reactivation of mature fields in northern mexico. - cedip

REACTIVATION OF MATURE FIELDS IN NORTHERN MEXICO.Authors: Ing. Antonio Narváez, PEMEX Exploration and ProductionDr. Luis Roca Ramisa, Schlumberger Oilfield ServicesCopyright 2005, CIPM. Este artículo fue preparado para su presentación en el cuarto E-Exitep 2005, del 20 al 23 de febrero de 2005 en Veracruz, Ver., México.El material presentado no refleja necesariamente la opinión del CIPM, su mesa directiva o sus colegiados. El artículo fue seleccionado por un comité técnicocon base en un resumen. El contenido total no ha sido revisado por el comité editorial del CIPM.RESUMENLos campos maduros y/o marginales en México sedefinen como aquellos que el margen de utilidad,aunque rentable; no son suficientementecompetitivos con otros proyectos de PEMEXExploración y Producción. El concepto de madurezy/o marginalidad es dinámico; es decir, puede sertemporal en función de las condiciones demercado y nivel de costos de extracción yproducción. En los EUA, se considera comomaduro y/o marginal, aquellos campos de aceitecon producciones inferiores a 10 bpd por pozo(IOGCC).En el Activo Integral Poza Rica-Altamira existenmás de 12 campos de aceite que sonconsiderados como maduros y/o marginales; sinembargo, y poseen todavía una cantidadconsiderable de reservas 2P y tienen factores derecobro históricos promedio relativamente bajos(>5%). Estos campos fueron descubiertos a lolargo de la década de 1990 y tienen actualmenteproducciones que oscilan entre 3 y 55 bpd porpozo. Con un enfoque adecuado, estos campospueden ser reactivados económicamente y ser undetonante para el re-surgimiento de la RegiónNorte como productora neta de aceite.En este trabajo se presentan los retos y planesdiseñados por la Región Norte para la reactivaciónde estos campos, así como también lasexperiencias con campos maduros y/o marginalesen otras partes del mundo.ABSTRACTfields that have passed their peak production.Fields producing less than 10 bbl/d are consideredmarginal In the U.S. (IOGCC).There are 12 oilfields considered marginal ormature in the Poza Rica-Altamira asset inMexico's North Region. Nevertheless, these fieldsstill have considerable 2P reserves, but theiraverage historical recovery factors are relativelylow (< 5%). These fields production started in theearly 1990s. Today, production from these fieldsaverages between 3 and 55 bbl/d. These fieldscould be reactivated economically and thereforeserve as a springboard for Mexico's North Regionto again become a net oil producer withcomprehensive study, properly applied technologyand a shift in the use of human resources.This paper discusses the challenges of reactivatingthe North Region and presents plans for doing so.Experiences with marginal or mature fields in otherlocations are cited as a backdrop for this study.INTRODUCTIONThe main driver of the oil industry continues to bethe demand for oil and gas, which is expected togrow at a cumulative rate of 1.8% from 2001through 2025 (Fig. 1). 2 Despite the projectedgrowth in demand, production in the world'sremaining proven reserves has peaked in manyareas and will peak in others within the next 10years.Although profitable, Mexico's marginal fields arethose whose profitability is not competitive withother PEMEX Exploration and Production projects.The concept of marginality is dynamic in that it is afunction of market conditions and lifting andproduction costs. Mature fields could be alsomarginal, but the term is applied strictly to thoseFig. 1. World energy demand.1

Remaining reserves are in a limited number ofcountries. With the exception of the harshdeepwater environments, future new explorationand growth will happen mainly in the EasternHemisphere. Figure 2 illustrates the peakdiscoveries in different areas around the globe.production costs. Mature fields are marginal, andare further distinguished by the fact that they havealready passed their peak production. These 12oilfields, which were put on production in the early1990s, were unprofitable until 1996. After that time,gas profitability has remained good to excellent,but profitability from the production of oil, whichpeaked in 1996, has been significantly lessimpressive (Fig. 3). 3Fig. 2. Oil reserves distribution.The larger bubbles, representing remaining oilreserves in MMbbl, appear mainly in EasternHemisphere countries.Peak production in remaining reserves will peak inthe next 10 years, which means the E&P industrywill become more production based over time. Thisscenario points to the importance of increasingproduction in marginal fields and prolonging it inmature fields where economically feasible.Although new discoveries, new technologies andnew evaluations will come into play, the overallscenario will not change significantly. In Mexico,where oil production is a key element of thecountry's continued economic growth, productionfrom marginal and mature fields will play animportant part in its future fiscal well-being.Twelve oilfields in Mexico's North Region—thePoza Rica-Altamira asset—are consideredmarginal or mature. The term marginal, which canbe applied to any oilfield, is dynamic in that it is afunction of market conditions and lifting andFig. 3. North region's profit per business type.Today, average production from the Poza Ricaasset is 70 bbl/d; it is 40 bbl/d from the Altamiraasset. Overall production from the North Region is100 bbl/d. These intermittent wells also produce ahigh percentage of water. Despite the decliningtrend in production, Poza Rica-Altamira reserveshave significant remaining value, with 2P reservesat 5531 MBOE for the Poza Rica and 4881 MBOEfor Altamira. In general, several difficulties must beovercome for these fields to be profitable:decreasing production, high production costs,excess personnel and a low level of financialinvestment.Several scenarios could be considered with regardto administering these mature and marginal fields.These fields could be closed, but such a movewould demand huge financial resources and wouldmean the loss of any profit. Therefore, closing the2

