Acknowledgements

First of all we would like to express our gratitude to all those who has
contributed in any way for the success of this Field Development Project
(FDP). We take immense pleasure in thanking Dr. Ismail B. Mohd Saaid
and Dr. Khalik B. Mohd Sabil for being very helpful in giving us assistance,
advices, and supervision. We would also like to express our deep sense of
gratitude to the coordinators of this project; Pn. Mazlin Idress and En.
Iskandar B Dzulkarnain. The supervision and support that they gave help
the progression and smoothness of this FDP.
We were deeply indebted to A.P. Dr. Swapan Kumar Bhattacharya, Dr. Ali
Fikret Mangi, Dr. Zuhar Zahir B. Tuan Harith, Dr. Askury B. Abd Kadir,
Mr. Mohammad Amin Shoushtari, Ms. Raja Rajeswary Suppiah, M. Faizal
Sedaralit (PCSB), Pn. Mazrah Bt. Ahmad (PCSB), En. Ramlan Latif
(PCSB) and En. Rozmee Ismail (PCSB) for their guidance and useful
suggestions which helped us in completing this project in time.
Words are inadequate in offering our thanks to all our lecturers both from
Heriot-Watt University and Universiti Teknologi Petronas (UTP) who had
taught us in our previous modules and put us in prepared theoretically for
this project.
Finally, yet importantly, we would like to express our heartfelt thanks to our
beloved family for their blessings, our friends/classmates for their help and
wishes for the successful completion of this project.

Table of Contents
1 Executive Summary ................................................................................................ 1
2 Introduction ............................................................................................................. 2
2.1 Background of Study ...................................................................................................... 2
2.2 Problem Statement .......................................................................................................... 3
2.3 Objective and Scope of Study ........................................................................................ 3
2.3.1 Objective .............................................................................................................. 3
2.3.2 Scope of Study ..................................................................................................... 3
2.4 The Team ........................................................................................................................ 4
2.4.1 Team Members .................................................................................................... 4
2.4.2 Organisation and Structure .................................................................................. 4
2.4.3 Project Planning ................................................................................................... 5

3 Geology ..................................................................................................................... 8
3.1 Introduction .................................................................................................................... 8
3.2 History and Geological Description of Sabah Basin ...................................................... 8
3.2.1 Sabah Basin .......................................................................................................... 8
3.2.2 Southern Inboard Belt ........................................................................................ 10
3.3 Reservoir Geology ........................................................................................................ 13
3.3.1 Depositional Environment ................................................................................. 13
3.3.2 Lithology Descriptions....................................................................................... 15
3.3.3 Stratigraphic Correlation .................................................................................... 17
3.3.4 Petroleum System .............................................................................................. 19
3.4 Calculations of Gross Rock Volume ............................................................................ 20
3.4.1 Planimeter Method ............................................................................................. 21
3.5 Conclusion .................................................................................................................... 24
3.6 References .................................................................................................................... 24

4 Formation Evaluation ........................................................................................... 25

4.1 Introduction .................................................................................................................. 25
4.1.1 Objective ............................................................................................................ 25
4.1.2 Data .................................................................................................................... 26
4.2 Petrophysical Analysis ................................................................................................. 27
4.2.1 Gelama Merah-1 ................................................................................................ 27
4.2.2 Gelama Merah-1 ST1 ......................................................................................... 28

ii

4.3 Fluid Analysis ............................................................................................................... 30

4.3.1 Fluid Contacts .................................................................................................... 30
4.3.2 Fluid Types ........................................................................................................ 33
4.4 Properties Calculation ................................................................................................... 33
4.4.1 Volume of Shale ................................................................................................ 33
4.4.2 Net-to-Gross ....................................................................................................... 34
4.4.3 Porosity .............................................................................................................. 35
4.4.4 Water Saturation ................................................................................................ 37
4.5 Core Analysis ............................................................................................................... 38
4.5.1 Poro-Perm Relationship ..................................................................................... 38
4.5.2 Capillary Pressure .............................................................................................. 40
4.5.3 Buckley-Leverett J-Function ............................................................................. 40
4.6 References .................................................................................................................... 41

5 Volumetric Estimation .......................................................................................... 42

5.1 Introduction .................................................................................................................. 42
5.2 Deterministic Methods ................................................................................................. 42
5.2.1 Planimeter .......................................................................................................... 43
5.2.2 Petrel Parameters ............................................................................................... 44
5.2.3 STOIIP Comparison........................................................................................... 44
5.3 Probabilistic Method ..................................................................................................... 45
5.3.1 Monte Carlo Method .......................................................................................... 45
5.3.2 Probabilistic STOIIP and GIIP .......................................................................... 46
5.4 Sensitivity Analysis ...................................................................................................... 47
5.5 Uncertainties ................................................................................................................. 48
5.6 Conclusion .................................................................................................................... 49

6 Reservoir Engineering .......................................................................................... 50

6.1 Introduction .................................................................................................................. 50
6.2 Reservoir Data Analysis ............................................................................................... 51
6.2.1 Reservoir Temperature....................................................................................... 51
6.2.2 Reservoir Pressure ............................................................................................. 51
6.3 Rock Physics Properties ............................................................................................... 52
6.3.1 Porosity-Permeability Relationship ................................................................... 52
6.3.2 Capillary Pressure .............................................................................................. 54
6.3.3 Relative Permeability ......................................................................................... 58
6.3.4 Rock Compressibility......................................................................................... 63
6.4 Reservoir Fluid ............................................................................................................. 63

iii

6.5 Well Test Analysis ........................................................................................................ 67

6.6 Reservoir Simulation Study .......................................................................................... 68
6.6.1 Preliminary Studies of Reservoir Drive Mechanisms ........................................ 69
6.6.2 3D Geological Static Model Export ................................................................... 70
6.6.3 Simulator Data Input .......................................................................................... 71
6.6.4 Model Initialization ............................................................................................ 72
6.6.5 Operating Constraints ........................................................................................ 72
6.6.6 Simulation Studies ............................................................................................. 73
6.6.7 Reservoir Management Plan .............................................................................. 83
6.6.8 Reservoir Surveillance Plan ............................................................................... 84
6.6.9 Considerations for Enhanced oil recovery ......................................................... 85
6.6.10 Uncertainty Analysis .......................................................................................... 86
6.7 References .................................................................................................................... 87

7 Drilling Engineering.............................................................................................. 88
7.1 Introduction and Objectives .......................................................................................... 88
7.2 Drilling History ............................................................................................................. 89
7.3 Drilling Targets ............................................................................................................. 92
7.4 Platform Location ......................................................................................................... 94
7.5 Well Trajectories .......................................................................................................... 97
7.6 Rig Selection ............................................................................................................... 101
7.7 Available Well Configuration .................................................................................... 103
7.8 Drillbit Selection ......................................................................................................... 104
7.9 Drilling Fluid .............................................................................................................. 107
7.9.1 Pressure Profiles Considerations...................................................................... 109
7.10 Casing Design ........................................................................................................... 109
7.10.1 Casing Cementation Programme ..................................................................... 113
7.11 Logging Programme ................................................................................................. 115
7.12 Potential Drilling Hazards and Mitigations .............................................................. 116
7.12.1 Shallow Gas ..................................................................................................... 116
7.12.2 Unconsolidated Sand problems/Stuck pipes/ wellbore stability ...................... 117
7.12.3 Lost Circulation ............................................................................................... 117
7.12.4 Shale Instability ............................................................................................... 118
7.12.5 Presence of CO2, H2S or Hydrocarbon Gases .................................................. 118
7.12.6 Presence of Faults ............................................................................................ 119
7.12.7 Abnormal Pressures ......................................................................................... 119
7.12.8 Possibility of any transmission line or gas lines .............................................. 119

iv

7.13 Well Control ............................................................................................................. 120

7.13.1 Blow-Out Preventer (BOP) Configuration ...................................................... 120
7.14 BHA Performance Considerations ........................................................................... 121
7.15 Drilling Time Estimates ............................................................................................ 121
7.16 Costs Estimates ......................................................................................................... 124
7.17 Drilling Optimizations and Sustainability ................................................................ 125
7.17.1 Installation of Conductors ................................................................................ 125
7.17.2 Casing While Drilling ...................................................................................... 126
7.17.3 Monitoring Drilling Performances ................................................................... 126
7.18 References ................................................................................................................ 126

8 Production Technology ....................................................................................... 128

8.1 Introduction ................................................................................................................ 128
8.1.1 Objectives ........................................................................................................ 128
8.2 Well Performance Prediction ...................................................................................... 129
8.2.1 Base Case Model.............................................................................................. 129
8.2.2 PVT Correlation Matching .............................................................................. 129
8.2.3 Tubing Size Optimisation ................................................................................ 130
8.2.4 Well Performance Sensitivity Analysis ........................................................... 133
8.3 Artificial Lift Requirement ......................................................................................... 134
8.3.1 Advantages and Disadvantages of Major Artificial Lift Systems ................... 134
8.3.2 Artificial Lift Selection Criteria ....................................................................... 134
8.3.3 Gas Lift Sensitivity Analysis ........................................................................... 135
8.4 Sand Control Requirement ......................................................................................... 137
8.4.1 Sand Failure Prediction .................................................................................... 137
8.4.2 Sonic Transit Time and Depth Relationship .................................................... 138
8.4.3 Geological Description of Formations ............................................................. 138
8.4.4 Risk Regional Analysis .................................................................................... 138
8.4.5 Advantages and Disadvantages of Sand Control Method................................ 138
8.4.6 Sand Control Criteria ....................................................................................... 139
8.5 Well Completion Design ............................................................................................ 140
8.5.1 Wellhead / X-mas Tree .................................................................................... 142
8.5.2 Material Selection ............................................................................................ 143
8.6 Production Chemistry ................................................................................................. 144
8.6.1 Wax Deposition ............................................................................................... 145
8.6.2 Corrosion.......................................................................................................... 145
8.6.3 Scale Formation ............................................................................................... 145

8.6.4 Emulsion formation ......................................................................................... 145

8.7 Well Unloading Philosophy ........................................................................................ 146
8.8 Well Surveillance Philosophy .................................................................................... 147
8.8.1 Permanent Downhole Gauge System (PDGS) ................................................. 147
8.8.2 Inflow Control Device ..................................................................................... 147
8.9 References .................................................................................................................. 148

9 Facilities Engineering.......................................................................................... 150

9.1 Introduction ................................................................................................................ 150
9.2 Design Basis and Philosophy ..................................................................................... 150
9.2.1 Design Basis..................................................................................................... 150
9.2.2 General design information.............................................................................. 151
9.2.3 Design Philosophy ........................................................................................... 153
9.3 Development Concept and Screening Process ........................................................... 153
9.4 Gelama Merah Facility Selection ............................................................................... 155
9.4.1 Description of Selected Option ........................................................................ 155
9.4.2 Process Flow Descriptions ............................................................................... 156
9.4.3 Description of Substructure and Topside ......................................................... 156
9.4.4 Description of Surface Facilities and Equipment ............................................ 157
9.5 Pipelines and Host Tie-ins to Existing Facilities ........................................................ 160
9.5.1 Pipelines ........................................................................................................... 160
9.5.2 Hoist Tie-ins..................................................................................................... 162
9.6 Facilities CAPEX Estimation and Project Schedule .................................................. 162
9.6.1 Facilities CAPEX Estimation ......................................................................... 162
9.6.2 Project Schedule............................................................................................... 162
9.7 Operation and Maintenance Philosophy ..................................................................... 163
9.7.1 Operation Philosophy....................................................................................... 163
9.8 Abandonment/Decommissioning ............................................................................... 164
9.9 References .................................................................................................................. 165

10 Economics .......................................................................................................... 166

10.1 Introduction .............................................................................................................. 166
10.2 Objectives ................................................................................................................. 166
10.3 Field Summary ......................................................................................................... 167
10.4 Fiscal Term ............................................................................................................... 167
10.4.1 Production Sharing Contract (PSC) ................................................................. 167
10.5 Economic Assumptions ............................................................................................ 169
10.6 Development Options ............................................................................................... 172

vi

10.6.1 Economic Analysis Results.............................................................................. 172

10.7 Production Profiles ................................................................................................... 173
10.7.1 Option A: 9000 bbl/d for Two (2) Years ......................................................... 174
10.7.2 Option B: 7000 bbl/d for Two (2) Years ......................................................... 175
10.7.3 Option C: 6000 bbl/d ....................................................................................... 176
10.7.4 Economic Analysis Results.............................................................................. 177
10.7.5 Net Cash Flow Profile ...................................................................................... 179
10.7.6 Revenue Split ................................................................................................... 180
10.8 Sensitivity Analysis .................................................................................................. 181
10.9 Conclusion ................................................................................................................ 183
10.10 References .............................................................................................................. 183

