Technological advances are proving critical to opening up the Middle East and North Africa region’s offshore oil and gas reserves
The push to discover new reserves to maintain production levels is forcing oil companies into more challenging territories, where hydrocarbon targets are deeper and obscured by complex geological patterns.
As much of the exploration and production focus of the Middle East and North Africa (Mena) region switches to these more challenging geological plays – often involving tight structures in deepwater areas – technology becomes even more important.
- 3 kilometres: Maximum feasible depth for offshore exploration wells
- $807bn: Global offshore capital expenditure over the next five years
- 30 per cent: Deepwater share of global offshore expenditure by 2011
New seismic, drilling and production-related technologies have enabled international oil companies (IOCs) and national oil companies (NOCs) alike to engineer complex developments in water deeper than 2 kilometres, some of which would have been inconceivable 10 years ago. Indeed, exploration wells of 3km in depth are now feasible.
Technologies for offshore production systems, three-dimensional (3D) seismic surveys and improved drilling and completion techniques have all boosted the commercial case for -offshore exploration and production.
Despite the recessionary climate, UK energy consultant Douglas-Westwood forecasts global offshore spend to grow strongly over the coming years. Capital expenditure was estimated at $578bn in the 2004-09 period but is due to rise to $807bn over the next five years. Offshore now accounts for more than half the world’s major hydrocarbons discoveries.
According to Douglas-Westwood forecasts, shallow-water spending will remain flat over the next five years, but deepwater expenditures will see a real increase, mostly in development drilling. The deepwater share is set to increase from 2 per cent of global expenditure in 1991 to nearly 30 per cent by 2011.
Technically challenging offshore exploration is relatively new for the Mena region, whose largest fields – such as Ghawar and -Burgan in the Arabian peninsula – have been fairly easy to tap onshore. Development costs have been barely more than $1 a barrel.
However, as most Mena oilfields are maturing, the region is following the global trend into deeper waters. With large capital expenditure budgets behind them, the Middle East’s NOCs are starting to invest heavily in offshore exploration and production, or are encouraging foreign oil companies to do so. State energy giant Saudi Aramco had 26 offshore rigs in operation in May 2009, 16 more than in May 2005.
One should not underestimate the challenges of these wells. They are very deep
Craig McMahon, lead analyst, Wood Mackenzie
The Mena region’s offshore technological requirements have to cover a wide range of geologies, from the large, shallow-water Gulf acreage to the deepwater acreage in Egypt, with depths generally more than 600 metres. These greater depths present challenges, with much higher temperatures and higher-pressure wells now a focus for technology development.
Until now, the shallow waters of the Gulf have posed only limited technical challenges. The main offshore formation in terms of gas is the Khuff reservoir in Qatar’s North field, which extends to Iran’s South Pars field as well as parts of the UAE offshore territory.
“The challenges in Gulf developments are not so much of a technical nature,” says Ross Cassidy, analyst at UK energy consultancy Wood Mackenzie. “There are a few challenging oil developments, such as the Upper Zakum and Al-Shaheen fields, which have thin or low-pressure reservoirs and therefore require horizontal drilling and more complicated completions. Dealing with sour gas [with high levels of hydrogen sulphide] is another technical challenge Gulf operators face.”
Abu Dhabi’s Zakum Development Company (Zadco) is to create four man-made islands to use as drilling platforms for its 750 Project. This aims to ease bottlenecks at the Zirku Island processing, storage and export plant and raise production at the Upper Zakum field to 750,000 barrels a day (b/d) by 2015, from the current level of about 500,000 b/d.
Zadco’s development is similar to what Aramco is doing with the Manifa oil field: building four islands to use as drilling platforms and as support for all the ancillary infrastructure. According to Salah al-Bufalah, major projects manager at Zadco, this will save 20-30 per cent on construction and maintenance costs over the life of the production and will be easier to decommission.
Zadco’s joint venture partners Abu Dhabi National Oil Company, Japan Oil Development Company and ExxonMobil of the US see technology as critical to the Upper Zakum field’s development prospects. Less than 10 per cent of the field’s oil has been pumped and much of the reservoir is of low-permeability rock, making the oil difficult and expensive to extract, says ExxonMobil.
The US energy major creates models using its EMpower reservoir-simulation technology to predict how the reservoirs will perform. This determines how it will maximise recovery at lowest cost and risk. ExxonMobil has established a technology centre in Abu Dhabi to apply high-impact technologies to the Upper Zakum field, as well as training facilities.
With Qatar also asking IOCs to explore offshore formations below the North field, the Gulf’s deeper exploration programmes will require a more developed technology skillset.
The Middle East’s NOCs are seeking to team up with the world’s leaders in deepwater technology, such as Brazil’s Petrobras. National Iranian Oil Company (NIOC) is seeking to drill in the Iranian sector of the Caspian Sea using its newly built semi-submersible rig, Iran-Alborz, which can operate in depths of up to 1.3km. The two deepwater wells – firsts for Iran in this sector – are managed by a foreign-owned drilling contractor.