12 fields in the Poza Rica-Altamira asset is notpracticable. Reactivating these fields couldsignificantly reduce operations costs and thereforeimprove profitability. This would appear to be thebest option, yet challenges remain. First, humanresources are the variable with the greatest impacton cost. The scope and focus of the workforce inthis area would have to be shifted to economicallysupport a reactivation scenario. Second, asubstantial improvement in performance wouldrequire a step-change in how decisions are madewith regard to these fields. Third, reactivating thesefields will require the application of fit-for-purpose,cost-effective technology that will increase ultimaterecovery through extended field life.NORTH REGION BUSINESS FRAMEWORKIn 2003, North Region 3P reserves represented43% of the PEMEX Exploration and Productiontotal 3P reserves. Despite this high percentage,income from this region accounted for only 8% ofthe income from total PEMEX wells in operation.Investments made in the North Region to datetotaled $2 billion USD, or 27% of the PEMEX total,and North Region workers accounted for 27% ofthe total PEMEX Exploration and Productionworkforce. The disparity in these numbers points tothe need to make significant changes in how andwhere workers are distributed, and in how critical itwill be that future investments are highly targetedto meet specific production and income levels. Inaddition, an unfavorable fiscal regime in Mexicofurther necessitates that production in the maturePoza Rica-Altamira be carried out in the mostefficient manner possible—in a way that ensuresfuture profitability.In the Poza Rica-Altamira asset, support staffmakes up a higher percentage of the workforcethan do well operations staff. A significant share—42%—of the total 3170 workers are used inmaintenance in the Poza Rica; in the Altamira,34% of the total 1992 workers are working at theadministrative level. In each case, essential areasrelated to well operations are being covered byonly about 40% of the total workforce. Thisimbalance must be remedied in coming years witha focused strategy for efficiently allocating humanresources. In other words, labor as a variablefactor must be brought into alignment withproduction.While more fields are becoming marginal (26% in2004, up from 11% in 1996), investment andproduction have dropped along with increasedcosts, volatile prices and lower profits. Theseareas must be balanced in order for reactivation ofthe North Region fields to be a step in the rightdirection.NORTH REGION GEOLOGICALCHARACTERISTICSThe geology of Mexico's North Region—specifically, the Ébano-Pánuco area—serves as anexample of the type of geology encountered insimilar mature fields such as the Poza Rica-Altamira. Heavy oil production in the Ébano-Pánuco comes from fractures in the CretaceousSan Felipe and Agua Nueva formations. Thereservoir rock is a Cretaceous carbonatecomposed principally of fine-grained limestone withvarying amounts of detrital shale. Four lithotypesare volumetrically dominant: argillaceous limemudstone (shaly limestone), detrital shale(calcareous shale), chalk (clean, fine-grainedlimestone) and Argillaceous mudstone. 4These lithotypes change vertically withstratigraphic position and laterally with geographiclocation. In general, the rocks become more shalytoward the west.Core samples taken in the Ébano-Pánuco reveallow but measurable values of porosity, rangingfrom 0.4 to 18%. In more than 60% of the thinsections, the pores are too small to be seen with apetrographic microscope (micropores). Because ofthis small pore size, the overall matrix porosity andpermeability are relatively low to low. Lithotypes inthe San Felipe and Agua Nueva formations havelower values of porosity (3.75 to 7.5%) andpermeability (0.008 to 0.0a mD) due to thepresence of detrital shale mixed with micritegrains.3