11 HSE and Sustainability Development ............................................................. 185

11.1 Introduction .............................................................................................................. 185
11.2 HSE Management Philosophy .................................................................................. 185
11.2.1 HSE Management Policy ................................................................................. 185
11.2.2 Risk Acceptance Criteria ................................................................................. 185
11.3 HSE Management System ........................................................................................ 186
11.3.1 Gelama Merah HSE Objectives ....................................................................... 187
11.3.2 HSE Hold Points .............................................................................................. 188
11.3.3 HSE Responsibilities ....................................................................................... 188
11.4 Occupational Health and Safety Issues..................................................................... 188
11.5 Safety System ........................................................................................................... 189
11.5.1 Safety Shutdown System ................................................................................. 189
11.5.2 Flare and Emergency Relief System ................................................................ 189
11.5.3 Emergency Evacuation Plan ............................................................................ 190
11.6 Environmental Obligations ....................................................................................... 190
11.6.1 Environmental Impact Asssessment (EIA) ...................................................... 190
11.7 Environmental Concerns .......................................................................................... 190
11.7.1 Upstream Activities ......................................................................................... 191
11.7.2 Downstream Activities..................................................................................... 192
11.8 Quality Assurance ..................................................................................................... 194
11.9 Abandonment/Decommissioning ............................................................................. 194
11.10 Sustainable Development ....................................................................................... 195
11.10.1 Sustaining Development in Gelama Merah Field ............................................ 196
11.11 References .............................................................................................................. 197

vii

List of Figures
Figure 2.1: Location of Gelama Merah field ............................................................... 2
Figure 2.2: Organisation and structure of the team ...................................................... 5
Figure 3.1: Structural elements of Sabah Basin, showing basin boundaries and
tectonostratigraphic provinces ............................................................................. 9
Figure 3.2: Regional cross-section of the Sabah Basin showing the Southern Inboard
Belt and East Baram Delta ................................................................................... 9
Figure 3.3: Map of Southern Inboard Belt in Sabah Basin ........................................ 11
Figure 3.4: Palaeogeographic reconstruction of the Sabah Basin .............................. 12
Figure 3.5: West-East cross-section of Gelama Merah field ..................................... 13
Figure 3.6: Tectonic setting of Sabah Basin .............................................................. 15
Figure 3.7: Lithology correlation between Gelama Merah-1 and Gelama Merah-1
ST1 ..................................................................................................................... 19
Figure 3.8: A Planimeter tool ..................................................................................... 21
Figure 3.9: Structural map for Unc/U3.2 layer .......................................................... 22
Figure 3.10: Plot of contour areas with respect to depth............................................ 23
Figure 4.1: GOC and OWC determined from the Neutron-Density and Resistivity
logs for Gelama Merah-1 ................................................................................... 30
Figure 4.2: GOC and OWC determined from the Neutron-Density and Resistivity
logs for Gelama Merah-1 ST1............................................................................ 31
Figure 4.3: Fluid contacts obtained from MDT data.................................................. 32
Figure 4.4: Finding Vsh Cut-off from GR-Density crossplot .................................... 34
Figure 4.5: Definitions of Gross Sand, Net Sand and Net Pay (Petroleum Geoscience,
Heriot-Watt University) ..................................................................................... 35
Figure 4.6: Poro-Perm relationship to obtain Porosity Cut-off when k = 0.1 mD ..... 36
Figure 4.7: Obtaining water saturation cut-off from core data .................................. 38
Figure 4.8: Poro-Perm relationship showing three facies in Gelama Merah reservoir
............................................................................................................................ 39
Figure 4.9: Capillary pressure as a function of water saturation for the 10 core
samples ............................................................................................................... 40
Figure 4.10: J-function of Gelama Merah field ......................................................... 41
Figure 5.1: Probability and Cumulative Distribution Functions of STOIIP .............. 46

Figure 5.2: Probability and Cumulative Distribution Functions for GIIP ................. 47
Figure 5.3: Sensitivity Analysis for STOIIP .............................................................. 48
Figure 6.1: Gelama Merah reservoir temperature profile .......................................... 51
Figure 6.2: Gelama Merah reservoir pressure profile ................................................ 52
Figure 6.3: Poro-Perm relationship ............................................................................ 53
Figure 6.4: Capillary Pressure (Pc) vs Water Saturation (Sw) for every sample ....... 54
Figure 6.5: Capillary Pressure (Pc) (Oil-Gas) vs Water Saturation (Sw) .................. 56
Figure 6.6: Capillary Pressure (Pc) (Oil-Water) vs Water Saturation (Sw) ............... 56
Figure 6.7: J-Function vs Pseudo Wetting Phase Saturation ..................................... 58
Figure 6.8: End Point correlation vs Log Permeability.............................................. 59
Figure 6.9: End Point correlation vs Porosity Fraction .............................................. 60
Figure 6.10: Oil-Water Relative Permeability curve for Facies 3 (Good Rock) ....... 61
Figure 6.11: Oil-Water Relative Permeability curve for Facies 2 (Moderate Rock) . 61
Figure 6.12: Gas-Oil Relative Permeability curve for Facies 3 (Good rock) ............ 62
Figure 6.13: Gas-Oil Relative Permeability curve for Facies 2 (Moderate rock) ...... 62
Figure 6.14: Gas-Oil Relative Permeability curve for Facies 1 (Poor rock) .............. 63
Figure 6.15: Phase diagram of Gelama Merah reservoir fluid ................................... 64
Figure 6.16: PVTi plot for Oil Relative Volume Factor ............................................ 65
Figure 6.17: PVTi plot for Gas Oil Ratio ................................................................... 65
Figure 6.18: PVTi plot for Gas Formation Volume Factor ........................................ 66
Figure 6.19: Drive mechanism of Gelama Merah ...................................................... 70
Figure 6.20: 3D Geological Static model ................................................................... 71
Figure 6.21: FOPR (bbl/day) & RF vs Time (yr) for Horizontal and Vertical Wells 75
Figure 6.22: FOPT (bbl) vs Time (yr) for Horizontal and Vertical Wells ................. 76
Figure 6.23: FOPR (bbl/day) & RF vs Time (yr) for 7, 8 and 9 Horizontal Wells .... 77
Figure 6.24: FOPR (bbl/day) & RF vs Time (yr) for GI, WI and ND ....................... 79
Figure 6.25: FOPR (bbl/day) & RF vs Time (yr) for 7000 and 9000 bbl/day ........... 80
Figure 6.26: FPR (psia) vs Time (yr) for No Limit and Limit of 30MMSCF/day .... 81
Figure 6.27: FOPR (bbl/day) & RF vs Time (yr) for 9000 bbl/day ........................... 82
Figure 7.1: Diagram showing all the target locations with the exploration wells in
place ................................................................................................................... 93
Figure 7.2: Possible location to place the rig (highlighted orange) ........................... 95
Figure 7.3: Subdividing the area for rig placement.................................................... 96

xi

Figure 7.4: Highlighted area showing the window zone which could be used to drill
the targets ........................................................................................................... 98
Figure 7.5: Top view of the trajectories ..................................................................... 98
Figure 7.6: Side view of the trajectories .................................................................... 99
Figure 7.7: Top view showing trajectories with the exploration wells ...................... 99
Figure 7.8 Side view showing the exploration wells and the producing wells ........ 100
Figure 7.9: Available well configuration ................................................................. 104
Figure 8.1: Well completion diagram from GMP-1................................................. 141
Figure 9.1: Schematic diagram of Gelama Merah conceptual facility design ......... 155
Figure 9.2: Conceptual Process Flow Diagram design ............................................ 156
Figure 9.3: Sensitivity analysis for pipeline diameter .............................................. 160
Figure 9.4: Sensitivity analysis for pump power and efficiency .............................. 161
Figure 9.5: Project Schedule of Gelama Merah field ............................................... 163
Figure 10.1: Gelama Merah Project Schedule ......................................................... 167
Figure 10.2: PSC Concept ........................................................................................ 169
Figure 10.3: Historical Brent Oil Price from 1947 - October 2011 ......................... 170
Figure 10.4: Production Profile of Option A (9000 bbl/d)....................................... 175
Figure 10.5: Production Profile for Option B (7000 bbl/d) ..................................... 176
Figure 10.6: Production Profile for Option C (6000 bbl/d) ..................................... 177
Figure 10.7: Net Cash Flow Profile for Option A (RT US$ 2012) .......................... 179
Figure 10.8: IRR Estimate........................................................................................ 180
Figure 10.9: Option A NCF in Money of the Day and Real Terms 2012 ................ 180
Figure 10.10: Revenue Split at NPV [0.10] (RT US$ 2012) ................................... 181
Figure 10.11: Sensitivity Analysis for Option A ..................................................... 182
Figure 11.1: PETRONAS HSE Management System ............................................. 186

xii

List of Tables
Table 2.1: Important dates during the course of the project ........................................ 6
Table 4.1: Logging program for Gelama Merah-1 and Gelama Merah-1 ST1 .......... 26
Table 4.2: Summary of cores with shows .................................................................. 27
Table 4.3: Comparison of fluid contact depths between GM-1 and GM-1 ST1 wells
............................................................................................................................ 31
Table 4.4: Comparison of fluid contacts between logs and MDT tool ...................... 32
Table 4.5: Fluid type identification from the MDT plot ............................................ 33
Table 4.6: Facies group according to their range of permeabilities ........................... 39
Table 5.1: Boi and Bgi obtained from PVT data ....................................................... 43
Table 5.2: Gas Initially In-Place calculated for each sand unit.................................. 43
Table 5.3: Stock Tank Oil Initially In-Place calculated for each sand unit ............... 44
Table 5.4: Comparison of STOIIP between two deterministic methods ................... 44
Table 5.5: Probabilistic STOIIP and GIIP values ...................................................... 47
Table 5.6: Reservoir parameters and their controlling factors on uncertainties ........ 48
Table 6.1: Group of facies according to their permeabilities ..................................... 53
Table 6.2: Laboratory-Reservoir fluid properties for capillary conversion ............... 55
Table 6.3: End Point correlation ................................................................................ 60
Table 6.4: Fluid properties in Gelama Merah reservoir ............................................. 66
Table 6.5: Oil PVT properties .................................................................................... 66
Table 6.6: Gas PVT properties ................................................................................... 67
Table 6.7: Fluid densities at surface conditions ......................................................... 67
Table 6.8: Summary of rock facies ............................................................................ 72
Table 6.9: Base case results ....................................................................................... 74
Table 6.10: Simulation results on production and recovery of different depletion
cases ................................................................................................................... 79
Table 6.11: Production Profile for Gelama Merah..................................................... 82
Table 7.1: Summary of previous well data ................................................................ 89
Table 7.2: Co-ordinates of the targets to be drilled .................................................... 92
Table 7.3: Summary of consequence of placing rig in each section .......................... 96
Table 7.4: Summary of the producer wells to be drilled .......................................... 100
Table 7.5: Rig Equipment ........................................................................................ 102

xv

Table 7.6: Rig Construction Details ......................................................................... 102

Table 7.7: Summary of the drillbits used when drilling the GM-1 .......................... 105
Table 7.8: Summary of the drillbits used when drilling the GM-1 ST1 .................. 106
Table 7.9: Mud types used during drilling the exploration wells ............................ 107
Table 7.10: Mud design to be used during drilling the Gelama Merah Producer wells
.......................................................................................................................... 108
Table 7.11: Summary of casing shoe depths ............................................................ 109
Table 7.12: Kick tolerance used in designing the casing shoes ............................... 110
Table 7.13: Design factors used in the casing designs ............................................. 110
Table 7.14: Casing material selection ...................................................................... 112
Table 7.15: Cementing summary for all the producing wells 1 to 4 ........................ 114
Table 7.16: Cementing summary for all the producing wells 5 to 8 ........................ 114
Table 7.17: Logging summary for the field development project ........................... 115
Table 7.18: BOP configuration from the exploration wells ..................................... 120
Table 7.19: Template for drilling a producer well ................................................... 122
Table 7.20: Showing the duration of drilling for each of the producer well ............ 122
Table 7.21: Summarised table for the combined drilling operation estimate .......... 123
Table 7.22: Tentative drilling operation dates ......................................................... 124
Table 7.23: Total drilling cost estimate using Que$tor software ............................. 124
Table 7.24: Estimated cost for each well ................................................................. 125
Table 8.1: The black oil correlation used to match the PVT data (Velarde, 1996) . 129
Table 8.2: Grouping of the wells according to their plateau production rate and
identifying the target oil rate for simulation purposes ..................................... 131
Table 8.3: The optimum tubing size for Gelama Merah Producers ......................... 131
Table 8.4: The result after running sensitivity analysis on water cut and layer
pressure ............................................................................................................ 133
Table 8.5: The production rate without GLI and with GLI at 50% water cut for GMP1 ........................................................................................................................ 136
Table 8.6: Summary of the optimum gas injection rate and the water cut when gas lift
injection is introduced ...................................................................................... 136
Table 8.7: Summary of the well completion design for the Gelama Merah Producers
.......................................................................................................................... 143
Table 9.1: Physical properties of Gelama Merah reservoir fluid ............................. 152
Table 9.2: Reserves and Development data of Gelama Merah ................................ 152
xvi

Table 9.3: CAPEX, OPEX and Abandonment Costs for facilities options ............. 154
Table 10.1: Terms and Details of PSC for Gelama Merah field .............................. 168
Table 10.2: Range of Brent Oil Price (2006-2016) .................................................. 170
Table 10.3: Economic Results for Different Development Options ........................ 172
Table 10.4: Production Profile of Option A (9000 bbl/d) ........................................ 174
Table 10.5: Production Profile for Option B (7000 bbl/d) ....................................... 175
Table 10.6: Production Profile for Option C (6000 bbl/d) ....................................... 176
Table 10.7: Economic Results for Different Plateau Rates...................................... 178
Table 10.8: Sensitivity Parameters of Option A ...................................................... 182

xvii

1 Executive Summary
Gelama Merah field is located in the offshore Sabah Basin in Block SB-18-12 which
is 130 km southwest of Kota Kinabalu, 43 km northwest of Labuan and
approximately 10.5 km east of Samarang Complex. Sabah Basin is a shallow marine
environment with water depth of 42.8 m. Two exploration wells were drilled in this
field; Gelama Merah-1, a vertical exploration well and Gelama Merah-1 ST-1, a
sidetracked well. Nine sand units interbedded with thin shale layers were discovered.
Presence of hydrocarbon was successfully encountered at the stage IVC middle
unconformity sand and in the updip position of unit 9. Also resulting from drilling
the exploration wells information was gathered to proceed with the Field
Development Plan. Objective of this project is to carry out a technical and economic
analysis of the Gelama Merah field, which leads to the production of a development
plan of the field using the latest technology, economics, environmental and political
conditions. This project is divided into several phases namely; Geology &
Geophysics, Formation Evaluation, Reservoir Engineering, Drilling Engineering,
Production Technology, Surface facilities and Economics. From the Geology &
Geophysics, the main lithology found is sandstone interbedded with claystone. For
the Formation Evaluation phase, the gas oil contact and the oil water contact from
the petrophysical logs is found to be 1467 m-TVDSS and 1509.3 m-TVDSS
respectively. The volumetric estimation is determined using deterministic and
probabilistic method. The Stock Tank Oil Initially In Place is found to be ranging
from 73 MMstb to 105 MMstb with 88 MMstb to be the most likely value. Same for
Gas Initially In Place, ranging from 78 BScf to 112 Bscf with 94 Bscf to be the most
likely value. From Reservoir Engineering, the best option to develop Gelama Merah
field is by drilling 8 horizontal production wells, producing for 15 years. For the
economics, the Maximum Capital Outlay is USD 82.0 Million with a Net Present
Value of USD 15.5 Million at 10% discount rate and Internal Rate of Return at 19%,
the breakeven is estimated to be 2.9 years.

