A Study of Major Projects and Contractual conditions: A Framework for Performance Improvement

Master's thesis in Industrial economicsThe oil price has experienced a significant decline since the second half of 2014. In combination with the high cost level, many field developments in the Norwegian petroleum sector entail marginable profit. As a counter measure to cope with the challenging market conditions, both oil companies and service suppliers are making various efforts such as substantial downsizing internal staff, as well as reducing costs in all phases of the project. Moreover, major players have increasingly explored the possibilities that lie in collaborative and mutually beneficial relationships. As the market condition and oil price are expected to remain volatile, oil- and service supplier companies are now searching for strengthened competitive positioning through contractual innovation that can drive and sustain performance and efficiency. Gaining stability and control over cost development in projects is crucial for staying competitive in the business. The thesis studies a few major development projects across two industry sectors, evaluating various options for strengthening the competitive positioning for oil- and supplier companies, and ultimately presenting a framework for performance improvement. The study of projects points out common pitfalls and highlight important lessons from the projects. Key lessons are addressed to project planning, contract strategy, compliance of Norwegian requirements and the interaction between operator and contractor organization. On the basis of study findings and current market conditions, three options for strengthening the competitive positioning for Norwegian players are evaluated. (1) Formation of strategic alliance, (2) Risk-gain sharing agreements and performance based contracting and (3) Waste reduction to go ‘lean’. The study suggests option (2) and (3) can be more facilitated in the environment of a strategic alliance. Therefore, the thesis presents a framework for performance improvement, focusing on the benefits and challenges, values and risks associated with the formation of a strategic alliance. The thesis argues that with the modern market conditions, alliances are a viable option that can entail benefits such as strengthened & shared capabilities, stimulation of innovative technology development, and integrated capacity that supports growth for effectivity & efficiency. The study also revealed common challenges and pit falls such as cultural gaps, integration failure and worker resistance. However, if done right, the framework suggest the collaboration model can unlock significant value and mutual benefits for the partners, an approach more suited for addressing the financial and competitive challenges arising in today’s oil and gas industry with low- oil price and margins. It is suggested that the challenges associated with strategic alliances can be alleviated by introducing industrial clusters devoted for strategic alliances. Removing the regional boundaries traditionally observed in clusters, and introducing real-time communication between strategic alliances on a global level can provide growth for better experience flow, opportunities to improve and more successful alliance relationships. A suggestion for future study is connecting with companies within a strategic alliance in order to access contract details so that a further specified framework can be developed

Numerical Modeling of Radial Fracturing of Cement Sheath Caused by Pressure Tests

To achieve an acceptable level of zonal isolation, well integrity should be guaranteed in hydrocarbon production and geological CO2 sequestration. Well pressure test can cause different types of failures in the well system leading to leakages through these failures. Laboratory evidences have revealed that occurrence of radial tensile fractures is likely during pressure tests. In this paper, we use a numerical code call MDEM which was formulated based on discrete element method. The code can model discontinuum feature of fractures. A model of a lab-sized pressure test was built and compared to an experiment previously published. The model was tested under different confinement levels and effect of the tensile strength of rock on the radial fracture was investigated at the same lab-scale. Fracture opening profiles are also presented showing the leakage potential of these fractures under different pressure level.publishedVersio

Prediction and Early Detection of Karsts—An Overview of Methods and Technologies for Safer Drilling in Carbonates

The nature of carbonate deposition as well as diagenetic processes can cause the development of unique geological features such as cavities, vugs and fractures. These are called karsts. Encountering karsts while drilling can lead to serious consequences such as severe mud losses, drops of bottom hole assembly and gas kicks. To improve drilling safety in intervals of karstification, it is important to detect karsts as early as possible, preferably in advance. In this paper, we review methods and technologies that can be used for the prediction and early detection of karsts. In particular, we consider acoustic, resistivity, seismic and drilling-data methods. In addition to the inventions and technologies developed and published over the past 40 years, this paper identifies the advantages, limitations and gaps of these existing technologies and discusses the most promising methods for karst detection and prediction

Numerical Modeling of Radial Fracturing of Cement Sheath Caused by Pressure Tests

To achieve an acceptable level of zonal isolation, well integrity should be guaranteed in hydrocarbon production and geological CO2 sequestration. Well pressure test can cause different types of failures in the well system leading to leakages through these failures. Laboratory evidences have revealed that occurrence of radial tensile fractures is likely during pressure tests. In this paper, we use a numerical code call MDEM which was formulated based on discrete element method. The code can model discontinuum feature of fractures. A model of a lab-sized pressure test was built and compared to an experiment previously published. The model was tested under different confinement levels and effect of the tensile strength of rock on the radial fracture was investigated at the same lab-scale. Fracture opening profiles are also presented showing the leakage potential of these fractures under different pressure level

Numerical Modeling of Radial Fracturing of Cement Sheath Caused by Pressure Tests

To achieve an acceptable level of zonal isolation, well integrity should be guaranteed in hydrocarbon production and geological CO2 sequestration. Well pressure test can cause different types of failures in the well system leading to leakages through these failures. Laboratory evidences have revealed that occurrence of radial tensile fractures is likely during pressure tests. In this paper, we use a numerical code call MDEM which was formulated based on discrete element method. The code can model discontinuum feature of fractures. A model of a lab-sized pressure test was built and compared to an experiment previously published. The model was tested under different confinement levels and effect of the tensile strength of rock on the radial fracture was investigated at the same lab-scale. Fracture opening profiles are also presented showing the leakage potential of these fractures under different pressure level

