upstrem-activity explained the process of Upstream Exploration
- 1. Varenna, July 23rd 2019 Exploration Activity in the Oil & Gas Upstream Cycle Jonathan Craig – Senior Vice President, Exploration Eni, San Donato Milanese (Italy)
- 2. 2 Eni…in brief Founded in 1953 by Enrico Mattei, Eni (Ente Nazionale Idrocarburi) is a supermajor multinational energy company with a worldwide presence Operating in all energy sector areas, from its traditional Oil and Gas business to renewables through its subsidiaries and associated companies. Significant investments in Research and Development (over 200 R&D Projects at present) Continuous growth oriented towards the sustainable development of energy resources (low-carbon sources: mix of natural gas and renewables, such as photovoltaic, waste recycling, bio-refineries, green chemistry, etc). Investments in CCS (Carbon Capture Sequestration) and CSP (Concentrated Solar Power) and Magnetic-onfinement fusion (with MIT) Core activities of Oil & Gas sector cover the entire Oil and Natural Gas supply chain as well the production and marketing of electricity and chemical products
- 3. 3 Oil & Gas Cycle: Eni covering the entire chain BASIN EVALUATION Regional Studies in order to identify areas with Hydrocarbon potential EXPLORATION Licenses Acquisition, Geological Studies, Seismic Acquisition & Drilling DEVELOPMENT Development Plan and Drilling Facilities and Infrastructure Construction PRODUCTION Management, Work-Over, Abandonment OIL NATURAL GAS Tankers Oil Pipes LNG Gas Pipes Chemicals Refinary Marketing Gas Market Electricity
- 4. 4 Exploration & Production Algeria Angola Australia China Congo Ecuador Egypt Ghana Kazakhstan Indonesia Iraq Italy Libya Nigeria Norway Pakistan Tunisia Turkmenistan UAE UK USA Venezuela Exploration only Argentina Canada Cyprus Gabon Greenland India Ivory Coast Ireland Kenya Lebanon Mexico Montenegro Morocco Mozambique Myanmar Oman Portugal Russia Somalia South Africa Taiwan (FM) Timor Leste Ukraine Vietnam Exploration Exploration & Production updated @ Dec. 31st, 2018 46 Countries No current activity Eni in the world (Upstream Activity)
- 5. 5 Development Oil & Gas Activity: Upstream BASIN EVALUATION Regional Studies in order to identify areas with Hydrocarbon potential EXPLORATION Licenses Acquisition, Geological Studies, Seismic Acquisition & Drilling DEVELOPMENT Development Plan and Drilling Facilities and Infrastructure Construction PRODUCTION Reservoir Management, Work-Over, Abandonment
- 6. Upstream Activity Cycle 6 EXPLORATION ABANDONEMENT PRODUCTION DEVELOPMENT APPRAISAL LIFE CYCLE PROJECT CASH FLOW CUMULATIVE (4%) (2%) (15%) (8%) (5%) (5%) (12%) (50%) (60%) (30%) (4%) (5%) Time + - Regional Studies Geological Model Exploration Potential Seismic acquisition & interpretation Prospect Definition NFW Drilling Subsurface Geology Studies Production Test Appraisal Drilling Reservoir Modelling Feasibility Studies Development Plan Development Wells Drilling & Completion Surface facilities and infrastructure construction Production Management Reservoir Management Reservoir Modelling Work Over Well dismission Facilities Dismission Enviromental Recovery LICENCING ACQUISITION BASIN EVALUATION LICENCING • Bid Round • Direct negotiation • Farm in • Merge / Acquisition PROJECT COST Discovery Start Production (First Oil) License Awarding Time to Discovery Time to Market
- 7. 7 What does “Exploration” mean? “Exploration” is a set of coordinated activities from different integrated disciplines, sciences and technologies - not only geology/geophysics – aiming at discovering new oil and gas volumes that could be exploited in a “reasonable” future with an economic return To explore, one needs to understand and carefully map the present day subsurface structure of an area, understand its evolution in time, locate the areas where HC’s may be generated, locate and accurately map the structures in which they may be preserved, estimate their volumes, evaluate the chances that our prediction have to be correct… To achieve such a target in the most efficient way, high level skills and know-how have to be employed together through a powerful digitally integrated approach and along the support of dedicated R&D projects
- 8. Geologists Geophisycist Exploration Mngr 8 Exploration Activity : Exploration Team Driller Sedimentologist Engineer Dev/Prod Economist Negoti ator
- 9. 9 Sedimentary Basin are regions of the earth of long term subsidence creating space for infilling by sediments For Hydrocarbon Exploration deep sedimentary basins are needed (usually over 2500m of sediment thickness) Where do we “explore” to find Hydrocarbons?