2 Introduction
2.1 Background of Study
Gelama Merah field is located in South China Sea, Sabah Basin with average water
depth of 42.8 m and is in Block SB-18-12 offshore Sabah in Malaysia with the
latitude of 5 33 49.98 N and longitude of 114 59 6.34 E (Figure 2.1). It is
located 130 km southwest of Kota Kinabalu and 43 km northwest of Labuan and
approximately 10.5 km east of the Samarang Complex.
The only major fault occurrence in the region is the Morris Fault which is 1.5 km
from the Gelama Merah field. Reservoirs are characterized by interbedded sand,
shale coarsening upward sequence. The sedimentological analysis confirms a
shallow marine, storm and wave influence settings.

Figure 2.1: Location of Gelama Merah field

Two wells were drilled in the Gelama Merah Field. The first well namely Gelama
Merah-1 (GM-1) was drilled vertically from 70.1 m to 1636 m from the Kelly
bushing TVDDF. The presence of a hydrocarbon reservoir was successfully
encountered at the Stage IVC middle unconformity sand. The second well is Gelama

Merah-1 ST1 (GM-1 ST-1) which was sidetracked to find oil in the up-dip position
of Unit 9. The estimated speculative recovery of oil is 5mmbls.
A field development plan is required to be carried out to produce the oil and gas from
this field. This study will help in providing the details to optimally develop the
Gelama Merah field.

2.2 Problem Statement

We have been given a field, Gelama Merah and the Management would like to know
whether profitable development of this field can be achieved. If so, what are the most
likely reserves?
If the development plan is possible, how should it be adopted? What are the risks and
uncertainties associated and how would this lack of information affect the decisionmaking? What further information would be needed to reduce the risk?

2.3 Objective and Scope of Study

2.3.1

Objective

The objective of this project is, therefore, to carry out a technical and economic
analysis of the Gelama Merah field, which leads to the production of a development
plan of the field using the latest technology, economics, environmental and political
conditions.
2.3.2

Scope of Study

In the Geology (Chapter 3) section, we are looking at the top structure of the
reservoir, understanding the lithology based on the core data. With this information,
we will come up with a reservoir description based on the field given. Log analysis
will be carried out in Chapter 4 during the Petrophysical evaluation in order to obtain
reservoir parameters such as porosity, water saturation, permeability and so on, thus
to be used in reserves estimation and volumetric calculations of hydrocarbons.

In the Reservoir Engineering section, the scope of study will be Well Test Analysis,
PVT data and recovery method, while Drilling Engineering involves the preparation
of drilling schedule, directional planning, casing design and mud programme.
Production Technology section focuses on production plan as well as reservoir
management and monitoring. It also include the design of surface facilities.
Economic evaluation handles the cost estimates and cash flows of the project. It will
also look into IRR and sensitivity analysis. Risk and Uncertainties section
incorporates how insufficient information and uncertainties may lead to risks and
how we will address them. We will also look at the impact of this projects activities
on the environment, such as decommissioning, and also the sustainability of the
development in the Health, Safety and Environment section.

2.4 The Team

2.4.1

Team Members

The Gelama Merah field development project is participated by:

1. Mohammad Adi Aiman B. Hj. Sarbini (Team Leader)
2. Mohamed Wuroh Timbo
3. Hasnain Ali Asfak Hussain
4. Hj. Muhammad Zulfadhli Putra B. Hj. Yaakub
5. Siti Mariam Annuar
6. Djamalov Shukhrat Rustamovich
7. Lydia Bt. Mohd Yusof

2.4.2

Organisation and Structure

The organisation of the team is shown in Figure 2.2.

Field Development
Project Team
Geology
Mohamed Timbo

Formation
Evaluation
Adi Aiman

Reservoir
Engineering
Hasnain Ali

Drilling
Engineering
Zulfadhli Putra

Production
Technology
Siti Mariam

Facilities & HSSE

Shukhrat

Economics
Lydia

Hasnain Ali

Zulfadhli Putra

Adi Aiman

Hasnain Ali

Shukhrat

Mohamed Timbo

Adi Aiman

Siti Mariam

Lydia

Mohamed Timbo

Shukhrat

Lydia

Adi Aiman

Siti Mariam

Figure 2.2: Organisation and structure of the team

2.4.3

Project Planning

This Field Development Project spans over four months, commencing from 1
November 2011 to 29 February 2012. The project is divided into three phases. Phase
1 is the Geology and Geoscience period where both geologist and petrophysicist will
be involved extensively. The next stage, Phase 2, is more on the reservoir
engineering and simulation. The last Phase 3 is the development stage, where drilling
engineer, production technologist and facility engineer as well as the economist will
be involved. See Figure 2.3 for the full project planning.
There are several milestones during the duration of the project, which are
summarised in Table 2.1 below.

Table 2.1: Important dates during the course of the project

Milestones

Dates

FDP Kick-off and Data Handover

1 November 2011

G&G Phase

1 November 2011

FDP Seminar

2 November 2011

Interim Report Submission

16 November 2011

Reservoir Engineering Phase

19 December 2011

Interim Oral Presentation

23 December 2011

Development Phase

9 January 2012

Final Draft Report Submission

13 February 2012

Final Oral Presentation

20 February 2012

Final Report Submission

29 February 2012

Figure 2.3 Field Development Project Plan

3 Geology
3.1 Introduction
The Geology section of this report includes the description and history of the Sabah
basin, reservoir geology and the determination of the gross rock volume from
contour maps.
The description and history of the Sabah basin includes its location, geological age,
the date of discovery and by whom, the geological settings, and the provinces that
make up the basin. It also includes the geological description of the Southern Inboard
Belt province, where the Gelama Merah field is located according to the coordinates
from the field report.
The reservoir geology includes the description of the depositional environment, the
lithological make up, tectonics and sedimentation and stratigraphic correlation.
The gross rock volume is determined using two methods. These methods are the
Planimeter method and the use of software (Petrel). In this project we are required to
use the planimeter to calculate the gross rock volume. The value obtained from Petrel
is used to compare with the gross rock volume from the Planimeter to determine how
much the values deviate from one method to another. The Petrel value will be also
used in producing the dynamic model from the static geological model in the
reservoir engineering phase. The gross rock volume is used in the estimation of
STOIIP and GIIP (See Section 5).

3.2 History and Geological Description of Sabah Basin

3.2.1

Sabah Basin

The Sabah basin is located on the northwestern continental margin of Sabah state.
This is shown in Figure 3.1. The age of the Sabah basin ranges between the middle
Miocene and Recent, which means that the basin came into existence between the
Tertiary and the Quaternary periods of the Cenozoic era. The basin unconformably
8

overlies deformed deep water sediments and now forms the Crocker formation and
Rajang group. The structure and stratigraphic evolution of the north western
continental margin was first discovered by Hinz et. al. and Hoorn in 1980. The basin
also exhibit features of compressional margins characterized by thrust and wrench
tectonics, which reflects the strong influence tectonics has had over its structural
evolution.

Figure 3.1: Structural elements of Sabah Basin, showing basin boundaries and
tectonostratigraphic provinces

Figure 3.2: Regional cross-section of the Sabah Basin showing the Southern Inboard Belt and
East Baram Delta

The Sabah basin is divided into provinces that are characterized by distinct structural
styles and sedimentation history. The provinces include the Baram Delta, Inboard
belt, Outboard belt, Sabah Troughs and the northwest Sabah Platform. Its
sedimentation history involves basically the northwestern progradation of siliclastic
shelf. Sedimentation since the middle Miocene was the early phase of the deep
marine

sedimentation.

Sedimentation

was

separated

by

several

regional

unconformities at the basin margin.

There are two phases of deposition recognised by Noor Azim Ibrahim in 1994. These
include a very rapid subsidence phase during the early middle Miocene to early late
Miocene which result in deltaic aggradation. The second phase is a slower
subsidence phase accompanied by western progradation of shelf- slope system as
sediment accommodation rates exceed the rate of increase in accommodation space.
3.2.2

Southern Inboard Belt

According to the co-ordinates given in the final well report and rig data, the GelamaMerah field is located at the southern inboard belt nearby the Morris faults. The
southern inboard belt is made up of the North to South and the North-North-East to
the South-South-West trending anticlines with steep flanks and strongly faulted
crests. The synclines are the kitchen source areas for the hydrocarbons in the
surrounding structures. The core of the anticlines mainly comprises of uplifted deep
marine Stage III shale. Large scale sinistral strike faults and cumulative horizontal
displacement of nearby 100 km in length have been found in the southern inboard
belt.

10

Figure 3.3: Map of Southern Inboard Belt in Sabah Basin

The initial deltaic progradation in the Southern Inboard Belt traced back from the
Labuan-Paisley syncline and was followed by a rapid north-western progradation of
a major delta towards the Samarang area (connecting with the East Baram Delta).
This progradation was maintained by uplifting of the hinterland and erosion of the
older forest (Rice Oxley, 1999). Stage IVA represents the first significant deposition
of alluvial, coastal plain and deltaic sediment in the inboard belt.
Stage IVB is a thin transgressive marine sequence which is absent over some of the
syn-depositional highs. Stage IVB mudstone has been encountered in the drilling of
the exploration wells but most of the sand rich upper portions has been eroded.
Intense deformation during the late Miocene and subsequent tectonic stability is
characteristic of the Southern Inboard Belt. The deformation process results into the
tightening of the earlier formed structures and the inversion of the depositional
troughs to form a complex pattern of ridges and synclines.

11

Figure 3.4: Palaeogeographic reconstruction of the Sabah Basin

The main hydrocarbon zones are in the stage IVC which directly overlies the stage
IVA at the upper intermediate unconformity area as a result of submarine erosion
and slumping at the late Miocene shelf edge (Level and Kasumaja, 1985). The
structures were affected by the late Miocene Shallow Regional Unconformity
deformational event which resulted in the secondary migration of the hydrocarbon
from stage IVA. The reservoirs are shallow marine storm wave influenced
environment with slight fluviomarine influence (Johnson et al, 1989). The reservoirs
are part of the prograding shelf-slope system that built out over tectonically active
shelf margins.

12

3.3 Reservoir Geology

3.3.1

Depositional Environment

The reservoir is shallow marine storm influenced environment with slight fluoviomarine influence. The deposition of the sediment occurs when the storm influenced
wave causes erosional slumping of the continental shelf in the late Miocene shallow
regional unconformity deformational event. This results into the migration of the
hydrocarbon from the stage IVA sediments to the stage IVC which is a potential
sandstone reservoir.

Figure 3.5: West-East cross-section of Gelama Merah field

Figure 3.5 represents the cross-section of the Gelama Merah field. The cross-section
is asymmetrical in shape, which means that one flank is longer than the other. The
west part of the cross-section is towards the shore and the east side is towards the
seaward direction.
The layers U3.2 to U8.0 are merged according to the Gelama Merah-1 ST1 when
correlated with Gelama Merah-1 as shown in Figure 3.6, which is an evidence of
erosion of these layers. This results in the formation of angular unconformity, which
is a secondary stratigraphic trap.
13

The layers U9.0 to U9.2 have no evidence of unconformity since these layers are
conformed according to the correlation of the two wells. The oil-water contact and
the gas-oil contact cuts through all the layer.
Shallow Marine Environment
In the shallow marine environment the dominant process is the wave action, but can
also be affected by tidal currents. The rate of deposition of sediments in the shallow
marine environment depends on the energy of the wave. Low wave energy tends to
produce a bedform such as wave ripples. High energy waves such as storm waves
transport sediments into deep water and after deposition the storm waves rework the
sediments continuously. The higher the energy of the wave the coarser the sediments.
As the sediments are overstepped seawards in a sequence stratigraphy offshore, they
produce upward coarsening facies sequence.
Tectonics and Sedimentation
Tectonics is responsible for uplift and subsidence of rock area and influences the
structure of the reservoir. After the rock undergoes uplifting, it is eroded and
therefore gives rise to angular unconformity. The angular unconformity gives rise to
stratigraphic traps, which is an arrangement of seal and reservoir rocks. The uplifted
or folded rocks results into debris which are transported to a zone of subsidence. The
subsidence zone will convert to a depositional environment through geological time.
Figure 3.6 shows the tectonic setting of Sabah Basin.

