What's new in production

	Vol. 223 No. 12
ROBERT E. SNYDER, EXECUTIVE ENGINEERING EDITOR

West Texas rules. At least it did for three days, recently, in Odessa, during the Permian Basin International Oil Show. From its humble beginning in 1940, the biennial event this year featured 1,117 exhibits of “every type of oilfield equipment and service,” except, of course, offshore facilities.

One major improvement this year was enlargement of a budding technical program. This year, the Permian Basin Onshore Technology (PBOT) Conference sessions were held during two mornings. The focus of the presentations was onshore and the Permian basin.

The technical presentations were excellent and well-focused, representing a good cross-section of operators. Tuesday’s session covered: horizontal well technology / case histories; oilfield security, major operators’ perspective of the Permian basin, and four decades of energy advances by Clayton Williams, Jr. and Kevin Murphy, Asst. U.S. Secretary of Energy, Environment and Materials. On Wednesday, three companies overviewed new management / monitoring technologies; infill drilling case studies were reviewed; and four independents gave their perspective of the Permian basin. The keynote address was given by Texas Railroad Commissioner, Michael Williams.

Expansion of the technology presentations is a major improvement to the show and a welcome break in covering the exhibits. Go there in 2004. It’s a good show, the barbeque is great, and traffic is a far cry from Rio de Janeiro.

Deepwater field development growth. Douglas-Westwood Ltd. says deepwater field development expenditure is forecast to continue its strong growth trend, doubling over the next five years. In its latest edition of The World Deepwater Report, the firm expects nearly $58 billion to be spent over the next five years in developing deepwater fields. “West Africa will lead the pack, attracting 38% of the expenditure, followed by the Gulf of Mexico with 32%, and Brazil with 23%,” the company says.

The report is based on analysis of data in the Infield Systems database. The underlying data shows that oil/gas companies are considering more than 140 deepwater field developments over the period. Some projects are tiny, single-well tiebacks, many of which “will not go ahead.” Nevertheless, the outcome is an expected 32 Bbbl equivalent of deepwater reserves to come onstream, compared with the 10 Bboe brought onstream over the previous five years. Specifically, some $21 billion is likely to be spent on deepwater floating production systems, $18 billion on drilling / completing subsea wells and $11 billion on flowlines and control lines, while subsea hardware and surface-completed wells could account for a further $8 billion.

And what could derail these oil company plans? Westwood’s main concerns are limited human resources and contractors’ low profitability. “More needs to be done to address the problem, perhaps by finding cleverer ways of using the huge potential skill pools of the developing world,” the firm adds. A second point is that risk/reward for the contractor community is out of balance. The present EPIC contracting system has pushed too much risk onto contractors, and new working methods must be developed. The World Deepwater Report 2003 – 2007 is available from Douglas-Westwood Ltd, www.d-w1.com.

U.S. gas production down. In early November, Lehman Brothers updated its 43-company natural gas production survey with 38 companies that reported third-quarter (Q3) volumes. With 96% of its survey complete, the group believes Q3 2001 production fell 1.2% from Q2, and 5.4% from Q3 2001 levels. The firm maintains its forecast for a 5 – 6% decline in U.S. production in 2002. Yearly annual production volume changes have been: 1999 (-2.0%), 2000 (-1.3%), and 2001 (+) 0.7%). Canadian gas production also decreased 2.2% in Q3, vs. Q2, and 2.5% from a year ago. Overall, Lehman estimates that North American gas production for Q3 2002 will drop 1.5% from Q2, and 4.4% from Q3 2001 levels.

Industry training opportunities. Four organizations have announced two cooperatives offering energy industry training. Starting January 2003, Petroleum Economist Training (PET) and the Institute of Petroleum (IP) will join forces to provide comprehensive training for the energy industry. Joint courses will be run in areas as diverse as energy trading, supply logistics and fundamentals of the energy industry. PET was formed 10 years ago and is one of the leading providers. The IP has a long history of providing professional training to the oil industry. Combining the two organizations will increase the breadth of topics covered and the number of training places, allowing delegates access to one of the best faculties for continuing professional development.

PET says it has been relied upon by senior decision-makers for its coverage of the world energy market for nearly 70 years. IP has been at the core of the oil industry for nearly 100 years. For further information, contact PET’s Crispian McCredie, mccredie@petroleum-economist.com; or IT’s Lawrence Slade, lslade@petroleum.co.uk

Another training group combines the Network of Excellence in Training (NexT) and Subsurface Consultants & Associates LLC (SCA). The group has announced the formation of a global alliance in education, The Upstream Institute (TUI). The new training program will initially be offered in Houston, New Orleans and Calgary, beginning in 2003. It will offer programs custom-designed to address unique geoscience / engineering challenges around the world. Client companies will be able to actively participate in co-designing training programs. TUI’s curriculum will include integrated E&P training in geoscience, petroleum engineering and petroleum business management. Training will address topics essential for all levels, from the new hire to the experienced professional. NexT is a for-profit, joint venture, limited liability company with four members: Heriot-Watt University; Texas A&M University; the University of Oklahoma; and Schlumberger Oilfield Services. SCA, a worldwide leader in upstream consulting / training has extensive expertise in a broad range of service areas, including exploration, petroleum and reservoir engineering. For information on The Upstream Institute, visit the web at www.theupstreaminstitute.com.