- 10. Seal Sediments (usually) with no permeability Capable to create a barrier above and around the reservoir Reservoir Sediments (usually) with porosity and Permeability capable to contain and flow HCs during production Source Rock Sediments rich in Organic Matter (shales, marls, carbonates coals) capable to generate HCs during thermal evolution (if deep enough to crack organic matter to HCs). Oil vs Gas generation depends on quality of Source Rock and/or its thermal evolution. Exception: bio-gas (no need of thermal alteration) Migration Carrier Permeable sediments and/or significant rock fractures (Faults) allowing buoyancy flowing from Source Rock into Reservoir Expulsion Trap Geometrical configuration of the Reservoir and Seal couplet allowing accumulation Generation Accumulation 10 Within a Sedimentary Basin: the 5 Elements of the “Petroleum System” Presence of the 5 Elements of the Petroleum System is necessary but not sufficient: precise timing occurrence of each elements/phase is necessary
- 11. 11 Source Rock Reservoir Seal Trap In the Outcrops…
- 12. 12 Theory is Ok, but…where to drill and…at which depth??? ? ? ? ? ?
- 13. 13 Geological Field Trip Data Analyses and Studies
- 14. 14 Code Linear elements 1 Roads, tracks 2 Uadi 3 Linear dunes 4 Rock veins Areal classification 1 Urban areas 2 Cropland and oasis 3 Natural vegetation 4 Surface waters 5 Bare land (or with poor vegetation) 6 Rock outcrops 7 Sandy desert (Erg) 8 Rocky desert (Reg) 9 Dry riverbed (Uadi) 10 Evaporitic deposit (Sebkha) Remote Sensing: LandSat7 and ASTER* Study: Landcover and Lithotype Processed image Interpretation * Advance Space-born Thermal Emission and Reflection Radiometer (2m resolution) LandSat7: 15m resolution
- 15. 15 Bouguer anomaly Bouguer anomaly GGT*– Tzz (vertical) Component (*Gravity Gradient Tensor) Total Magnetic Intensity RTE Reduced to the equator C.I. 2 nT Sill Dyke Sill Dyke ● Magnetic Basement C. I. 500 m Total Magnetic Intensity RTE Reduced to the Equator Grav-Mag Acquisition and Studies
- 16. 16 Slicks: Slicks are ‘flat’ parts of the sea surface in mm-cm amplitudes similar to the wavelength of the radar Small amounts of oil create slicks by suppressing mm-cm amplitude waves Smooth areas (slicks) result in no return to the radar ERS, Radarsat & Envisat wavelength: 5.6 cm This is perfect for mapping the wind-generated capillary waves that are ‘damped’ by oil Oil not detectable Oil detectable Oil not detectable Smooth surface Slightly surface Very rough surface Oil Slicks 20 km
- 17. Seismics 17 Seismic is the most important and most used exploration tool It allows visualizing and describing the subsurface in 3 dimensions Acquired seismic signals require complex mathematical processing (months-long) before they can be displayed in an “understandable” way and used by geologist for interpretation «Migration» is referred to the processing step that allows reflections’ origins to be correctly located and displayed in a way that mimics a geological profile on a two-way-time scale Array Energy source
- 18. It looks like a 3D echography, but at a different scale (resolution: dam vs. mm) What Is a Seismic Volume?
