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Copyright Kamran Fatahi @2015

In its Outlook, the IEA expects oil and gas spending to increase
sharply, increasing by almost 50% from its average of US$678b
per year over the 20002013 period.
Industry spending will continue to be dominated by spending in
the upstream segment accounting for about 77% of total
industry spending.
Midstream or transportation-related spending, in particular for
pipelines and storage, will account for about 13% of total
spending, with cumulative natural gas transportation spending of
about US$1.9t and
oil transport spending of about US$1t over the 20142035
period.
Downstream spending will account for the remaining gas (LNG)
projects of about US$0.7t.
In total, oil-related spending will account for about 61% of total
spending, with the remaining 39% made up of natural gasrelated spending

 As seen in above Table, the typical oil and gas megaproject was very
expensive, and a great deal more expensive than planned.
It was also nearly a year late.
Worst of all, it was frequently quite disappointing in terms of production. The
failure to produce is by far the most economically damaging result.

There are three major factors that, taken

together, explain the poorer outcomes of
upstream megaprojects.
All three are manifestations of the industrys
struggle to effectively integrate the functions
that are needed to produce excellent
upstream projects.
The three factors are:
Front-End loading (FEL)
The Effects of Turnover in Project Leadership
The Drive for Speed

Determining the preferred

contracting strategy involves
many aspects:
contractor availability and
compatibility
host government position
and influence
Companys own resource
availability CHR and activity
assets
market forces
local content issues
In developing the Contract Matrix the following critical success factors need to be
considered/covered:
retention of single point responsibility for managing each contract (and contractor or partner)
the availability of suitably qualified contractors and suppliers, with acceptable quality and HSE
management systems
the ability to integrate contractors effectively into the project

Commercial Strategy includes:

how the contractor should be
remunerated by the Company
how payment and cost control
will be established
how negotiations should be
handled
The three basic methods of
contractor remuneration used in
EP are:
Lump sum
Unit rate
Reimbursable cost

Drilling operations account for over 80% of the total cost

of a well and this cost will continue to increase rapidly as
the petroleum industry moves deeper offshore to explore
additional reserves.
Very expensive day rates
Increasing concern to exceed stakeholders expectation
manage the large number of interrelated factors
influencing economic feasibility and project success

Objectives:
drilling at lowest possible costs
to safely drill
useable hole
underlined the necessity for sound project management to
ensure above goals

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Drilling operations are critical oil and gas projects

which constitutes the major cost center:
the degree of which is seriously influenced by the
number of rig days.
Often, the objective is to reduce days on location
without compromising safety of life, environment
and asset; hence the need to manage the entire
operation as a project since it has specific
beginning and end.
The end of drilling project is reached when well
objectives, as stated in the Authorization For
Expenditure (AFE), are met.

Multi Discipline teams

Geological Uncertainty
Operational Faults/Issues
Too much Dynamics in Planning/Operation
Contractual Risks
Many Stakeholders E,P,D,S, Client, PMC,
Communication Challenges, No Coordination Procedure!
Needs Collaborative Engagement
Pressure on Faster Project Completion
Program Management Issues
No Standard Training!
No Standard Drilling Policy! NISOC? NIOC-EXP? IOOC?
Different HSEQ standards!

Drilling project integration:

vertical integration (i.e. interaction between
operator and contractors)
horizontal integration (i.e. interaction among
project phases)

Source: Heriot-Watt University drilling manual)

Well
Planning
Workflow

Using this method, a dynamic well plan can be

developed which can always be updated with
current information obtained as drilling
progresses.
This scheme facilitates real-time documentation
of lessons learnt which will aid planning and
implementation of future drilling programs.
So, How to propagate the change into the drilling
program and in fact, re-plan in a timely manner?
Which components needs update?
How to communicate the change among internal
and external stakeholders?

Proactive Risk Assessment

Pay more Attention to Planning Phase
DWOP/CWOP
Pre-Drill Drilling Optimization
While-Drilling Optimization
Collaborative Environment
Interdisciplinary Synergy by Senior Experts via
DRTOC
Geosteering

Traditional drilling workflow. A linear workflow requires more people and incurs higher cost because of
inefficiency in the process. Iteration is time consuming and costly, particularly at the stage when drilling
target selection occurs. The lack of a shared digital database inhibits integration of data and
interpretations among team members. Integration, in this situation, depends on human interaction as
well as duplication of data entry efforts in incompatible databases.

Ideal drilling workflow. With team members using the same database and model of the earth, the drilling
process becomes less linear. At each point in the process, validation occurs earlier, saving time and
money. Inferior solutions are weed out early in the process. The use of real-time data allows
optimization of operations during drilling. After completion of drilling operations, results are readily
available in the database to improve subsequent operations.