Water saturation is uniformly high in the most shalyrocks because the throats of the matrix pores arevery small. The irreducible water saturation is verylow (15%) in the porous and permeable chalkintervals.Fracture porosity is very important in the areabecause of the low total volume of matrix porosity.Virtually all the fractures in the rocks are of tectonicorigin, and at least two stages have occurred in therocks, both producing vertical fractures. Thevertical seal is provided by the Mendez andoverlying Tertiary formations. Log evaluations haveshown that the Mendez contains a significantquantity of shale. The basal part of the Mendezformation contains a higher proportion of limestonethan the upper part, and it is likely that somelocations in the lower Mendez contain fracturesthat may act as a Type 1 reservoir.Oil gravity in the Ébano-Pánuco ranges from 11 to14 API, with viscosities ranging from 1200 to 8000cp. This area has produced approximately 1 billionbarrels of oil from several different sectors. Somewells in the area still produce by natural flow, butwater production is a major problem in thesereservoirs where water has coned upward throughthe natural fractures.STRATEGIES AND PLANS FOR REACTIVATIONObviously, the objective of boosting reactivation inthe North Region is to significantly increaseproduction. Opportunities abound for PEMEXExploration and Production to ensure that matureNorth Region fields become net producers.Exploration in geologic basins associated withthese fields must be carried out to identifyadditional areas that are ripe for development.Appraisal of these fields would include seismicstudies and identifying strategic wells that arecandidates for reentry. Development of maturefields could include directional drilling, whereappropriate. Fields and wells would be optimizedby artificial lift systems and water controlmeasures. Secondary and tertiary recovery wouldalso be considered.A focused and ongoing human resources strategywill be a key part of profitable reactivation toensure that labor as a variable factor directlyrelates to production. Without such a strategy,costs might reach $35 per barrel in 10 years asPoza Rica-Altamira production declines. Keyelements of this strategy would include:• relocating employees to more productiveareas• modifying work shifts and improving laborrelations• transferring jobs to expanding businessunits, inside or outside PEMEX Explorationand Production• establishing incentives for performancelinked to increased production and loweredcosts.Targets for linking the size and processes oftechnical and administrative staff support areas tooperations will have to be reset to levels that aremore in line with production. Currently, 65% of staffworks in support areas in the Poza Rica-Altamira.Reducing that number to 30% would reduce costssignificantly. To fill in the gaps resulting from thisreduction, training should be offered to improvepersonnel skills in design, drilling and operations ofwells and installations. State-of-the-art informationtechnology and telecommunications equipmentshould be put in place to reduce the timepersonnel currently spend in managing data andtransmissions. Where possible, maintenance,personnel, accounting and other support areas canbe relocated within PEMEX or outsourced to moveresources to areas more essential to reactivationactivities.Along with a human resources strategy, theoperation and management of wells should beexpanded and automated where appropriate.Since these activities require substantial manuallabor, energy and maintenance, steps must betaken to optimize management activities.Capacities for separation, storage, pumping,transport, injection and compression must begradually resized, and controls can beimplemented to measure and handle fluids4

automatically and remotely. Crude oil pumpingactivities can be streamlined to take advantage ofthe large storage and pumping capacity alreadyavailable in the Poza Rica-Altamira.Funding is another area where projects in maturefields are at risk. Without revising the fiscal regimeand the Law of Financing and Public Expenditure,there are options for strengthening the sourcing forfinancing mature fields. First, reasonable andappropriate baselines—particularly for costs—should be established for evaluating projects.Second, assistance can also be gained bydesignating multiannual financial resources formature fields, without restricting these funds topresent technical limitations. Third, arrangementscould be made with the federal government topermit PEMEX to use financial reserves forreactivating those fields with the most oil and gasreserves. Finally, peer groups (competing amongequals for financial contracts) could establish thefinancial budget as is done by other E&P operatingcompanies.PUTTING ADVANCEDTECHNOLOGY TO WORKOverall, Mexico's oil industry must come to rely ontechnology that lowers lifting costs so thatmarginal, mature fields become viable. Making useof and developing new fit-for-purpose, costeffectivetechnology and services is essential toretarding the decline in performance of the world'sproduction base, while concurrently increasingultimate recovery through extended field life. Inaddition, digital technologies must become morecentral to providing an infrastructure thatmaximizes the value of specialists and theirknowledge to improve the overall efficiency ofreactivating mature fields.Currently, there are a number of ways where usingappropriate technologies can add significant valueto mature fields. Production and reservoirmanagement tools can more accurately describeand control production for long-term economicbenefit. For instance, mutiphase flow metering Vx*technology allows the simultaneous measurementof oil, gas and water flow without fluids separation,which typically requires bulky separator equipment.The Wet Gas module of Vx permits measurementof condensates, an important capability where bothoil and gas wells are produced or where theproduction character changes over time. Ingeneral, production metering lowers overall costsby providing quick, efficient well tests and earlywater detection. 5Cost-effective well construction is another areawhere specific technologies can help lower overallwell/field construction costs and access greaterreserves per well. In the Burgos basin, forexample, the Drillers Technology Corporation(DTC) uses its telescopic double rigs to improvedrilling efficiency. The performance record set thebar for drilling in the Poza Rica-Altamira. Forexample, the average drilling time was 10.68 days,with the best time at 9.09 days (drilling timesadjusted to total well depth of 2000 mV). Bestaverage ROP in an 8 1/2-in. hole section was 31.3m/hr; in a 6 1/8-in. hole section the average was22.9 m/hr. Nonproductive time (NPT) was reducedfrom 14.63% to 2.88% between drilling the first andsecond wells. With lessons learned in the Burgosbasin, similar achievements can be expected withDTC rigs in the Poza Rica-Altamira to lower drillingtime and costs.Fig. 4. Schematic diagram of a DTC telescopicdouble rig.5