- 20. Massiccio Sella – Passo Gardena Outcrops vs Subsurface through Seismics Supergiant Gas Field (Zohr) 20
- 21. 21 Seismic Process SUBSURFACE IMAGE SEISMIC DATA SEISMIC ACQUISITION SEISMIC PROCESSING & IMAGING
- 22. 22 Eni Technology Roadmap: Digital Simplification of Geo Complexity Accuracy Reduction of turnaround times Computing Power 2012 0,5 PFlops 8 months 2014 5,1 PFlops 6 months 2018 22,4 PFlops 2 months Next 1000 PFlops 1 wk Eni Green Data Centre (hosting HPC3 & HPC4)
- 23. 23 3D Visualization: Structural vs Sedimentary Facies Rendering Structure and sand distribution may not be linked
- 25. Nannofossils Foraminifera & Microfacies High resolution bio- chronostratigraphy Occurrence of marker taxa Palynology Integrated High resolution biostratigraphy Paleoecology & Paleoenvironmental Reconstruction 5 G&G Studies: Biostratigraphy
- 26. G&G Studies: Structural Characterization SW NE Relay Ramps Extentional Normal Faults 26
- 27. G&G Studies: Clastic and Carbonate Sedimentology Integrated exploration and reservoir scale studies Stratigraphic and sedimentological modelling Clastic and carbonate Sedimentology petrography and diagenetical study 6
- 28. Overbank Sheets Channel axis (youngermost system) Confined overbanks (youngermost system) Meander terraces Sand filled channel belt (older system) Thicker channel axis (older system) Well-1 G&G Studies: Sedimentology 10 Hz 20 Hz 40 Hz CONTINUITY CONTINUITY + 1 km Meandering River (Google Map)
- 29. G&G Studies: Petroleum System Modeling The PSM methodology considers all the variables and associated uncertainties that define the possible hydrocarbon distribution, reducing the exploration risks 10x vertical exaggeration Basin Geometry Temperature & Pressure Generation & Expulsion Migration & Trapping Exploration Risk Evaluation Source Rock Geochemistry Biogenic gas High Resolution PSM Expelled Gases Expelled Gases HR detail Secondary Migration Eni Award 2008
- 30. 30 G&G Studies: Seismic AVO (Amplitude versus Offset)
- 31. 31 What does “Exploration” mean? “Exploration” is a set of coordinated activities from different integrated disciplines, sciences and technologies - not only geology/geophysics – aiming at discovering new oil and gas volumes that could be exploited in a “reasonable” future with an economic return To explore, one needs to understand and carefully map the present day subsurface structure of an area, understand its evolution in time, locate the areas where HC’s may be generated, locate and accurately map the structures in which they may be preserved, estimate their volumes, evaluate the chances that our prediction have to be correct (PoS, Probability of Success) To achieve such a target in the most efficient way, high level skills and know- how have to be employed together through a powerful digitally integrated approach and along the support of dedicated R&D projects
- 32. Rigs vs Water Depth 32
- 33. 33 Rotary drilling is the most commonly used because it is faster and cheaper A «bit» is attached to the end of a string of steel pipes (rods) and is made to spin (rotate) by an engine located at the surface or at the bottom end of the string Hard steel or diamond dents on the bit grind the rocks and the string progressively sinks in the bore driven by its weight and rotation The string is extended by screwing in more and more rods Bits wear out and must be periodically changed by lifting the whole string to the surface Rotary Drilling
- 34. Perla-1X Preliminary Petrophysical Zonation Gamma Ray Resistivity Gross Hydrocarbon Column at well: 792’ = 241 m 8889’ = 2709 m (MD) 9681’ = 2951 m (MD) Zone 2 8929’ ÷ 9278’ = 349’ (106.40 m) N/G = 100% Avg. Φ = 24.90% Avg. Sw = 5% Zone 3 9278’ ÷ 9513’ = 235’ (71.60 m) N/G = 100% Avg. Φ = 18.50% Avg. Sw = 11% 9000’ 9500’ Zone 4 9513’ ÷ 9611’ = 98’ (29.90 m) N/G = 100% Avg. Φ = 17.50% Avg. Sw = 16% Zone 5 9611’ ÷ 9681’ = 70’ (21.30 m) N/G = 73% Avg. Φ = 15.80% Avg. Sw = 31% Zone 1 8889’ ÷ 8929’ = 40’ (12.20 m) N/G = 73% Avg. Φ = 21.20% Avg. Sw = 14% WHOLE RESERVOIR 8889’ ÷ 9681’ (MD) 792’ (241.40 m) N/G = 97% Avg. Φ = 21% Avg. Sw = 10% Eni Petrophysical Interpretation, 03 Sep. 2009 On 09 Oct 2009 the well flowed on 36/64" choke for Official Flow: • FWHP : 3051 psi • Qgas : 20,7 MMScf/d = 586000 scm/d • Qoil : 442 bbl/d • Qw : 12,7 bbl/d • GOR : 47000 Scf/bbl • Gas SG : 0,660 • Oil density : 47,5 °API @ 60 °F • W. Salinity : 150 ppm Cl- • H2S : 0 ppm • CO2 : 2% Official Flow Results Tested Interval 535’ = 163 m 21