14

Figure 3.6: Tectonic setting of Sabah Basin

3.3.2

Lithology Descriptions

According to the report from the two wells drilled, the Gelama Merah-1 and Gelama
Merah-1 ST1 proved that the reservoir is made up of three rocks. These are
sandstone, claystone and dolomite. sandstone forms the largest part the formation,
followed by claystone and a very small portion of dolomite.
Based on The Petroleum Geology and Resourcees of Malaysia by Petronas (1999),
the porosity varies from 20%-35% and permeability values of 600-2000 mD.
Gelama Merah-1
The Gelama Merah-1 well was drilled from a depth of 553 m to a total depth of 1636
m. Cores were taken from 3 intervals within the total depth of the well.

15

Interval (553-1120) - Interbedding of Sandstone, Claystone and

Dolomite
Sandstone is mainly soft to friable in texture, with partly medium hard,
which indicates that it is unconsolidated. The grains ranges fine to very
fine quartz, moderately to well sorted, sub-angular to sub rounded in
shape.
Claystone is mainly soft to firm in texture, partly moderately hard,
amorphous to sub blocky in shape. It comprises mainly of silt and very
fine quartz grain. Some traces of carbonate rocks such as dolomite and
pyrite were observed.
Dolomite is hard to very hard in texture and the grains are sub-angular
to angular in shape.

Interval (1320-1636) - Interbedding of Sandstone and Claystone

Sandstone is mainly soft to friable in texture, partly medium hard. The
grains are quartz dominated, sub angular to sub-rounded in shape,
moderately to well sorted grain size. Traces of carbonaceous matter were
observed.
Claystone is very soft to soft in texture, amorphous in shape. It is
partly silty with very fine quartz grains. Traces of carbonaceous matter
were observed.
Gelama Merah-1 ST1

The Gelama Merah-1 ST1 well was drilled from a depth of 560m to a total depth of
1797m. Cores were taken from 3 intervals within the total depth of the well.

Interval (1200-1600) - Dominant Claystone with minor Sandstone

16

Claystone is soft to moderately hard in texture, partly soluble, Sub

blocky to amorphous in shape. It comprises of mainly silt and partly very
fine quartz grains. Traces of carbonaceous matter were observed.
Sandstone is moderately hard to hard in texture, mainly comprises of
loose quartz grains, sub angular to sub rounded in shape, sorting is
moderate to well sorted, and traces of carbonaceous matter were
observed.

Interval (1600-1797) - Interbedding of Sandstone and Claystone with

minor Dolomite
Sandstone is moderately hard to hard in texture, comprises of loose
quartz grains, which are moderately to well sorted, Sub-angular to subrounded in shape, and traces of carbonaceous matter were observed.
Claystone is very soft to soft in texture, mainly amorphous in shape
and partly sub blocky. It comprises of slit and traces of very fine quartz
grains.
Dolomite the grains are moderately hard to hard in texture, with
angular shapes.

3.3.3

Stratigraphic Correlation

Stratigraphy is the pattern of succession of rock strata in an area represented

diagrammatically by a stratigraphy or geological column. Stratigraphic correlation is
the process where rock unit and other features such as fossil, magnet etc, which are
correlated through wells to determine their lateral extension within the reservoir.
Lithostratigraphy is commonly used and it gives an understanding of the lateral
extension of lithified rock units, thereby enhancing knowledge on reservoir
characteristics. Correlation of lithology will give knowledge of the arrangement of
the facies, porosity and permeability zones, flow units and potential barriers in a
reservoir and also the volume and extent of the reservoir. According to the law of

17

superposition the older rocks are deposited first before the younger rocks, and
therefore a succession that has not been overturned will have the older rocks at the
base and the younger at the top. Lithostratigraphy correlation involves correlating the
older rocks first at the base of the well before the younger rocks.
According to the logs obtained from the two wells in the Gelamah Merah field,
Gelama Merah-1 and Gelamah Merah-1 ST1 (Figure 3.7) there is an evidence of
erosion on layers U3.2, U4.0, U5.0, U6.0, U7.0, U8.0 as they are correlated between
the two wells. This evidence is supported by the fact that these layers are laterally
discontinuous on Gelama Merah-1 ST1. The erosion also gives to the evidence of an
angular unconformity, which forms stratigraphic traps. Stratigraphic traps are formed
from an arrangement of seals and reservoir rocks. Correlation of layers U9.0, U9.1
and U9.2 through both wells show that there is lateral continuity of these layers,
although the thickness varies from one well to the other.
The main uncertainty in the Gelama Merah field is the fact that the two wells cannot
give the information of the reservoir rock, properties such as porosity and
permeability throughout the extent of the reservoir. If more wells are drilled in line
and correlated then the uncertainty will be reduced and the reservoir structure and
characteristics will become more clearer.

18

Figure 3.7: Lithology correlation between Gelama Merah-1 and Gelama Merah-1 ST1

3.3.4

Petroleum System

Source Rock
The source rock of the Gelama Merah field is found in the stage IV sequences (post
DRU). It is mainly rich in terrigenous organic matter derived from land plants .Small
quantities of liptinic organic matter which comprises of cutinites and resinites is also
present. The Labuan paisley synclines are believed to be the possible kitchen source
for hydrocarbons. The erosion of the northwest Sabah margin during early Miocene-

19

middle Miocene, and the outbuilding of Stage IV siliclastics, which results in the
deposition of source beds rich in terrigenous organic matter.
Trap
The trap mechanism in the Gelama Merah field is a combination of structural and
stratigraphic traps. The structural traps includes folding (anticline) due to tectonic
activities and erosion of the anticlines results into unconformities which is an
indication of stratigraphic traps.
Seal
The presence of shale (claystone) in the sand units forms the seal to the hydrocarbon
traps.
Reservoir
The reservoirs in the Gelama Merah field were deposited during the stage IVC as
shallow marine coastal sands influenced by both wave and storm activities.

3.4 Calculations of Gross Rock Volume

Gross rock volume is the total volume between the mapped surface that defines the
top of the reservoir or potential reservoir and the hydrocarbon contact or expected
hydrocarbon contact. In this report, structural maps are used to determine the gross
rock volume by using two methods:
1. Using a mechanical device known as planimeter
2. The use of software Petrel
To calculate the gross rock volume the surface areas on contour maps are first
calculated.
Once the surface area has been calculated through the above methods the gross rock
volume can be computed using the trapezoidal rule, Simpsons rule or the peak rule
for calculating volume. The true stratigraphic thickness (isopach) is used in the
calculation of the gross rock volumes. The isopach can also be used to generate the

20

base structure map if the base structure map is not available. This is done by
subtracting the contour map of sand thickness from the top structure to give the
structure at the base of the reservoir.
The main purpose of the gross rock volume is to determine the hydrocarbon initially
in place, gas initially in place and the stock tank oil in place. This calculation is
carried out by integrating the gross rock volume with porosity, net to gross,
hydrocarbon saturation and formation volume factor.
3.4.1

Planimeter Method

Planimeter is a mechanical device operated manually to measure the areas of the

structural maps. Figure 3.8 shows the image of a planimeter.
Figure 3.9 shows a structural map of sand unit U3.2 where the area within a selected
depth interval is measured (Jahn et al., 1998).

Figure 3.8: A Planimeter tool

Methodology
1. Calibrate planimeter for each structural map. Each map has a different
scale and hence different calibration.

21

2. Once the planimeter is calibrated, planimeter each contour to find the

area. The stylus of the planimeter is guided around the depth to be
measured and the respective area contained within this contour can
then be read off (Jahn et al, 1998).
3. After the area is found, construct a plot of depth against area, connect
the measured points. This will result in a curve showing the areadepth relationship of the top of the reservoir. Increasing depth, the
area measured for each depth will also increase. The GRV is
calculated by the product of the area (A) and the gross interval
thickness. Note that this method assumes that the reservoir thickness
is constant across the whole field.

Figure 3.9: Structural map for Unc/U3.2 layer

Planimeter Results
The contour areas obtained from the gas cap depth to the oil-water contact using the
Planimeter are plotted in Figure 3.10. Although there are some close proximities
from Layer U3.2 to U7.0, there is no overlapping between the area lines from the

22

graph, implying that all the layers are subsequently confined underneath one another.
This may explain the presence of some uncomformities along the sand units.
The planimeter area numerical results can be found in Table A.1-1 to Table A.1-3
from the Appendix. Calculation of GRV is done using Trapezium Rule (Equation
3.1).
1
!" = ! + !
2
Equation 3.1

where,
V12 is the volume between depth 1 and 2,
A1 is the surface area at depth 1,
A2 is the surface area at depth 2, and
H is the height between depth 1 and 2.

Figure 3.10: Plot of contour areas with respect to depth

23

3.5 Conclusion
The reservoir in the Gelama Merah field is mainly made up of siliclastic rocks
namely claystone and sandstone. Carbonate rocks such as dolomite is also present in
the lithological make up but in small quantity. The reservoir comprises of
interbedded sandstone claystone and dolomite according to the two wells drilled
during exploration which confirms that our reservoir is moderately homogenous. The
depositional environment is shallow marine which means that the sediments are
influenced by wave action and energy with a slight fluviomarine influence.

3.6 References
PETRONAS. (1999). In The Petroleum Geology and Resources of Malaysia (pp.
500-542).
Heriot-Watt University. (2005). Petroleum Geoscience.
Jahn, F., Cook, M., & Graham, M. (1998). In Hydrocarbon, Exploration and
Production (First ed., p. 155). Elsevier B.V.
Forrest, J. K., Hussain, A., Orozco, M., Bourge, J. P., Bui, T., Henson, R., et al.
(2009). Semarang Field - Seismic To Simulation Redevelopment Evaluation Brings
New Life to an Old Oilfield, Offshore Sabah, Malaysia. 8.

24

4 Formation Evaluation
4.1 Introduction
Petra- is a latin word for rock, while physics is the study of nature. Petrophysics,
therefore, is the study of rock nature. By definition, Petrophysics is the study of the
physical and chemical properties of rocks and fluids contained.
Petrophysics enables the determination of reservoir and fluid characteristics such as
lithology and bed boundaries, porosity and permeability, fluid properties such as
saturation, types, etc. and flow between different fluid phases.
In order to determine such properties and characteristics of the reservoir as
mentioned above, petrophysics involves the analysis of data obtained from the
logging tools as well as from the physical core.
4.1.1

Objective

Formation evaluation is to study and understand the reservoir based on its

interactions with the logging tools as well as from the core data analysis. This, in
turn, will help in the determination of the reservoir rocks and fluid characteristics.
Hence, the objective of this part of the project is to obtain numerical values of
several reservoir parameters that will aid in the volumetric calculations such as HIP
(STOIIP, GIIP) and reserves. Such parameters include:

Net-to-Gross,

Porosity, and

Water saturation

Once these parameters have been obtained, their values are plugged in to the STOIIP
(or GIIP), combined with other parameters acquired from the Geologist and
Reservoir Engineer, which are the Gross Rock Volume and Oil Formation Volume
Factor, !" , respectively.

25

STOIIP =

GRV (1 ! )
!"
Equation 4.1

4.1.2

Data

Logging Program
The logging programs for both Gelama Merah-1 and Gelama Merah-1 ST-1 are
listed in Table 4.1 below.

Table 4.1: Logging program for Gelama Merah-1 and Gelama Merah-1 ST1

Wells

Gelama Merah-1

Gelama Merah-1 ST1

Hole section

12

12

Depth

553m 1636m

560m 1797m

Logging tools

Super Combo

Super Combo

MDT

DSI

CSI

Remarks: MDT run #2

SWC

failed due to stuck in hole,

fished out with DP

Petrophysical Logs
The well logs available to be imported into the well data is obtained from the LAS
file format were the Resistivity (RDEED_1, RSHAL_1 and RMICRO_1), Density
(DEN_1), Caliper (CALI_1), Neutron (NEUT_1), Gamma Ray (GR_1), Spontaneous
Potential (SP_1), Sonic Logs (DTCOMP_1, and DTSH_1) and Photoelectric
(PEF_1).
Sidewall Cores
There were 26 sidewall cores taken from Gelama Merah-1 between depth of 1086m
to 1617m, out of which only 22 cores were recovered while the remaining 4 cores
returned empty. Among the successful cores, however, only 3 of them that have
shows, which were taken from depth 1498.1m to 1573.1m as shown in Table 4.2
below. No sidewall core were retrieved from Gelama Merah-1 ST-1.