New techniques for reentry, stimulation andintelligent completions can ensure that the value ofmature fields be fully realized. In the past, reentrieshave often been hampered by small hole sizes. Anew technique, called TTRD*, or Thru TubingRotary Drilling, combines small high-torque motors,reliable high signal strength MWD andsophisticated multicurve resistivity systems. TTRDtechnology has demonstrated that sidetracks of upto 25,500 ft can be drilled at good penetration ratesto targets once considered uneconomical. Thistechnology also provides the ability to "daisy chain"targets, a capability that will surely forestall thedecommissioning of existing infrastructure until thereservoir is totally drained.With the Rapid* service provided by sometechnical companies, wells can quickly beidentified as candidates for stimulation. This timesavings translates into reduced rig time and costs.Once these wells are identified, a fiber-based fluidfracturing technique has been shown to fullydistribute within the fracture. This full-heightpacking of the fracture effectively increases thesurface area open to flow. The difference in wellproductivity can be considerable.Intelligent completions, such as those applyingone-trip ESP completions and creating a largezonal pressure and flow differential, will mean thatfewer wells must be drilled. They also allow forbetter pressure management, reduced waterproduction and improved recovery rates.Other cutting-edge, reliable and proven technologieshave been used in Mexico's Chicontepec basin.These innovative technologies have set the standardfor improved production and cost management, andmay demonstrate the efficacy of their application inMexico's mature fields in the near future. Amongthese technologies are• Axia-Production Management—A fit-forpurposedownhole pumping system withimproved reliability and simplified fieldoperations, and the Axia lifting service thatdelivers real-time pump data via a webbrowser to monitor well operations.Fig. 5. Axia* fit-for-purpose integrated liftingsystem.• Well trajectory planning with 4D seismic—A new seismic technology that acquiresdata digitally, avoiding the signal averagingapplied in conventional seismic, for muchquicker processing that can moreaccurately plan the well track to avoidwater contact and improve production.6

• Deep reading measurements—A newcross-well resistivity that measuresresistivity across thousands of feet toprovide a "view" of often missed reservoirfeatures such as bypassed oil and waterfingering, and to proactively manage andproduce reservoirs and infill drillingprograms; when combined with controlledsource electromagnetic andmagnetotelluric surveys, yields a resistivitymap of the reservoir.• ABC* Analysis Behind Casing—Provides afull range of openhole-qualitymeasurements in wells after they arecased to reveal the effects of productionon reservoirs, such as waterencroachment and depletion, where rigefficiency is of critical importance to theeconomic success of a mature field drillingprogram.Fig. 6. Well trajectory planning with 4D seismic.Fig. 7. Deep reading measurements.Fig. 8. ABC* Analysis Behind Casing.7