- 35. 35 SW NE Near Stack Rephased PMA = Perla Main Area Bank Core Transition To Basin F l a n k EBM W Bank Margin NFW and OUT WellS (example from Perla Field, Venezuela) 25% 21% 18% 16% 11% Porosity Unit Color Scale Perla-1x (NFW) Perla-2x (OUT) NFW (New Field Wildcat) First well to be drilled on a structure in order to prove a HC bearing reservoir OUT (Outpost or Appraisal) Well to be drilled on a structure In order to define extension of an already proven HC bearing reservoir
- 36. 36 Characteristics and distribution of ‘conventional’ and ‘unconventional’ petroleum systems Tight Oil Tight Gas Tight Gas Overpressured Cell Gas Generation Window Oil Generation Window WATER Conventional stratigraphic gas accumulation Conventional structural oil accumulation Tight Oil Shale Oil Shale Gas WATER Conventional structural gas accumulation Oil Shale Shale Gas Tight Gas Tight Oil Bituminous Sand/Heavy Oil Coalbed gas or Shallow Biogenic Methane 0.6% Ro 1.3% Ro Tens of miles
- 37. Conventional vs Unconventional Exploration and Production Source Rock Conventional Unconventional Conventional Field Unconventional Field» Source Rock
- 38. Unconventional Fields Development of Unconventional Fields needs much more production wells compared to Conventinal development (high costs) It requests huge quantities of water (competition with drinking water supplies, agriculture, industry) High Environmental Impact (visival, noise) Induces seismicity 10 km Unconventional Oil Fields Permian Basin (Midland TX – USA) Conventional Oil Fields Val d’Agri – Italia
- 39. 39 Global ‘Unconventional’ Plays Estimated technically recoverable gas reserves of 6,622 Tcf (48 shale basins in 32 countries) U.S. Energy Information Administration
- 40. 40 Unconventional and M&A play an important role in reserves replacement for most majors Eni has a unique strategy entirely based on conventional exploration Resource accretion approach % Total Exxon Mobil Eni Statoil BP Shell Chevron CoP 0 10 20 30 40 50 60 70 80 90 100 Competitors Resources Accretion Strategy @ 2018 Conventional Exploration Unconventional Exploration M&A Eni Strategy
- 41. 41 Why still Oil & Gas ? Primary Energy Demand BP Energy Outlook, 2018 Gas Liquids Hydrocarbons
- 42. 42 Alternative Scenarios BP Energy Outlook, 2018
- 43. New discoveries are required to fill the future global needs of Liquid Fuels ONSTREAM PROBABLE DEVELOPMENT YET-TO-FIND Peak liquid demand in 2032 (WoodMac scenario) EXPLORATION IS NEEDED! 15 mboe/d !
- 44. 44 Forecast of Sources of Energy required to meet World Energy Demand to 2100 Billion Barrels of Oil Equivalent per Year (GBOE) 100 80 60 40 20 1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100 World Energy Demand Decreasing Fossil Fuels Crude Oil Natural Gas Coal Nuclear Electric Solar Wind Geothermal New Technologies Careers in Oil & Gas Remain Important Projected Demands Hydroelectric
- 45. 45 Shortage of Geoscientists in the U.S. by 2021 (American Geosciences Institute prediction, 2016) 262,627 geoscience jobs in the United States in 2016 130,000 geoscientists expected to retire by 2021 72,000 new geoscience jobs by 2021 15,000 new graduates (M.Sc. or Ph.D.) or 45,000 new graduates, if also hiring B.Sc. and B.A. Net shortage of over 150,000 geoscientists in the United States by 2021
- 46. The Public Perception of today’s E&P Industry 46 The shale-gas fracking debate The Macondo Disaster Arctic drilling and climate change Groundwater Contamination
- 47. 47 But we should be proud of our industry – it has fuelled huge improvements in the quality of life for billions of people around the world* Abundant and affordable energy has underpinned huge progress in the human condition Global Human Development Index vs oil & gas consumption 72 52 Life expectancy has surged (global average, years at birth) 1960 2015 13% 35% Global hunger is in decline (% pop. malnourished in developing countries) 1970 2015 42.5 185 Infant mortality has plummeted (global average infant deaths per 1000 births) 1960 2015 0.85 0.70 0.55 0.40 0.25 0.15 180 160 120 80 40 0 140 100 60 20 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Today Human development index (life expectancy / education / per capita income) Global oil & gas consumption Human Development Index Global fossil fuel consumption (mmboe/d) *After Lambert Energy Advisory
- 48. The ingredients in the mixer………… 48