NIOC would also like to tap Petrobras’ expertise in deepwater drilling in future. In February 2009, Petrobras announced plans to spend $250m to develop Caspian Sea acreage after signing a production-sharing agreement with Iran. However, Petrobras’ enthusiasm for the exploration programme has since cooled.
Aramco, the largest of the Middle East’s NOCs, is upgrading its own technological capacities. In 2009, it set up a very small aperture terminal satellite system, which provides high-speed voice, video and data communications to its seismic, drilling and marine teams kingdom-wide.
This year, Saudi Aramco should complete work on its new Upstream Professional Development Center in Dhahran, which will include 3D visualisation rooms and drilling and intelligent field simulators to keep its geoscientists and petroleum engineers abreast of the latest advances in their fields.
Technology advances have also unlocked areas in other regions, in particular offshore Egypt, where gas fields in the Nile Delta are driving growth, and which has emerged as the main regional focus for advanced technology.
Deepwater gas reserves are expected to be the mainstay of Egypt’s future gas supply, and offshore activity is likely to remain strong.
“We are expecting a slight increase in activity in the Egyptian Mediterranean,” says Rod Hutton, managing editor for rigs at research company ODS-Petrodata. “We’re expecting about six jackups [rigs] to be working in the Egyptian market in 2010 and on the semi-submersible side we see work for between three and four units to be employed through to 2010.”
Some of the Egyptian fields are high-pressure/high-temperature, which requires rigs that can cope with pressures of 15,000 pounds a square inch in the well.
The seismic profile is also more challenging. Much of the Nile Delta reservoir lies under 1.5km of water in a tight gas sand (low permeability sandstone), shielded by salt which blurs the seismic image. The Messinian layer is a thin yet complex layer of anhydrite salt located about 3km below the surface that tends to scatter seismic waves.
The UK’s BP is using new seismic technology in Egyptian acreage where these salt accumulations make it difficult to gain an accurate picture of the geology below.
Multi-azimuth seismic (MAZ) extends the principles of normal 3D seismic surveys. For a MAZ survey, between two and six 3D surveys are recorded over the same area in quick succession at different angles, resulting in a grid of closely spaced seismic data lines which can be combined to form a more accurate picture.
The Egyptian Mediterranean is underpinned by gas, itself underpinned by an increasingly successful Pliocene play – a prehistoric strata – discovered in the mid-1990s and which gave rise to Cairo’s liquefied natural gas exports from 2005. That is now maturing, but a new formation has been established in the pre-Pliocene, confirmed in 2004 when BP made the Raven deep gas discovery.
The development is still in its infancy. “One shouldn’t underestimate the challenges of these wells,” says Craig McMahon, lead analyst at Wood Mackenzie. “They are very deep from a subsurface perspective, typically in the region of 5km or more. They are also characterised by high-pressure and high-temperature reserves which make drilling operations extremely challenging.”
The only way to drill is slowly, through tight pressure intervals that can change quickly. The result is that it can take at least six months to drill, making it extremely expensive. The upshot, says McMahon, is that there will be a massive upturn in expenditure in the Egyptian Mediterranean, led by the likes of Italy’s Eni, BP, the UK’s BG Group and Anglo-Dutch Shell. Even the Pliocene reservoirs have been found to be more fragmented and challenging than anticipated, increasing the projected capital expenditure.
BP and German energy company RWE Dea’s North Alexandria project is a particularly challenging development, with an estimated third of its gas reserves in deeper pre-Pliocene high-pressure/high-temperature reservoirs.
The technical challenge is not confined to the gas plays. Belayim Petroleum Company (Petrobel) – a joint venture between Eni and Egyptian General Petroleum Corporation – has deployed Schlumberger’s PowerDrive vorteX technology in the Belayim Marine field. This provides more energy and a sufficient rotation rate to drill hard veins of anhydrite in this mature field in the Gulf of Suez.
The majors’ offshore technology innovations are being supported by a new generation of hi-tech drillships operating in the region’s waters. Leading drilling contractors such as Transocean and Pride International, both of the US, have vessels capable of operating in deeper water depths than their predecessors, extending to 3.7km and potentially to drill to about 12.2km, in contrast to the current generation of drillships limited to around 3km depths. Transocean has drilled in the deep water in the Middle East over the years and the Sedco Express, an ultra-deepwater class of semi-submersible rig, is scheduled to start work in the Mediterranean in September 2010 for the US’ Noble Energy.
As countries across the region prepare for more technically complex offshore field developments, the need to keep abreast of the latest technologies is now well understood. The increased expense over most of the ‘easy oil’ in the Gulf may take longer to get used to.
You might also like...
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.