• Well construction for mature fields—Services that can link multiple smallaccumulations with a single wellbore byreducing the number of wells/slots, andthat can access small single targets,resulting in reduced well costs, accuratewell placement, increased step-outcapability, and higher steering capability.Fig. 9. Drilling in complex reservoirs requireexcellent steering capabilities.FloScan Imager*—Deploys sensors across thewellbore to measure holdups and velocities at anypoint in the well to provide a flow profile and anunderstanding of exactly which zones in the wellare producing and what they are producing.EXPERIENCES WITH MATURE FIELDSMature fields in Mexico's North Region willultimately benefit from lessons learned in maturefields in other parts of the world that have hadsuccessful reactivation programs. Importanttechnologies have been applied with considerablesuccess in these key areas:• Effective processes to quickly identify wellsthat are candidates for productionenhancement• Logging techniques that assist in buildingthe complete petrophysical picture ofhydrocarbon zones behind casing inexisting wells• Accurate well placement to ensure longtermproduction• Efficient well construction that maximizesdrilling performance, improves penetrationrates, avoids existing slot/well preparation,and reduces hole size and drilled length—all to improve the economics of wellreactivation.A scenario parallel to the Poza Rica-Altamiraexists in the Chicontepec fields within the NorthRegion. In its first year of reactivation activities,this field is on track toward increased productionand profitability. This field has the largest 3Phydrocarbon reserves in Mexico—18,129 MMBOE.Within one year of applying a reactivation programto this field, 25 km of roads have been built, 12platforms set, 81 wells drilled with 58 completed,55 km of pipeline laid, and a 3.3-km pumpingnetwork installed.To reactivate the Chicontepec fields, a newapproach was taken that called forFig. 10. FloScan Imager* (FSI) System.• Appraisal of fields with seismic activities toidentify strategic wells for reentry• Development of fields via directional hole• Optimization of fields and producing wellsusing artificial lift systems and watercontrol• Secondary and tertiary recovery schemes.8

Overall, average oil production currently stands at50 bbl/d per well. Over the next 25 years, 13,372wells will be drilled with an expected oil productionbetween 600 and 700 bbl/d and gas productionexceeding 700 MMft 3 /d.CURRENT ACTIVITIES TOWARDREACTIVATION OF THE POZARICA-ALTAMIRASuccess in the Chicontepec has paved the way fornew activity in the Poza Rica-Altamira, and muchhas already been done to begin a successfulreactivation of this asset. To date, amultidisciplinary team has been formed to look atall aspects of the project. The marginal fields havebeen ranked in terms of the status of theirdevelopment, optimization of artificial lift systemsand the production infrastructure. Companieshaving experience in marginal fields have beenconsulted, along with consultants in specializedareas from academia and other corporateinstitutions. A financing plan has been puttogether, along with payment arrangements. Betterlabor relations have already been initiated.The team has also set forth a list of services thatwould optimally be contracted outside PEMEXExploration and Production. Among these areconverting wells to optimized artificial lift systems;reengineering of production installations;negotiating permits for rights of way; workovers;handling produced water; administration andmaintenance of installations and the infrastructureof production, just to name a few.CONCLUSION: FINDINGS AND CHALLENGESAHEAD FOR POZA RICA-ALTAMIRAThe Poza Rica-Altamira, like other mature fields,faces great challenges due to high productioncosts, excess personnel, low levels of financialinvestment and decreasing production. Despitethese challenges, mature fields have importantreserves, installations, opportunities, experienceand personnel skills. In addition, geologic basinsassociated with mature fields have good remainingpotential for development that could greatly affectoverall outcome.A successful strategy going forward will includepinpointing those reservoirs with remainingpotential that can produce with a margin over thecost to extract. Once identified, they must bemanaged in such a way that they are no longerlosing value. The application of fit-for-purposetechnology, reallocation of human resources totake greatest advantage of personnel talents, andallocating financial resources to cover the specialneeds of these fields will be required to increaseand prolong production from these important NorthRegion assets.ACKNOWLEDGEMENTSThe authors wish to thank PEMEX andSchlumberger for the permission and support topublish this paper.REFERENCES1. Marginal Oil and Gas: Fuel for EconomicGrowth, IOGCC, 2003.2. BP Statistical Review of World Energy, June2004.3. Antonio Narváez Ramirez, 2004 "Managementof Mature and Marginal Fields: The ChicontepecSuccess," presented at the SPE Mature FieldsForum, Denver, Colorado4. Caracterización de Yacimientos, Área Ébano-Pánuco, Veracruz, México, reporte interno dePEMEX Exploración y Producción, 1998.5. Burgos Review, Schlumberger Publication,2002.6. Satish Pai, "Lifting Our Game: Technology in aMature Fields Environment," 2004 presented atAAPG, Cancun, Mexico.Note: An asterisk throughout this documentdenotes a mark of Schlumberger.9