matter & impacts makes target audience fragmented: Who should we speak to? Lack of any corporate mindshare stymies interaction • Engagements as an “emergency service” under crisis make life uncomfortable & benefits frustratingly under-realised for all • Potential “glitter effect” of new technology can distort relationship

Geomechanics: Quo Vadis. . ? WHAT NEXT? Section 3 Sharing Knowledge • • Instil as standard subsurface activity, from academia to planning & assurance Better off/on-boarding in companies for the few people with the experience? Technical “presence” of the specialist: Ability to communicate! Role of “nodes”? Encapsulating good practice within process, e. g. checklists, standards & guidelines More general articles rather than just specialist? Extent of subject => natural split between G&G and Engineering sides? Impact? Does embedding techniques in widespread software increase chance of uptake? Image courtesy of Baker Hughes “Distill to simple message - A Green Cross Code of Geomechanics: This is advisable, this is not, this is when you bring someone in. . . ”

Geomechanics: Quo Vadis. . ? WHAT NEXT? Section 3 Engagement How do we get Operators to publish more examples of high-impact case studies? • • Collaboration between operators on common themes of critical interest? Focused events, led by Operators – motivation to honestly share experience & questions. For maximum relevance, organise within regional context & themes. Find a way to address sensitivities regarding confidentiality & fracking Who could provide a representation within the industry? • Operator-to-operator collaboration via honest broker who can find out who is doing what • For UK, could new Oil & Gas Authority fulfil this role? • SPE (engineers) & EAGE (geoscientists) could have significant role to play in coordinating efforts to encourage explicit involvement from Operators – this may change the dynamic. What about other stakeholders? • Outward-facing events for service companies & Exploration companies to seek funding & raise awareness of topics among investors? • Academia’s primary role to set stage for role of geomechanics in the industry.

Geomechanics: Quo Vadis. . ? WHAT NEXT? Section 3 Realising Potential • Will have greatest impact on decisions when can be seen as agent of change: o o Demonstrate subsurface risk can be lowered Diagnosis of factors in long-term behaviour & effectiveness of assets Modelling fluid response to ∆stress fields (challenge constant K? ) Greater understanding of ultimate recoverability “For serious E&P, should be fundamental to development of field & drilling wells!” “Deploy those with experience of geomech to actively share knowledge & marketing the ‘toolbox’ to those who matter” “Recruit people at senior level who Get It, see the full asset picture & put theory into practice” “Appoint ‘champions’ that ask ‘has anyone thought about this? ’ ‘Have we spoken to the drillers? ’ ‘Are there uncertainties we ought to understand better? ” “We need to demonstrate impact on cost savings, risk reduction & value uplift”

Geomechanics: Quo Vadis. . ? WHAT NEXT? Section 3 The Future: 5 -10 Years Where will geomechanics be in Upstream Oil & Gas in 5 -10 years? v Crucial subsurface effectiveness tool OR Can’t justify itself & side-lined? v Small but important part of reservoir modelling workflows, especially in complex geology. Degree of externalisation vs internal skills? v Convert concepts into recognised applications? Image courtesy of Schlumberger Where should it be…. in 5 -10 years? v Significant for production enhancement, superseding “Reservoir Mgmt” v Firmly embedded as a routine workflow. A normal part of business. v Senior Management & Assurance teams fully aware of potential impact v Movement to 3 D & reservoir effects with links to seismic & struc geology v There will be a turning point in widespread adoption, but when. . ? !?

GEOMECHANICS: Quo Vadis. . ? The one Question no-one could/would answer: What’s the % of projects out there that have had a geomechanics study conducted on them compared to those that would benefit from one? . . . which led to a question back: Do we know what the real intrinsic demand for the techniques is/should be?

GEOMECHANICS: Quo Vadis. . ? Outstanding Questions ? What’s its true potential in terms of % of subsurface projects? ? What does it take to become integrated into standard assurance? ? How to raise baseline knowledge within companies? ? Who/How best to sell value of discipline upwards & outwards? ? Are there enough geomechanicists to address topic? ? Is weight towards production stage reflective of potential? ? How can Operators & external consultants work best together?

GEOMECHANICS: Quo Vadis. . ? Conclusions v Geomechanics needs to market itself better across life cycle v Stymied by lack of strategy/visibility & knowledge sharing v Include in E&P planning & assurance: It will pay rewards v Barrier of current poor integration is surmountable v Disquiet between operators & service companies on roles v Need for clarity on demand & scope of discipline v Drillability & Reservoir Performance greatest under-realised benefits

GEOMECHANICS: Quo Vadis. . ? Way Forward? 1. Cross-industry working group to develop a Geomechanics Strategy 2. Geomechanics needs to find a “home” with a motivated custodian(s), e. g. SPE, OGA 3. E&P Companies should be encouraged to review capabilities & develop strategies 4. National bodies, e. g. OGA, to take on role of collating case studies, steer knowledge sharing & evaluate impact on existing assets 5. Establishment of independent “watering holes” where free, honest, valuable exchange can occur: Focused workshops, confidential reporting 6. More JIP (Joint Industry Projects) to promote deployment, transition to 3 D/4 D benefits & encourage rapport between industry actors?