26

Table 4.2: Summary of cores with shows

Core
Number

Depth (m)

Shows
- 15-20%

1573.1

- Slow blooming light bluish white fluorescence

- Bluish white residual thin film
- Weak odour
- 5%

1558.0

- Very slow blooming bluish white fluorescence

- Bluish white residual thin film
- 15-20%

1498.1

- Slow blooming light bluish white fluorescence

- Bluish white residual thin film
- Weak odour

4.2 Petrophysical Analysis

Microsoft Excel was used to run and analyze the petrophysical analysis.
4.2.1

Gelama Merah-1

See Section B.1.1 in the Appendix for the Petrophysical logs of Gelama Merah-1.
Depths below are in MDDF.
1300-1330m:
o High Gamma Ray reading can be seen indicating high shale content in the
formation. Possibly shale formation. High Neutron porosity is observed
indicating high content of hydrogen index possibly due to claybound water.
Density reading also high (2.4 g/cm3). Resistivity logs read low indicating
conductive, saline claybound water in the formation.
1330-1460m (Layers U3.2, U4.0, U5.0, U6.0, U7.0 and U8.0):
o Low Gamma ray reading observed with slight fluctuations, indicating possible
sandstone formation with thin shale layers. Low Neutron porosity due to
27

lacking of H-index is observed. Density also reads low (2.0 g/cm3) from the
logs, creating cross-overs, which is due to effects of gas present in the
formation. High resistivity fluctuations indicating potential hydrocarbon
1465-1510m (Layer 9.0):
o Gamma ray logs still read low, thus sandstone formation. Density-Neutron
crossovers still occurring indicating gas presence down to depth 1490m. After
1490m, Neutron logs read sudden increase in H-index (high Neutron
porosity). Density reading also increased, indicating possible fluid change
from gas to liquid. High resistivity remains observed, thus, potential
hydrocarbon present in the formation, possibly oil.
1520-1530m (Layer 9.1):
o Low Gamma Ray is observed. Neutron porosity remains high with density
slightly fluctuates. Resistivity is seen to remain high due to the presence of
potential hydrocarbon (oil).
1530-1550m:
o High, fluctuating Gamma Ray is observed indicating shale content. Possible
shale layer in the formation. Density logs read relatively higher (2.4 g/cm3)
and Neutron porosity remains high. Low resistivity is observed, indicating the
presence of claybound water. Possible water-bearing zone.
1350-1600m (Layer 9.1):
o Low Gamma Ray counts indicate possible sandstone formation. High H-index
is seen in Neutron logs (high Neutron porosity). Density remains fluctuating.
Resistivity is seen low indicating conductive fluid in the formation. Possible
water-bearing zone.
4.2.2

Gelama Merah-1 ST1

See Section B.1.2 in the Appendix for the Petrophysical logs of Gelama Merah-1
ST1. Depths below are in MDDF.

28

1200-1590m:
o High Gamma Ray reading is observed, indicating high shale content.
Possible shale formation. High H-index (high Neutron porosity) and high
density (2.4 g/cm3), potential claybound water. Low resistivity is
observed indicating conductive fluid present i.e. saline claybound water.
1590-1660m (Layer U9.0, U9.1 and U9.2):
o Relatively lower Gamma Ray is seen indicating possible sandstone
formation with thin shale layers. Low Neutron porosity is observed (low
H-index). Cross-overs are seen in the Neutron-Density logs, indicating
possible gas presence. High resistivity is observed, gas is potentially
hydrocarbon.
1660-1720m (Layer U9.2):
o Gamma Ray remains low. Cross-over dimishes as Neutron porosity
increases (high H-index). Density also starts to increase, indicating change
in fluid phase. Resistivity remains high. Possible GOC is located with
potential hydrocarbon (oil).
1720-1760m (Layer U9.3):
o Relatively low Gamma Ray reading is seen indicating possible sandstone
formation. Density logs showing increasing value whilst Neutron porosity
remains high. Resistivity reading is reduced, indicating conductive
medium is detected. Possible OWC is located with potential water-bearing
zone.

29

4.3 Fluid Analysis

4.3.1

Fluid Contacts

Determination from Logs

The Density-Neutron is first used to interpret the GOC, which usually can be seen by
its diminishing crossovers - indicating the change of fluid phase from gas to oil. In
this case however, the crossover in the oil zone is very small or almost absent.
Resistivity log is then needed to check for the presence of oil as it would indicate
high resistivity. Looking at the resistivity in the water-bearing zone, we can conclude
that the formation water is saline due to its low resistivity.

Gelama Merah-1
o For the Gelama Merah-1 well, it can be seen from Figure 4.1 that GOC
is present within Layer U9.0 at the depth of 1494 m (1466.7 m
TVDSS). The OWC, on the other hand, is indicated to lie below the
base of Layer U9.1 (outside the zone of interest). This depth is
equivalent to 1535 m (1507.7 m TVDSS).

Figure 4.1: GOC and OWC determined from the Neutron-Density and Resistivity logs for
Gelama Merah-1

30

Gelama Merah-1 ST1

o The GOC in GM-1 ST1 is located at 1668 m (1467.3 m TVDSS). This
Gas-Oil Contact lies in Layer U9.2. The OWC is indicated in Layer
U9.3 at the depth of 1722 m (1510.8 m TVDSS). See Figure 4.2.

Figure 4.2: GOC and OWC determined from the Neutron-Density and Resistivity logs for
Gelama Merah-1 ST1

The difference of fluid contacts between the two wells are small. By taking average,
this gives a uniform GOC depth at 1467.0 m, and OWC at 1509.3 m in TVDSS.
There is a uniform 42.3 m gross thickness of oil column present across the reservoir.

Table 4.3: Comparison of fluid contact depths between GM-1 and GM-1 ST1 wells

Contacts

GOC

OWC

Wells

Depths, m
MDDF

TVDSS

GM-1

1494

1466.7

GM-1 ST1

1668

1467.3

GM-1

1535

1507.7

GM-1 ST1

1722

1510.8

31

Average
1467.0

1509.3

Determination from MDT

Fluid contacts obtained from petrophysical logs can be confirmed with the pressure
data plot obtained from MDT as shown in Figure 4.3. Converting the depth as
TVDSS, the GOC is located at 1466.1 m, and OWC at 1506.1 m.

Figure 4.3: Fluid contacts obtained from MDT data

From MDT data, it can be seen that OWC depth is shallower than that obtained from
the logs as tabulated in Table 4.4. This is because MDT detects only mobile
hydrocarbons. Unlike logs, which record the presence of both mobile and immobile
hydrocarbons.

Table 4.4: Comparison of fluid contacts between logs and MDT tool

Contacts

Depths, m (TVDSS)
Logs

MDT

GOC

1467.0

1466.1

OWC

1509.3

1506.1

32

4.3.2

Fluid Types

The fluid types in the reservoir can be identified from the pressure plot (Figure 4.3)
by looking at the gradients, where the gas gradient turns out to be 0.046 psi/ft, oil
gradient is 0.35 psi/ft and water gradient is 0.43 psi/ft. Table 4.5 below summerises
the fluid classification.

Table 4.5: Fluid type identification from the MDT plot

Fluid Types Gradients, psi/ft

Gas

0.05

Oil

0.35

Water

0.43

4.4 Properties Calculation

4.4.1

Volume of Shale

To determine the volume of shale, Vsh, in the interested zones, the first step is to
calculate the Gamma Ray Index, IGR, which can be represented by the following
equation,
!" =

!"# !"#
!"# !"#
Equation 4.2

where,
!"# is the Gamma Ray log reading,
!"# is the maximum Gamma Ray log reading,
!"# is the minimum Gamma Ray reading which indicates clean sand
The GRmin is taken to be 52 API and the GRmax is 100 API as seen in Figure B.1-1 in
the Appendix B.1. The volume of shale is related to the Gamma Ray Index by the
following relationship:
!! = !"

33

See Table B.1-1 in the Appendix for shale volume of each sand unit for both Gelama
Merah-1 and Gelama Merah-1 ST1 wells.
Vsh Cut-off
Vsh cut-off is the maximum amount shale content present in the formation which is
considered to be sand or reservoir rock. The cut-off is calculated by using a Gamma
Ray-Density crossplot where point when the density reaches the plateau is taken to
be the Vsh cut-off as shown in Figure 4.4. This point on the crossplot reads GRlog of
84 API. By using Equation 4.2, the Vsh cut-off is calculated to be 66.7%.

Figure 4.4: Finding Vsh Cut-off from GR-Density crossplot

4.4.2

Net-to-Gross

The Net-to-Gross is calculated by taking the ratio of Net Sand thickness to the Gross
Interval thickness. Figure 4.5 shows the definitions of reservoir thicknesses. Here,
the gross interval is the total height of the sand unit, and the net sand term is the sand
thickness after both the Vsh and cut-offs have been applied. The average Net-toGross for Gelama Merah reservoir is calculated to be 72.2%.

34

See Table B.1-3 in the Appendix for the Net-to-Gross values for each sand unit for
both Gelama Merah-1 and Gelama Merah-1 ST1 wells.

Figure 4.5: Definitions of Gross Sand, Net Sand and Net Pay (Petroleum Geoscience, HeriotWatt University)

4.4.3

Porosity

Porosity is the amount of space in the rock that can contain hydrocarbons. Therefore,
determining the pore space of the reservoir rocks is vitally important as this allows
the volume of hydrocarbons to be calculated. Porosity can be calculated from
Density, Neutron and Sonic logs. However, a combination of these logs are often
used to acquire better values of porosity. In this case, only Density-Neutron logs are
used due to the presence of gas which has major impact (overestimation) on porosity
calculations using Sonic logs. The porosity of the Gelama Merah reservoir is
calculated to be 27.9%, and the corresponding effective porosity of 24.0%. From the
porosity values in each layer from Table B.2-1 in the Appendix, the porosity varies
from 24.9% to 30.1% - an evidence of a moderately homogeneous reservoir.
See Section B.2 in the Appendix for steps in calculating porosity using DensityNeutron logs.

35

Porosity Cut-off
Porosity cutoff is the minimum porosity that is considered to valid when
differentiating between reservoir and non-reservoir rocks. In other words, any
porosity value that is lower than the cutoff is rejected and considered as nonreservoir rock. A Poro-Perm plot established from the available core data is used to
obtain this porosity cut-off of 12.6% as seen in Figure 4.6.
In the calculation of the porosity cut-off, a permeability of 0.1 mD is taken as the
cut-off point where the formation is no longer able to make fluids flow. This is
equivalent to the porosity cut-off value mentioned previously.
See Table B.4-1 in the Appendix for the core data grouping.

Figure 4.6: Poro-Perm relationship to obtain Porosity Cut-off when k = 0.1 mD

Porosity Averaging
Average porosity, ! is carried out using arithmetic thickness average,
! =

!
!!! ! !
!
!!! !

36

Equation 4.3

Where,
is the porosity, and
is the height.
4.4.4

Water Saturation

Archies Saturation
The application of Archies equation in a shaly reservoir like Gelama Merah is not a
valid approach as this would result the water saturation calculated to be
underestimated. Other methods should be used instead, such as Dual Water Model
and Buckley-Leverett J-Function.
Dual Water Model
Dual Water is a more accurate model to be used in calculating the water saturation
index to take into account on the presence of shaly sandstone that exists in the
Gelama Merah reservoir. Based on a calculated formation water resistivity of 0.274
m, the average water saturation is 39.2%.
See Section B.3 in the Appendix for the step in calculating water saturation using
Dual Water Model.
See Table B.3-1 in the Appendix for water saturation values of each sand unit in both
Gelama Merah-1 and Gelama Merah-1 ST1 wells.
Water Saturation Averaging
A thickness, porosity averaging method is used to calculate the water saturation of
the Gelama Merah reservoir.

! =

!
!!! ! ! !
!
!!! ! !

Equation 4.4

where,

37

Sw is the water saturation,

is the porosity, and
h is the net pay thickness.
Sw Cut-offs
Water saturation cut-off is calculated using the ratio of relative permeabilities which
is obtained from SCAL analysis (Gelama-2 ST1 Core Anlaysis Report) as shown in
Figure 4.7. By taking the ratio of relative permeabilities of the cut-off to be 1, the
water saturation cut-off is equivalent to 59%. See Table B.3-2 for data table.

Figure 4.7: Obtaining water saturation cut-off from core data

4.5 Core Analysis

4.5.1

Poro-Perm Relationship

Porosity has the most obvious control on permeability. This is because, larger
porosities define that there are many more and broader pathways for fluid to flow. A
plot of permeability (on a logarithmic scale) against porosity for a formation will
result in a clear trend with a degree of scatter associated with the other influences

38

controlling the permeability. This Poro-Perm crossplot can be constructed to help

clearly define lithologies or reservoir zones.
From the given core data, a Poro-Perm relationship can be established by plotting log
of permeability against porosity of the core samples, which can be seen in Figure 4.8.

Figure 4.8: Poro-Perm relationship showing three facies in Gelama Merah reservoir

From Figure 4.8, three groups of facies can be identified by separating the cores
based on their permeabilities as shown in Table 4.6 below.

Table 4.6: Facies group according to their range of permeabilities

Facies

Permeability, mD

Remarks

< 20

Poor rock

20 < k < 150

Moderate rock

>150

Good rock

Once the Poro-Perm relationship has been established from the core data,
permeability values from the petrophysical logs can be estimated. See Table B.4-1 in
the Appendix for the core data grouping.

39

4.5.2

Capillary Pressure

There are 10 core samples that have capillary pressure data provided from the
Gelama-2 ST1 Core Analysis Report (see Table B.4-2 in the Appendix). The core
samples are grouped together according to their facies type as laid out in Table 4.6.
Capillary pressure curves as a function of water saturation is plotted as shown in
Figure 4.9.

Figure 4.9: Capillary pressure as a function of water saturation for the 10 core samples

4.5.3

Buckley-Leverett J-Function

The purpose of J-Function is to convert all capillary pressure data into a single
universal curve as a function of porosity, permeability and capillary pressure. Its
advantage is the ability to predict water saturation anywhere in the reservoir unlike
wireline tools which can only measure water saturation within the vicinity of the
wellbore. Leverett defined the dimensionless function of saturation (J-function) as:

! =

! (! )
cos

where,

40

! (! ) is the capillary pressure at different wetting saturation,

cos is the interfacial tension and cosine of oil/gas-water,
is the permeability (mD), and
is the porosity

Figure 4.10: J-function of Gelama Merah field

From Figure 4.10, J-function equation for Gelama Merah reservoir can be obtained
as the following:
= 133.39 !!.!!!!"

4.6 References
Asquith, G., & Krygowski, D. (2004). In Basic Well Log Analysis (pp. 31-35).
Holstein, E. D. (2007). In Reservoir Engineering and Petrophysics (Vol. V, pp. 77287).
Darling, T. (2005). In Well Logging and Formation Evaluation (pp. 100-150).
Tiab, D., & Donaldson, E. C. (2004). Petrophysics - Theory and Practice of
Measuring Reservoir Rock and Fluid Transport Properties. In Petrophysics - Theory
and Practice of Measuring Reservoir Rock and Fluid Transport Properties (Second
ed., pp. 105-179).

