Recently, the Research Partnership to Secure Energy for America (RPSEA) awarded a deepwater measurement research project in the Gulf of Mexico to the Houston-based Letton-Hall Group, an oil and gas measurement consulting firm. Expected to span the next two and a half years, the program is striving to conquer the current dearth in industry-standard tools and technologies for flow measurement in the deepwater production segment – a task that will benefit both operators and the government.
An effort to close the gaps in technology needed to accurately measure flow from individual wells at deepwater depths, the deepwater measurement research project will benefit both the US government and production companies. While it is economically viable to connect each well to the production facility in a shallower water environment, deepwater developments comingle well production before bringing it to the water's surface in an effort to reduce development time and costs.
In a comingled production environment, it is currently impossible to tell from which well the oil and gas are coming. This leads to companies involved not being able to properly divvy up the production and, thus, revenues garnered. If the oil is inappropriately divided, that could result in millions of dollars lost.
"A quick calculation of a big well, e.g. 50,000 bopd, suggests a 1% error is 500 bopd or about 180,000 barrels of oil per year. At $50/barrel, that's about $9 million," explained Chip Letton of the Letton-Hall Group. "But there are situations that can develop in deepwater where the error might be 10% -- believe it or not. The same scenario now yields an error of $90 million at today's prices, or over $200 million at last summer's prices, from one big well. So measurement is crucially important to stakeholders -- and often unrecognized as a major risk factor."
Additionally, the government through the MMS cannot accurately assess royalties from the production. Some deepwater wells were granted royalty relief in the 1990s to encourage exploration and production, and others are measured at standard rates. This discrepancy in royalty rates solidifies the commitment of the MMS to determine which companies owe what.
Also, accurate deepwater measurement will better control and manage the flow from each well, which will greatly improve response time to changes in flow when they occur. Under the current configuration, it may take hours or days until operators are aware of these changes, such as water being produced from a well.
At a total cost of $4.5 million, the majority of the project has been funded through the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research and Development Program, which was authorized by the US Energy Policy Act of 2005. The effort of the program is to increase the supply and reduce consumer costs and improve the US's global leadership in the energy technology sector. RPSEA was tapped to administer the program.
Part of the agreement signed with RPSEA entailed that 20% of the funds for the research project must come from companies producing in the Gulf of Mexico, and seven signed up. Industry partners on the project, BHP Billiton, BP, Chevron, ConocoPhillips, Shell, StatoilHydro and Total, are able to leverage their research money, as well as help with the direction of the program. Each is also contributing their technological expertise, which will help to overcome challenges and benefit the whole group.
Additionally, Letton-Hall tapped two specific contractors to help with the program. Oceaneering International and Multiphase Systems Engineering will be adding their expertise to the research team.
The technologies and devices developed to accurately monitor deepwater flow will have global repercussions. Even the companies involved are active players in deepwater environments worldwide, such as offshore West Africa and Brazil.
"In any offshore application where you need to measure what's coming out of the wells, this will be applicable," confirmed Jim Hall of Letton-Hall.
Though sponsored by the US government, the effort of the program is to develop measurement tools that can be utilized across the board -- and that includes other deepwater offshore regions.
"We're trying to create an industry standard," explained Hall. "We're trying to extend the technology beyond what it is today."
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