Real-Time Detection of Karstification Hazards While Drilling in Carbonates

The nature of carbonate deposition can cause the development of unique geological features such as cavities and vugs called karsts. Encountering karsts while drilling can lead to serious consequences. To improve drilling safety in intervals of karstification, it is important to detect karsts as early as possible. The use of state-of-the-art geophysical methods cannot guarantee early or even real-time detection of karsts or karstification zones. In this paper we demonstrate, based on an analysis of 20 wells drilled in karstified carbonates in the Barents Sea, that a karst that is dangerous for drilling is often surrounded by one or more other karstification objects, thus forming a karstification zone. These zones can be detected in real time through certain patterns in drillstring mechanics and mud flow measurements. They can serve as indicators of intervals with a high likelihood of encountering karsts. The identified patterns corresponding to various karstification objects are summarized in a table and can be used by drilling engineers. Apart from that, these patterns can also be utilized for training machine learning algorithms for the automatic detection of karstification zones

Real-Time Detection of Karstification Hazards While Drilling in Carbonates

The nature of carbonate deposition can cause the development of unique geological features such as cavities and vugs called karsts. Encountering karsts while drilling can lead to serious consequences. To improve drilling safety in intervals of karstification, it is important to detect karsts as early as possible. The use of state-of-the-art geophysical methods cannot guarantee early or even real-time detection of karsts or karstification zones. In this paper we demonstrate, based on an analysis of 20 wells drilled in karstified carbonates in the Barents Sea, that a karst that is dangerous for drilling is often surrounded by one or more other karstification objects, thus forming a karstification zone. These zones can be detected in real time through certain patterns in drillstring mechanics and mud flow measurements. They can serve as indicators of intervals with a high likelihood of encountering karsts. The identified patterns corresponding to various karstification objects are summarized in a table and can be used by drilling engineers. Apart from that, these patterns can also be utilized for training machine learning algorithms for the automatic detection of karstification zones

Modified discrete element method (MDEM) as a numerical tool for cement sheath integrity in wells

Cement sheaths undergo extreme loading conditions in wells during subsurface operations. A damaged cement sheath may lead to fluid communication between different formation layers and fluid migration up to the surface, which can cause environmental, technical, and economic problems. In this study, we numerically analyze cement sheath stability using the modified discrete element method (MDEM). MDEM considers the cement sheath and rock formation as porous media and can model discontinuous fracturing of the materials. Analyses are performed based on a small-scale cement sheath integrity test and field cement pressure data measured by Cooke et al. (1983). Oil well class H cement was used, and its poroelastic properties were estimated using a micromechanics model and a multi-scale homogenization technique. First, the evolution of the stress state was approximated in the cement sheath and rock formation. Then, radial fracturing, shear failure, and interface debonding formation were studied under pressure increase/decrease operations. The effects of several parameters, such as the casing size, rock elastic parameters, and loading time, were also investigated. During the hydration of cement, the compressive and shear stresses evolved in the cement sheath, and the stresses in the surrounding formation also changed. The simulation results showed that a decrease in the casing pressure can lead to debonding of the casing-cement interface, and the calculated interface opening was within 1–50 μm. A pressure increase in the casing can lead to progressive shear and tensile failures in the cement sheath. A further pressure increase did not extend those failures into the rock formation; rather, it increased the number of radial fractures in the cement sheath. The analyses showed that a lower decrease and increase in the casing pressure is required to generate debonding and radial fracture in the cement sheath, respectively, in the early stages of hydration after the cement is set. This is also the case when the casing has a larger diameter and smaller thickness. When the cement sheath is bonded to a softer rock formation, the pressure increase required to create a fracture in the cement is lower compared with the case in which the sheath is bonded to a stiffer formation. However, in the case of softer formation, debonding was not observed

Prediction and Early Detection of Karsts — An Overview of Methods and Technologies for Safer Drilling in Carbonates

The nature of carbonate deposition as well as diagenetic processes can cause the development of unique geological features such as cavities, vugs and fractures. These are called karsts. Encountering karsts while drilling can lead to serious consequences such as severe mud losses, drops of bottom hole assembly and gas kicks. To improve drilling safety in intervals of karstification, it is important to detect karsts as early as possible, preferably in advance. In this paper, we review methods and technologies that can be used for the prediction and early detection of karsts. In particular, we consider acoustic, resistivity, seismic and drilling-data methods. In addition to the inventions and technologies developed and published over the past 40 years, this paper identifies the advantages, limitations and gaps of these existing technologies and discusses the most promising methods for karst detection and prediction

Drilling in Karstified Carbonates: Early Risk Detection Technique

Heterogeneous nature and complex rock properties of carbonate reservoirs makes the drilling process challenging. One of these challenges is uncontrolled mud loss. Caves or a system of cavities could be a high-risk zone for drilling as the mud losses cannot always be controlled by conventional methods, such as mud weight (MW) / equivalent mud weight (ECD) optimization, or by increasing concentration of lost circulation material (LCM) in the drilling mud. Seismic-based detection of such karstification objects is inefficient due to relatively small size, various shapes and low contrast environment. In this paper we, based on drilling data from the Barents sea, analyzed possible patterns in real-time drilling data corresponding to drilling through karstification objects. These patterns can serve as real-time indicators of zones with higher risk of karsts and can be used as an online tool for decision support while drilling in karstified carbonates