41

5 Volumetric Estimation
5.1 Introduction
Volumetric estimation is the quantifying of the amount oil and gas that is
accumulated in a reservoir. The estimate will change at each stage in the life time of
the field, as technology for collecting and analysing of field data is upgraded. There
are two main methods in volumetric estimation, Deterministic and Probabilistic
method. Deterministic method involves the averaging of data collected at different
points in the reservoir, from well logs, seismic and cores. Probabilistic method
involves the use of statistics and predictive tools to input and analyse field data
concerning the geological model to extract information about the trends in the
reservoir properties that are far away from the sample points.

5.2 Deterministic Methods

A deterministic method is a single technical best estimate of stock tank oil in-place
and gas initially in-place. It does not take uncertainty into consideration, therefore
averaging of parameters such as porosity, saturation and net to gross is possible. The
equations for calculating STOIIP and GIIP are shown below.

STOIIP =

GRV N G (1 ! )
!"
Equation 5.1

GRV N G (1 ! )
GIIP =
!"
Equation 5.2

Where,
STOIIP is the stock tank oil initially in-place,
GIIP is the gas initially in-place,
N

G is the net-to-gross ratio,

is the porosity,
! is the water saturation,

42

!" is the oil formation volume factor,

!" is the gas formation volume factor, and
GRV is the gross rock volume.
The formation volume factor for oil and gas can be found from the PVT data (see
Table 5.1).
Table 5.1: Boi and Bgi obtained from PVT data

Formation Volume Factor Values

5.2.1

1.17

0.01

Planimeter

Gas Initially In-Place

Table 5.2: Gas Initially In-Place calculated for each sand unit

Sand Units GRV ( m3) GIIP (Bscf)

Unc/U3.2

3.53

1.46

U4.0

4.28

1.59

U5.0

4.99

1.85

U6.0

9.02

1.65

U7.0

21.7

1.17

U8.0

42.9

2.68

U9.0

37.6

1.14

U9.1

23.3

6.53

U9.2

39.3

11.5

Total

187

74.6

From Table 5.2, the total GIIP is calculated to be 74.6 Bscf.

Stock Tank Oil Initially In-Place
The total STOIIP is calculated to be 118 MMstb as shown in Table 5.3.

43

Table 5.3: Stock Tank Oil Initially In-Place calculated for each sand unit

Sand Units GRV ( m3) STOIIP (MMstb)

5.2.2

Unc/U3.2

2.55

1.61

U4.0

1.66

0.94

U5.0

1.34

0.75

U6.0

3.38

0.94

U7.0

3.94

3.24

U8.0

7.95

7.58

U9.0

42.20

19.6

U9.1

11.20

4.78

U9.2

176.0

78.8

Total

250

118

Petrel Parameters

From Petrel, the GRV is calculated to be 364 106 m3. From this volume, the
STOIIP is determined to be 88.1 MMstb while the GIIP is 93.8 Bscf. See Section I in
the Appendix for methods in Volumetric Evaluation using Petrel.

5.2.3

STOIIP Comparison
Table 5.4: Comparison of STOIIP between two deterministic methods

Method

Planimeter

Petrel

STOIIP (MMstb)

118

88.1

GIIP (Bscf)

74.6

93.8

GRV (106 m3)

437

364

From the Table 5.4, the STOIIP and GIIP values obtained from two different
methods vary. For STOIIP calculations, GRV measured using the planimeter gives a
higher value (118 MMstb) compared to Petrel (88.1 MMstb). For GIIP, however,
using the planimeter gives a lower gas in-place volume of 74.6 Bscf compared to
Petrel (94 Bscf). These differences are most probably as a result of erroneous

44

measurements when using the planimeter tool (which is prone to human error) during
the calculations of GRV, which gives an overestimation and underestimation of
STOIIP and GIIP volumes respectively.
Due to this uncertainty, the STOIIP and GIIP values calculated using planimeter is
no further considered. The deterministic values obtained from Petrel which involves
digitization of the contour maps, provide a much more reliable, less erroneous value,
which will be carried forward into the probabilistic analysis of the in-place volume.

5.3 Probabilistic Method

The probabilistic method is used to estimate STOIIP and GIIP with the consideration
of uncertainty in each parameter used in the estimation. There are three Probabilistic
methods can be used in the estimation of STOIIP and GIIP; Monte Carlo, Parameter
method and Three-Point method. The Monte Carlo method is the most commonly
used in the estimation of STOIIP and GIIP, therefore, it will be used in the
probabilistic volume analysis.
5.3.1

Monte Carlo Method

The Monte Carlo distribution is used to estimate STOIIP and GIIP by allowing more
realisation of the parameters by combination of maximum volume and minimum
saturation. Monte Carlo presents a skewed distribution for volume and saturation and
a normal distribution for porosity. The deterministic element in the Monte Carlo is
provided in the selection of the parameter distributions. The random component
comes from the random sampling of the distribution.
The Monte Carlo distribution is done by using a software called Crystal Ball1. It is
recommended to exceed 1000 trials when using this software so that the values will
show a range of uncertainty than to be a simple deterministic solution. The Monte
Carlo simulation produces results for a small number of combinations of variables,
which approximates a distribution of all possible combinations. The more the set of

Crystall Ball is a Microsoft Excel software addon by Oracle.

45

combinations are made the closer the Monte Carlo result will be to the theoretical
result of using all possible combinations.
If two variables are dependent, the value chosen in the simulation for the dependent
variable can be linked to the randomly selected value of the first variable using the
defined correlation.
The Monte Carlo method is the most appropriate method for project with large
varieties of uncertainty, but however the parameter distribution should not be normal
or else it will reduce the power of the Monte Carlo distribution. The parameters
should also be independent for effective Monte Carlo results or else it will lead to a
deterministic solution which is not a representation of uncertainty.
5.3.2

Probabilistic STOIIP and GIIP

Figure 5.1 and Figure 5.2 show the probabilistic distribution for STOIIP and GIIP
values respectively. The P50 value for STOIIP is 88 MMstb, with P90 and P10
values of 105 MMstb and 73 MMstb respecively. The P90, P50 and P10 values for
GIIP is 78, 94 and 112 Bscf respectively. Table 5.5 shows the summary of the
probabilistic values for STOIIP and GIIP.

Figure 5.1: Probability and Cumulative Distribution Functions of STOIIP

46

Figure 5.2: Probability and Cumulative Distribution Functions for GIIP

Table 5.5: Probabilistic STOIIP and GIIP values

Probability

P10

P50

P90

STOIIP (MMstb)

73

88

105

GIIP (Bscf)

78

94

112

5.4 Sensitivity Analysis

Five parameters of the STOIIP equation are considered, which are; gross rock
volume, net-to-gross, porosity, water saturation and oil formation volume factor.
From the sensitivity analysis as shown in Figure 5.3, a positive change in gross rock
volume, net-to-gross and porosity has the most impact on the STOIIP value. In fact,
they all three carry the same weight. The oil formation volume factor, however, has
the most impact on the in-place volume when there is a negative change. Change in
water saturation has the least influence on the STOIIP values. The same is true for
GIIP values in the sensitivity analysis as discussed here.

47

Figure 5.3: Sensitivity Analysis for STOIIP

5.5 Uncertainties
The parameter which are used in determination of STOIIP and GIIP are influenced
by uncertainties. These uncertainties are controlled by several factors. Table 5.6
below is showing each parameter and its related controlling factor.
One of the main uncertainty in the volumetric estimation for the Gelama Merah field
is the lack of information on the base structural map and the thickness map for each
layer in the reservoir architecture. The difference between the top structural map and
the base structural maps gives the thickness of each layer. Since the base structural
map is not available we assumed the thickness of each layer in the reservoir to be the
difference between the top structural map of the top layer and the top structural map
of the next layer underlying it. The assumption in the thickness of the layers will
result in an under-estimation or over-estimation of hydrocarbon in-place as seen in
Table 5.4.

Table 5.6: Reservoir parameters and their controlling factors on uncertainties

Parameters

Controlling Factors

Gross Rock Volume

Shape of structure, dip of flanks, position of boundary,

faults, depth of fluid contacts

Net-to-Gross

Depositional environment, diagenesis

48

Porosity

Depositional environment, diagenesis

Hydrocarbon

Reservoir quality, capillary pressures

saturation
Formation Volume

Fluid type, Reservoir pressure and temperature

Factor
Recovery factor

Physical properties of the fluids, formation of dip angle,

aquifer volume, gas cap volume

Another important uncertainty in volumetric estimation is the fact that the

information about the reservoir properties and fluid properties are based on the
information gathered from the two wells, GM-1 and GM-1 ST1 which were drilled
within a very small fraction of the whole reservoir. The lateral extension of the
reservoir rock properties and fluid properties are limited to the wells which restricts
our knowledge in greater part of the reservoir which is a major uncertainty. If more
wells were drilled although expensive, it will enable us to understand our reservoir
properties and fluid properties by correlating logs through these wells thereby
reducing uncertainty. Uncertainty in the borders of the top structural maps also affect
the estimation of the hydrocarbon in place. In the top structural maps given to us the
area around the contour lines 1500-1520 m are under-estimated because the borders
of the map were made is such that some parts of the above contour lines are not
included. There is the possibility that hydrocarbons are present in areas around the
contour lines which are out of the boundaries.

5.6 Conclusion
The Petrel Value for the STOIIP will be used in the Reservoir engineering section
since it gives a more accurate value than the Planimeter .The reservoir engineer will
also use the Petrel software to produce the dynamic model from the static geological
model which makes it the best choice for the way forward.

49

6 Reservoir Engineering
6.1 Introduction
Primary functions of a reservoir engineering phase would be, the estimation of
hydrocarbons in place, to estimate recovery factor and the attachment of a time scale
to the recovery. In a field development stage, reservoir engineer is required to gather
data i.e data preparation and analysis which becomes the input data for simulation
studies. All the data required for this reservoir engineering study was obtained from
Gelama Merah-1 well and core plugs analysis data which were cored from Gelama
Merah-2 ST1 well. Reservoir simulation is used to study the dynamics of our
reservoir, Well position, Well count and predict the optimum development strategy
for the field. For the simulation purposes, Black Oil Simulator, Eclipse 100 had been
utilized.
The studies made by the reservoir engineer are divided into the following sections
a) Gathering reservoir data for simulation studies, i.e
1) Reservoir Temperature
2) Reservoir Pressure
3) Rock Physics Properties
i. Capillary Pressures
ii. Relative Permeability
iii. Rock Compressibility
4) Reservoir Fluid PVT Properties
b) Preparation of Dynamic model using Petrel and Eclipse 100
1) Studies carried out using, Natural Depletion, Water Injection and Gas
injection scenarios.
2) Choosing Development plan based on recovery factor and economics.

50

6.2 Reservoir Data Analysis

6.2.1

Reservoir Temperature

Temperature versus depth plot was prepared using the Modular Dynamic Tester
(MDT) of Gelama Merah-1data provided. Reservoir temperature equation obtained is
estimated to be,
() = 0.02522 Depth (TVDSS-m) + 25.974

Figure 6.1: Gelama Merah reservoir temperature profile

Reservoir Temperature ranges from 59.6 to 64.5 degree Celsius based on MDT
report. Reservoir temperature gradient was estimated to be about 2.5 oC/100 m.
6.2.2

Reservoir Pressure

Reservoir pressure versus depth plot was prepared using Gelema Merah-1 data
provided on Modular Dynamic Tester (MDT). Pressure depth plot shown in Figure
6.2 shows the Gelama Merah Field is in normal hydrostatic pressure.
The Gas Oil contact (GOC) obtained by this plot was 1466.1 mTVDSS and Water
Oil contact (WOC) at 1506.1 mTVDSS. Gas pressure gradient of 0.046 Psi/ft, Oil
pressure gradient of 0.35 Psi/ft and Water pressure gradient of 0.433 Psi/ft were

51

obtained from MDT pressure plot. From the plot we also notice that the Gas, Oil and
Water zones are communicating with each other, which when compared to the logs
could mean presence of discontinuous shale barriers.

Figure 6.2: Gelama Merah reservoir pressure profile

From the pressure and temperature plot, there are no zones showing high temperature
and high pressure zones, which might not be the case in reality. This inconsistency
could be due to limited data provided and uncertainties as the data used for these
plots were taken only from one well i.e Gelama Merah-1.

6.3 Rock Physics Properties

6.3.1

Porosity-Permeability Relationship

Porosity has the most obvious control on permeability. This is because, larger
porosities define that there are many more and broader pathways for fluid to flow. A
plot of permeability (on a logarithmic scale) against porosity for a formation will
result in a clear trend with a degree of scatter associated with the other influences
controlling the permeability. This Poro-Perm crossplot can be constructed to help
clearly define lithologies or reservoir zones.

52

From the given core data, a Poro-Perm relationship can be established by plotting log
of permeability against porosity of the core samples, which can be seen in Figure 6.3
In plotting the porosity-permeability distribution, two samples had to be discarded
(sample 1-021 and 5-002). This is because they do not correlate with porositypermeability relationship. Refer Table C.1-1 in the Appendix for samples used for
Porosity-Permeability relationship.