Thanks to modern computerized mud logging unit at

the Wellsite, accurate, real time information is
available to everyone who needs it (tool pusher,
drilling engineer, geologist, drilling engineer, mud
engineer) through interactive workstations.
Anyone with a workstation can follow progress of
operations in real time, enabling everyone to stay
informed and to work together efficiently and in
greater safety.
Multi-reference, multi-well display capabilities mean
that data can be displayed simultaneously during
drilling or tripping, with reference to different criteria
(depth, time, lagged depth) either from the current
well or from other previously stored wells.

TEC/PKD Office
MPCL/EDS Office

Mudlogging
LWD

Internet

Rig Site Data Acquisition

Data Transmission/Replication
and Transmission
Open-hole data such as:
LLD, LLS, GR
Partners
Mud log Data such as:
Dxc, MW, ECD, ROP, RPM Service companies
in WITSML Format

Real-Time Collaboration:
Pressure Engineers+ Drilling
Optimization team+ Geoscience
Experts
1)Composite Real-time displays
2)WITSML feed to Techlog

No geologist and reservoir

engineer in the loop!
drilling engineer can play on few parameters
because of technical feasibility or availability of equipment:
drilling parameters (WOB, RPM, bit, BHA);
mud characteristics (mainly its density);
casing setting point;
any updated geological or reservoir
well path.
model which can help him to take the
best decision when speaking of the well
path. Today it is possible!

what is at stake: which parameters (geological,

petrophysical, etc.) these measurements
correspond to?
their links and dependence on the well
architecture (mud type, bit diameter, etc)
the value of the information requested, that is
often assimilated to its cost.
The consequences of E&A wells insufficiently
evaluated, as referee and controlling points of
the models, affect costs, delays, uncertainties,
and quality of the upcoming development
scenarios.

Holistic view to subsurface activities

Role of Program Management
Change in Job Description of well site
supervisors

Thanks for your attention

Questions and Answers

SHELL CASE STUDY IN AN IRAQI FIELD

Majnoon

86

Located in south-east Iraq (Basrah province)

STOIIP (estimated oil in place): 38 bln bbls*
Development and Production Service Contract (DPSC) 20 years
Contract Effective Date 1st March 2010
Shell Iraq Petroleum Development BV (45%) is the operator, with partners
Petronas Carigali Sdn. Bhd. (30%) and South Oil Company (25%), representing
the Iraqi State
Shell Iraq Petroleum Development manages all the contracts on behalf of
the Majnoon Venture
Field Development
Phase 1 - FCP (First Commercial Production) - target of estimated
175 Kbbl/d (optimise existing wells/facilities)
Post FCP Phases - Start ramp-up to plateau to increase and maintain
production

*Data source Iraqi Ministry of oil

Majnoon - Latest Project Developments

Drilling programme targeting new 15-20 wells ongoing two drilling rigs in place, a third rig
on its way.
Several production shut-down programmes as part of facility maintenance and inspection.
In addition to the Majnoon Pioneer Camp, other 9 camps (contractors) are being built. 1800
workers in the field and an estimated 1300 jobs provided to local community members to
date.
Jetty construction has concluded. This will allow the transportation of Early Production System

(EPS) equipment through the ShattAl Arab water-way, thus minimizing road transportation.
New Central Production Facility
Several Social Investment projects (SI) delivered within the areas of Education,
Health and

Capacity building.

ERW Team - Performing to World class Standards

Around 100.000 m2 cleared per day

To date more than 9.000.000 m2 cleared
Over 250 staff from 4 different contractors
Well over14000 items removed and made safe
Largest item 500 kg explosive

Metal contamination

Collection of ERW

Accumulator and Flash drum PSV platform

assembly

Metering Skid Foundation Pedestal

DS1 Bypass line installation and welding

DS1 Instrument Air Receiver installation

Piling for Train 1 skids

Piperack Module 21 lifted by 600T crane and fitted with

Module 23

Produced water tank foundation

Crude Oil buffer tank foundation

MJ-19 being prepared for the arrival of the

workover rig

Pile driving unit on location at MJ-E22 drilling pad

Pouring concrete between cellars at MJ-E20

drilling pad

Failed equipment changed on existing wells to restore

integrity

MJ-E22a-02, core 3. Top of core at surface

Rig 985

Rescue at height Emergency Response exercise (stretcher)

The first class of wells trainees start with SIPD March

2012

MJ-E22a-01 The first newly drilled & completed SIPD well

The internal target is to have more than 50% of the Wells

organization staffed by local nationals for the start of Full
Field Development (FFD) and approximately 70% in 2017
just six and half years into the project

LOCAL STAKEHOLDERS AND CSR

Hiring Procedures and Local Committee in place; approximately 1300 workers

already recruited from Majnoon field Communities

Awareness campaign at schools

in Al Nashwa and Al Dayr
communities as part of the
health prevention program

Dredging of the canal

in the Halechee village

Road safety awareness campaign

at schools in Al Nashwa and Al
Dayr communities (37 schools)Completed

Distribution of food parcels

during Ramadan - Completed.

Scholarships for young unemployed

Equipment and training in Al

Nashwa clinic (ultra sound and
ECG) - Completed