Intelligent Well Completions

Intelligent well completion technology gaining rapid acceptance

A quick look at the basics explains who the suppliers and buyers are, and why this technology is advancing so fast.

Perry A. Fischer, Editor

Intelligent well completion technology was developed and commercialized in the 1990s as part of the global industry trend toward improving reservoir productivity. This technology enabled the development of marginal fields by allowing flows to (in the case if injection), and from, multiple reservoirs to be controlled remotely and contained within a single well. The ability to manage reservoirs remotely also reduces potential well intervention costs.

Although most intelligent well completion systems have been installed in offshore wells, service providers have begun installing systems on land as well. Service companies have reported a greater number of repeat customers and increased demand for intelligent well completions among independent oil and gas companies. The independents have been late adopters of this technology. This trend likely reflects growing confidence in the reliability of this technology. This article is based in large part on conversations with, and the research of, Kevin Wood in Susquehanna Financial Group’s (SFG’s) Signs of Increased Confidence in Intelligent Well Completion Technology.

WHAT IS AN INTELLIGENT WELL?

It may be helpful to know the definition of an intelligent well. With only very minor variance among the various definitions, we can safely define an intelligent well as a well that is equipped with sensors/ monitoring equipment and completion components that can be remotely adjusted to optimize production. This optimization of production typically involves flow control that takes place downhole via remote control from the surface, without physical intervention.

While there are exceptions, the key components of a typical intelligent completion are: 

1. Flow control devices, which are usually hydraulically-operated internal control valves used to control flows into and out of the reservoir 
2. Feed-through isolation packers that enable hydraulic control lines to be fed through to subsurface control valves 
3. Downhole sensors, which report pressure, temperature and flowrates back to the surface 
4. Control systems, comprising hydraulic and/or electrical surface systems, used to monitor and control subsurface conditions.

THE BENEFITS

Operators evaluate intelligent completions on the basis of the value offered relative to conventional completion systems. Roughly 60% – 70% of intelligent well completions are in high-cost critical wells, where intervention costs are also high. Deepwater wells account for most of these. The remaining 30% – 40% of intelligent well systems are installed in mature oil fields to boost hydrocarbon recovery or accelerate production.

There exists considerable disagreement as to the degree of value of intelligent wells, especially how to measure it. Two recent papers, SPE 93859, Using Economic and Production Evaluation Methodologies to Expedite Commercialization of Intelligent and Multilateral Wells; and SPE 94672, Impact of Intelligent Well Systems on Total Economics of Field Developments, offer insights and methods on how to provide answers to such valuations.

Another concern that operators often cite is reliability of downhole components. This is discussed in SPE 84327, Reliability Assurance, Managing the Growth of Intelligent Completion Technology.

Intelligent well completions enable multiple reservoirs to be accessed with a single well while avoiding the common problem of cross-flow caused by different reservoir pressures. In addition, intelligent completions of injection wells enable greater control of water injection and improve the recovery of hydrocarbons from related production wells.

These completions also can result in less time to first production. Production from multiple zones historically required complicated completions with multiple packers and multiple tubing strings, assuming the wellbore could accommodate two or three tubing strings. If this was not feasible or cost-effective, then a sequencing of production was implemented, starting with the bottommost (highest-pressure), and then moving to the upper reservoirs as the lower ones deplete, to avoid cross-flow. Intelligent well completions enable the operator to alternately produce the lower and upper reservoirs, accelerating total production and increasing the Net Present Value of the well.

Finally, reduced well intervention costs can make a big difference, given the expense of rig time, especially in deepwater and subsea wells, and lost production caused by schedule delays. The ability to reconfigure wells remotely reduces the need for physical intervention.

THE MARKET FOR INTELLIGENT COMPLETIONS

Installations of intelligent well completion systems have grown at an estimated 27% compound annual growth rate over the past five years, Fig. 1. Rapid adoption of intelligent well completion technology is expected to double in 2005, from $100 million in 2004, to $200 million in 2005. SFG believes the market could grow to $600 million by 2010.

Fig. 1. The number of intelligent completion system installations.

Two trends reflect the growing confidence in this technology: 1) a shift to longer-term multiwell contracts (with deliveries out to 2010 in certain cases), and 2) greater demand for intelligent completions from independent oil and gas producers, who have been late adopters of this new technology. WellDynamics, Halliburton’s 51%-owned joint venture with Shell, has an estimated 50% share of the market. SFG estimates that Baker Hughes and Schlumberger each have a market share of 20% – 25%. BJ and Weatherford have the remainder of the market, with the latter focusing on downhole sensors, particularly fiber optic-based sensors.

Activity in the North Sea and Gulf of Mexico improved significantly in 2004, and growth is expected to accelerate in 2005. The North Sea has experienced the highest rate of market penetration (40% – 60% by our estimate), but significant opportunity exists in the Gulf of Mexico, where the rate of adoption has been slower.

WellDynamics is targeting installations on 60 wells in 2005 – twice the number it completed in 2004. This probably reflects the overall growth of the market rather than an increase in market share. Intelligent well system providers report high visibility of market demand, given the trend toward long-term multiwell contracts (e.g., 10 – 50 wells) with deliveries out to 2010 in some cases.