Figure 6.3: Poro-Perm relationship

From Figure 6.3, three groups of facies were identified by separating the cores based
on their permeabilities as shown in Figure 6.1 below.
Table 6.1: Group of facies according to their permeabilities

Facies

Permeability, mD

Remarks

< 20

Poor rock

20 < k < 150

Moderate rock

>150

Good rock

53

Once the Poro-Perm relationship has been established from the core data,
permeability values from the petrophysical logs can be estimated.
6.3.2

Capillary Pressure

For laboratory studies of capillary pressure, high pressure mercury injection analysis
was carried out with 10 core plugs. High injection pressures up to 55000 psi was
applied to push all the water out from the core. Refer Table C.2-1 in Appendix C.2
for samples used for Capillary Pressure measurements.
The capillary pressures were grouped into three different facies i.e Poor rock (1)
Moderate rock (2) and Good rock (3), according to the porosity and permeability
ranges. Reservoir rock generally yield different capillary pressure curves with
different pore-size distribution, porosity and permeability as illustrated in Figure 6.4.

Figure 6.4: Capillary Pressure (Pc) vs Water Saturation (Sw) for every sample

The lab capillary pressure data (mercury-air system) were converted to the reservoir
conditions by using the formula below:
= ( ) ( )
Where
54

!" = capillary pressure at reservoir conditions, psi

!" = laboratory drainage capillary pressure, psi
! = interfacial tension in reservoir system, (dyne/cm)
! = interfacial tension measured at the laboratory condition, (dyne/cm)
! = contact angle in reservoir system,
! = contact angle measured at the laboratory conditions,
Table 6.2: Laboratory-Reservoir fluid properties for capillary conversion

IFT

Contact

(dynes/cm2)

Angle ()

Air - Mercury

485

140

0.765

372

Oil Water

25

30

0.866

21.7

Gas Water

50

50

Condition

Fluid Type

Lab
Reservoir

Cos

IFT * Cos

By applying the above equation, mercury capillary injection pressures were

converted to gas-water and oil-water system based on the reservoir conditions
described in Table 6.2. Capillary pressure from the laboratory measurements can only
be converted to oil-water and gas-water system, thus to obtain gas-oil capillary pressure
curve, following equation was used,

!!"#!!"# = !!"# !!"# = !!"#!!"#$% !!"#!!"#$%

Where,
!!"#!!"# : Capillary pressure for gas-oil system
!!"#!!"#$% : Capillary pressure for oil-water system
!!"#!!"#$% : Capillary pressure for gas-water system
Oil-water and gas-oil capillary pressures were generated. Each of them represents
Facies 1 (Poor rock), Facies 2 (Moderate rock) and Facies 3 (Good rock).

55

Figure 6.5: Capillary Pressure (Pc) (Oil-Gas) vs Water Saturation (Sw)

Figure 6.6: Capillary Pressure (Pc) (Oil-Water) vs Water Saturation (Sw)

56

Leverett J function attempts to convert all capillary pressure data, as a function of

water saturation, to a universal curve. Leverett defined the dimensionless function of
saturation (J-function) as:

Usually a constant of 0.26145 is multiplied with the J-function values for field data
units conversion.
Where,
Pc (Sw) : Capillary pressure at different wetting saturation
cos : Interfacial Tension and Cosine of oil/gas-water
k : Rock Permeability (Darcy)
: Rock Porosity (Fraction)
Cos term is added to the equation to consider wettability. To obtain J function
value, capillary pressure measurements are performed on each core plug and
converted to reservoir conditions, and then converted to J values as the independent
variables once a J function has been established, they can be used in the field to
relate saturation with height above Free Water Level (FWL), Permeability and
Porosity.

57

Figure 6.7: J-Function vs Pseudo Wetting Phase Saturation

The J-function equations obtained for Gelama Merah reservoir is obtained as

follows:
= 133.39 !!.!!!!"

6.3.3

Relative Permeability

Relative permeability data for Gas-Oil and Oil-Water systems were based on
available information from the core analysis. Eight core samples were tested for this
analysis which belonged to facies 2 and 3 (Moderate and Good rock) hence relative
permeability analysis for two facies (Good and Moderate rock) were carried out in
this section, Unsteady-state (USS) for gas-oil/ water-oil and steady-state test (SS) for
water-oil systems are carried out to obtain the relative permeability curve. Analysis
for facies 1 (Poor rock) for water-Oil relative permeability was not carried out due to
missing information from the core data. Refer Table C.3-1 in the Appendix C.3 for
samples used for Relative Permeability calculations.
One sample was discarded which is Sample 1-021. The reason is explained earlier in
Porosity-Permeability Correlation section
58

1) Oil Water Relative Permeability

For oil-water relative permeability test, unsteady state and steady state
displacement method had been conducted as shown in Table C3-1 in Appendix
C.3.
To obtain a representative oil-water and gas-oil relative permeability for each
facies, averaging the values of oil-water and gas-oil relative permeability by
using Normalizing and De-normalizing approach was implemented.
Detailed explanation and steps involved in normalization and de-normalization
process is explained in Appendix C.3.

End Point Correlations

The degree of heterogeneity of Gelama Merah reservoir rocks were further
investigated through end-points correlation. The saturation and relative permeability
end-points are correlated with the rock qualities (porosity and permeability) to
identify rocks with similar porosity and permeability having similar saturation and
relative permeability end-points values.

Figure 6.8: End Point correlation vs Log Permeability

59

Figure 6.9: End Point correlation vs Porosity Fraction

The results obtained from End Point correlations are tabulated in Table 6.3.

Table 6.3: End Point correlation

Case
Swc
Sorg
Sorw
Krw
Kro
Krg
vs Porosity 0.370102 0.240668 0.295215 0.178562 0.75329 0.654981
vs Perm
0.332218 0.251268 0.265501 0.218928 0.783993 0.641968

Oil water relative permeability curves obtained are shown below.

60

Figure 6.10: Oil-Water Relative Permeability curve for Facies 3 (Good Rock)

Figure 6.11: Oil-Water Relative Permeability curve for Facies 2 (Moderate Rock)

2) Gas-Oil Relative Permeability

For Gas-Oil relative permeability test, unsteady state displacement method had
been conducted as shown in Table C.3-1 in Appendix C.3.

61

Gas-Oil relative permeability curves obtained for each facies are shown below.

Figure 6.12: Gas-Oil Relative Permeability curve for Facies 3 (Good rock)

Figure 6.13: Gas-Oil Relative Permeability curve for Facies 2 (Moderate rock)

62

Figure 6.14: Gas-Oil Relative Permeability curve for Facies 1 (Poor rock)

6.3.4

Rock Compressibility

Using Hall correlation, the rock compressibility can be correlated with the porosity
by the following equation,
! =

1.78210!!
!.!"#

By using the porosity obtained from the Formation Evaluation section, the rock
compressibility is calculated to be 3.12 10-6.

6.4 Reservoir Fluid

According to the data provided to us, the reservoir fluid study contains routine PVT
Analysis study for Gelama Merah-1 (DST#1) separator sample. The samples for
reservoir fluid study were sent to PRSS laboratory. The studies involved quality
checks on the separator sample and bubble point estimation at separator conditions.
After evaluation of quality check results, One sample was selected for further
analysis. The following tests were conducted and analyzed which are:

Compositional Analysis (Gas Chromatography)

Constant Composition Expansion Test (CCE)

63

Differential Liberation Test (DL)

Viscosity Test

Separator Test

PRSS Lab determined the bubble point pressure to be 2014 Psig i.e 2028.7 Psia
which is below the initial reservoir pressure 2116 Psia, close to Gas Oil Contact
(GOC) which is confirmed by well test analysis as 2116 Psia was measured by
extrapolation at 1496 RKB i.e 1468.7 mTVDSS which is close to the observed GOC
obtained from MDT data earlier. This contradicts the observed field behavior where
the reservoir is already saturated with a pressure of 2116 Psia.
Schlumbergers ECLIPSE PVTi software was used to estimate new set of fluid
properties based on a bubble point pressure of 2116 Psia and 155 oF. Only the
parameters of the heavy pseudo-components were adjusted in order to match the
experimental data. The equation of state used to estimate the properties of fluids are
3-Parameter Peng-Robinson (PR3) and Lorenz-Bray-Clark for Viscosity correlation.
Based on well-stream fluid composition and selected EOS model, the following
phase envelope and fluid properties has been generated using ECLIPSE PVTi
simulation software.

Figure 6.15: Phase diagram of Gelama Merah reservoir fluid

64

Figure 6.16: PVTi plot for Oil Relative Volume Factor

Figure 6.17: PVTi plot for Gas Oil Ratio

65

Figure 6.18: PVTi plot for Gas Formation Volume Factor

The fluid properties estimated for Gelama Merah reservoir which were further used
in Simulation are summarized below.

Table 6.4: Fluid properties in Gelama Merah reservoir

Reservoir Pressure Pr

2116 Psia

Reservoir Temperature Tr

155 F

Bubble point pressure Pb

2116 Psia

(a) Fluid Properties at Pb and T=155 F for Live Oil PVT Properties
(Dissolved Gas)

Table 6.5: Oil PVT properties

Oil Density @ Pb

49.0 Ib/ft3

Oil Viscosity @ Pb

1.1752 cp

Oil FVF

1.1572 rb/stb

Gas Oil Ratio GOR

310.7 scf/stb

(b) Fluid properties at Pb and T=155F for Dry Gas PVT Properties (No
vaporized Oil)

66

Table 6.6: Gas PVT properties

Gas FVF

1.3408 rb/Mscf

Gas viscosity

0.0171 cp

Gas gravity

0.6588

(c) Fluid densities at surface conditions

Table 6.7: Fluid densities at surface conditions

Oil

53.77 Ib/ft3

Gas

0.0520 Ib/ft3

Water

62.428 Ib/ft3

6.5 Well Test Analysis

Well testing was performed in GM-1 (wildcat well in the Gelama structure), At the
exploration stage, to test the hydrocarbon potential of the shallow marine coastal
sands below the Stage IVC Middle Unconformity (Unit 3 to Unit 6) while the Unit 7
and Unit 8 being the second objective. Main objectives of well testing were:

To evaluate the well productivity and flow performance.

To obtain reservoir data

To obtain representative samples (for PVT analysis)

To investigate the sand productivity

Three sets of surface PVT samples were collected during the stabilized Main Flow
period of GM-1 DST #1. Table C.4-1 in Appendix C.4 summarizes GM-1 DST #1
result while Table C.4-2 in Appendix C.4 provides calculated values obtained from
Pressure Transient Analysis of GM-1 DST #1.
According to the GM-1 DST #1, it can be concluded that:

Unit 8 of Gelama Merah field has proven to be an oil-bearing zone.

67

OWC was penetrated at a depth of 1535.5 m-MDRKB, about 5 m below the

bottom perforation.

The interpreted reservoir pressure at depth of 1525.5 m-MDRKB was

calculated to be about 2151 psia.

Permeability and skin of 140 mD and -2.1 respectively.

The perforation design for GM-1 is reasonable as it resulted in a negative

skin of -2.1.

There were no water and sand produced during Maximum Flow period of
GM-1 DST #1.

The actual productivity index (PI) of 3.46 stb/d/psi and flow efficiency (FE)
of 140%.

The best model to represent the Gelama Merah field is a moderately

homogeneous reservoir with skin, wellbore storage and a constant pressure
boundary.

6.6 Reservoir Simulation Study

Reservoir simulation is widely used to study reservoir performance by studying
different scenarios for estimating the applicability and recovery potential of the most
feasible recovery processes available for use.
Decisions made on simulation studies in this section are coupled with risk analysis
and/or economic evaluation models, giving a better and clear idea of any given
scenario.
Reservoir simulators play a very important role in modern reservoir management
process and are used to develop a reservoir management plan. This plan includes the
ability to monitor and evaluate reservoir performance during the life of the reservoir.
The objectives of this reservoir simulation study are to:
1) Determine the optimum drainage strategy and the possible recovery factor
2) Determine the optimum well development plan

68

3) Generate production forecast.

4) To propose the most profitable, economical and feasible development
strategy based on recovery factor, economics, and long term sustainability of
the reservoir.

6.6.1

Preliminary Studies of Reservoir Drive Mechanisms

From the petrophysical log of Gelama Merah-1 and Gelama Merah-ST1, shale
presence is clearly observed in all reservoir units. However, the continuity of the
shale layers is uncertain due to limited well data for the detailed correlation to be
carried out. Based on the log interpretation, this Gelama Merah reservoir is unlikely
to be supported by bottom-up water drive due to the presence of shale-barrier hence
support may be expected to come from the edge direction of the reservoir structure.
Due to this factor, weak aquifer support is expected to be acting in this reservoir.
Significant gas cap is observed from the log and MDT data and hence the gas cap
expansion drive mechanism will also expect to occur. The better prediction of drive
mechanism in Gelama Merah reservoir can be achieved if regional field data is
provided.
Energy plot
It should be noted that the results obtained by using MBAL is merely a prediction.
No history matching was performed due to unavailability of any production data and
the results obtained below is based on the simulation studies carried out and the
production data obtained from it is used here.
Figure 6.19 shows the drive mechanism of the reservoir vs time. The energy plot
shows the relative contributions of the main source of energy in the reservoir along
the history data time. The y-axis represents the percentage of the related drive
mechanism while the x-axis represents time.

69

Figure 6.19: Drive mechanism of Gelama Merah

From the energy plot that is obtained from Figure 6.19, we can identify that the drive
mechanism is dominated by Fluid expansion and Gas Cap expansion which
contributes about 80% of the reservoir drive mechanism. Aquifer support plays a
minor role in drive mechanism as it only support less than 10-15% of the total drive
mechanism. Thus the main drive mechanism of this reservoir would be fluid
expansion and gas cap expansion.

6.6.2

3D Geological Static Model Export

The reservoir parameters for the static model were based on geological and
petrophysical interpretations described in previous chapters. The geophysical
interpretations were already done for the modelers to execute the task. The overview
of the model is shown below in Figure 6.20.

70

Figure 6.20: 3D Geological Static model

A model dimension of 53*43*125 was generated for Gelama Merah field with a
regular orthogonal corner point grid system with total number of 284,875 cells.
6.6.3

Simulator Data Input

Equilibrium Data
Under this section, fluid contacts are defined based on the logs and MDT data. Most
of fluid contacts (gas-oil and oil-water) are known, either being observed in the well
logs or derived from pressure plots. For Gelama Merah reservoir, a common GasOil-Contact (GOC) and Oil-Water-Contact (OWC) are assumed at 1466.1 m TVDSS
and 1506.1 m TVDSS, respectively.
Fluid data
All reservoirs in Gelama Merah are in communication. Thus, it is assumed that one
PVT analysis is representative to all reservoirs.
Core Data
Relative permeability and endpoints from the correlation of Gelama Merah-2 ST-1
and GelamaPutih core analysis were assumed to be representative to the Gelama

71

Merah field area. In summary, three rock facies were classified according to the rock
facies as estimated in SCAL.

Table 6.8: Summary of rock facies

Sand Facies

Porosity Range
(Fraction)

Facies 1 (Poor rock)

Facies 2 (Moderate rock)

< 0.18

< 20

0.18 0.279

20 150

> 0.279

>150

Facies 3 (Good rock)

6.6.4

Permeability Range (mD)

Model Initialization

The Gelama Merah field simulation models were initialized to the STOIIP derived
from the 3D static model. Simulation models initialization is considered acceptable
so long as the STOIIP error is within 5% or less (STOIIP of Dynamic Model is 87.67
MM STB, Static Model is 88.05 MM STB, GIIP of Dynamic model is 90.6 BSCF
whilst Static Model is 93.83 BSCF). The minor difference is unavoidable given that
the 3D static model STOIIP was based on cell capillary pressure calculation, while
that of the simulation model initialization (STOIIP) used the capillary pressure
grouping calculation and the equilibrium conditions are obtained from the support of
the aquifer and gas cap. Also, due to the rock compressibility, pore volumes
calculated in dynamic model will be slightly different compared to static model.
6.6.5

Operating Constraints

Constraints are set to ensure the production profile and the development strategies
that will be proposed in well within the feasibility of facilities and equipments that
will be utilized in the development phase. Cases were run with the base conditions
except for their specific sensitivities. The base conditions are:

STOIIP (MMstb): 87.67

GIIP (Bscf): 90.602

Oil production rate (stb/d): 9000 for base case

Liquid production rate (stb/d): 15000

72

Cases were run until the end of field production and the wells were shut-in or
stimulated subject to the following constraints:

Minimum well oil rate (stb/d): 200

Minimum BHP (Psia): 1030

Maximum Watercut (%): 95

Well FTHP (Psia): 300

The minimum well FTHP was set relatively high in the model to ensure the ability to
export the liquids to the receiving platform.
6.6.6

Simulation Studies

Several sensitivity analyses were studied in order to come out with the optimum
development strategy. These include:
1) Well type sensitivity
2) Well completion sensitivity
3) Well count sensitivity
4) Depletion strategy sensitivity
5) Peak rates sensitivity
6) Production performance and forecast sensitivity
Well Type sensitivity
For the base case, the two existing wells in the exploration phases; Gelama Merah-1
and Gelama Merah-1 ST1 was used as the producer. The perforation intervals are
optimized in such that it will perforate only at the oil interval of the reservoir which
is in layer 9.0 to 9.1. Basically three runs were conducted and are summarized below
as shown in Table 6.9:

73

Table 6.9: Base case results

Case 1

Producer Well

Case 2
Gelama Merah-1

Gelama Merah-1

ST1

Case 3
Gelama Merah-1
and Gelama Merah1 ST1

Total Cumulative
Oil Produced

0.577

2.86

3.13

0.66

3.26

3.57

(MM stb)
Recovery Factor
(%)

From the base case runs, the two existing wells are not economical in terms of
completion and facilities costs associated with it. The recovery factor from the three
base runs was relatively low (below 4%). Thus considering the operating costs and
forecasted economic evaluations, new wells must be drilled as producers and new
sensitivities runs will be made based on the new wells drilled.
In order to optimize the capital expenditure, optimum number of well were
evaluated. Reservoir simulation study started with conventional vertical wells under
natural depletion (ND) via gas cap expansion. 11 vertical wells yield 10.7%
recovery. Then the numbers were added to 13 wells and the recovery only increased
by 0.9%. Due to the small increase of recovery, the drilling, completion and
operating cost of these additional wells will not justify a good economic return. As
such, simulation run with horizontal wells offers better economic potential. In the
case of horizontal wells, the optimum well count achieved from the simulation
results were 8 horizontal wells (RF=17.1%). The horizontal section of the wells was
positioned in area with high oil saturation confirming with logs, in order to get better
recovery. Figure 6.21 shows the Recover Factor (RF) and Field oil production rate
(FOPR bbl/day) plotted against Time (yr).

74

Figure 6.21: FOPR (bbl/day) & RF vs Time (yr) for Horizontal and Vertical Wells

Well Completion sensitivity

Well completion strategy was evaluated in order to maximize the recovery and
minimize coning problems which could yield to eventual shutting off the well.
Gelama Merah has around 42 meters of oil column. Given the relatively huge gas
cap size and weak assessed aquifer support, conventional well production (Vertical
wells) could be susceptible to gas coning due to high pressure drop. In addition, more
wells were required to achieve good recovery from multiple reservoirs. The best
recovery obtained from the simulation was achieved with 8 horizontal wells. Adding
more wells did not increase the recovery significantly, while reducing the number of
wells decreased the optimal recovery. The wells were strategically placed at bottom
one-third of the oil column in order to avoid early gas breakthrough or Localized gas
clasping and preserving the reservoir drive energy as much as it could. The range of
horizontal section used in the simulation was from 200 meters to 400 meters. Figure
6.22 below shows the Field oil production total (FOPT bbl) plotted against Time
(yr).

75

Figure 6.22: FOPT (bbl) vs Time (yr) for Horizontal and Vertical Wells

Well Count sensitivity

In order to optimize the capital expenditure, optimum number of wells was
evaluated. Wells with the lowest range of recovery were deleted one by one. Some of
the remaining wells were repositioned depending on the outcome of the simulation
result in order to try to get a better recovery. In the case of horizontal wells, the
optimum well count achieved from the simulation results were 8 horizontal wells
(RF=17.1%). Referring to Figure 6.23, adding additional well did slightly increase
the recovery factor but insufficiently justify the cost of drilling the extra well, thus
not economically attractive to further add more wells. While reducing the number of
wells to less than 8 wells, it decreases significantly the optimal oil recovery. Based
on this sensitivity analysis, it is more economically feasible to develop this field with
8 horizontal wells. Figure 6.23 below shows a plot of Field oil production rate
(FOPR bbl/day) and Recovery Factor plotted against Time (yr).

76

Figure 6.23: FOPR (bbl/day) & RF vs Time (yr) for 7, 8 and 9 Horizontal Wells

Depletion Strategy sensitivity

In an effort to improve oil recovery and to control the steep decline of pressure drop
due to gas cap expansion, gas and water injection scenarios were investigated. For all
the cases, the existing exploration well; Gelama Merah-1 was utilized as one of the
injector well. Reservoir pressure maintenance strategy through water injection (WI)
and gas injection (GI) schemes were investigated, using the horizontal wells
completion as base case. The simulation run shows that obtainable recovery factor
through water injection (in the case of 3 WI wells and voidage replacement ratio,
VRR=1) equal to 19.1%. With the gas injection scheme (in the case of 2 GI wells,
VRR=1 and no gas production restriction), the oil recovery factor reaches 21.4%.

1) Gas Injection
For the case of gas injection, huge amount of gas is needed to be injected
in order to maintain the VRR of one (1). Few cases were investigated by
applying no limits on injection which resulted in the injection pressure at
sand face exceeding the fracture pressure of the formation. Nevertheless,

77

sensitivity study was done to check the possibility of applying gas

injection to the reservoirs.
The oil recovery factor reaches 21.4% for the case of gas injection
scheme (with 2 injectors and no gas production restriction) with the
injection pressure being limited to 2500 Psia to ensure the formation
pressure not to exceed the fracture pressure. Even though gas injection
provides a better recovery factor, but the amount of gas required to be
injected is phenomenal (up to 110 MMscf/d), thus making this option
economically unattractive.
2) Water Injection
Similarly to gas injection, water injection also yielded a better recovery
than Natural depletion with a Recovery factor of 19.1% (3 injectors). If
oil production is not limited, bigger volume of water is needed for
injection to maintain the VRR of one. Again precautionary measures were
taken to ensure the formation pressure does not exceed the fracture
pressure due to injection. The recovery factor obtained for water injection
is only slightly higher than the natural depletion strategy, but huge
amount of additional investment would be required on the 3 water injector
wells and water injection facilities, which makes it economically
unattractive.
Figure 6.24 shows the simulation results that illustrates the production
and recovery implications of different strategies.

78

Figure 6.24: FOPR (bbl/day) & RF vs Time (yr) for GI, WI and ND

Table 6.10: Simulation results on production and recovery of different depletion cases

Case
Natural
Depletion
Water
Injection
Gas
Injection

Peak Oil Rate

RF

Incremental NPV @ 10%

(BOPD)

(%)

(RT, USD Million 2010)

Remarks

9000

17.1

14.2

Base Case

9000

19.1

-3.4

Uneconomical

9000

21.4

-12.7

Uneconomical

Based on the simulation results and the anticipated additional capital

expenditures, horizontal completion with Natural depletion is concluded
as the optimum development option and the most economically attractive.

79

Peak rates sensitivity

Sensitivity study was done on establishing the suitable peak rate for the oil
production. First simulation run was done without putting any limit to the oil rate and
gas rate. Two peak rates were studied in this analysis (7000 and 9000 bbl/day). The
optimum peak rate considered for this simulation run is 9000 bbl/day to ensure
maximum revenue to be earned in the early stages of field life because cash flows at
later stages are discounted heavily. Figure 6.25 below shows a plot of Field oil
production rate (FOPR bbl/day) and Recovery Factor plotted against Time (yr) for
the 2 peak rates studied.
Higher drawdown causes high production of gas-cap gas due to gas coning. To
arrest this issue, several sensitivities on peak rates and gas production were done.
The optimum peak rate was found to be 9000 BOPD with gas rate limitation of not
more than 30 MMSCF/day. Figure 6.26 shows the pressure decline between with no
limit on production of gas and the pressure decline when gas production is limited to
30 MMSCF/day. Limiting the total gas produced will decide on the size of
compressor to be designed and a smooth trend for reservoir pressure decline could be
obtained.

Figure 6.25: FOPR (bbl/day) & RF vs Time (yr) for 7000 and 9000 bbl/day

80

Figure 6.26: FPR (psia) vs Time (yr) for No Limit and Limit of 30MMSCF/day

Production performance and forecast sensitivity

First oil will be produced at a scheduled date of May 2015. The following Table 6.11
and Figure 6.27 shows the production forecast of Gelama Merah reservoir for 15
years and expected to produce up to a total of 14.96 MMbbl of oil (until the end of
PSC contract). With a plateau rate of 9000 bbl/day of oil for 2 years is to be
expected. The high plateau rate is imposed in order to produce as much oil as
possible in the early years to reduce the payback period. Table 6.11 below shows the
production profile of Gelama Merah.

81

Figure 6.27: FOPR (bbl/day) & RF vs Time (yr) for 9000 bbl/day

Table 6.11: Production Profile for Gelama Merah

Oil Rate

GOR

Gas Rate

Watercut

Bbl/Day

Scf/Stb

MMscf/Day

Fraction

9000

4133

37.25

0.052

9000

7636

68.83

0.287

5002

6511

32.57

0.585

3232

2817

9.10

0.680

2162

2129

4.60

0.753

1601

1953

3.12

0.793

1299

1811

2.35

0.812

1052

1699

1.78

0.827

900

1642

1.47

0.835

10

765

1546

1.18

0.841

11

700

1503

1.05

0.838

12

601

1571

0.94

0.844

Year

82

6.6.7

13

522

1441

0.75

0.847

14

420

1270

0.53

0.859

15

380

1374

0.52

0.857

Reservoir Management Plan

The reservoir management plan is developed in order to meet the objective of

Gelama Merah reservoir. The primary objective of the reservoir is to be produce
under natural depletion with oil production reaching peak rate of 9000 oil bbl/day.
To achieve the reservoir objective, the strategies discussed below will be
implemented.
Development and operating strategies

Reservoir will be produced with horizontal wells in order to maximize the

contact with reservoir and minimize drawdown to avoid gas coning/cusping
and also water coning. Due to the relatively huge gas cap size, gas coning is a
more prominent issue than water coning and thus, the horizontal section of all
the wells will be completed approximately bottom one-third of the oil
column.

Since the reservoir will be depleted naturally, the wells need to be

strategically placed with optimum well spacing to ensure efficient reserves
drainage.

Impose GOR limit or prioritize production based on GOR performance.

Gelama Merah has relatively large gas cap. From production performance
(Table 6.11), the GOR is quite high. Thus, GOR limit shall be imposed for
the purpose of controlling gas production. This is to minimize gas
coning/cusping in order to conserve the reservoir energy and minimizing the
reservoir pressure decline.

Simulation study shows that Gelama Merah produced quite a lot of water
from the first day of production. Hence close monitoring of water production
is essential to provide early corrective measures to prevent excessive water
production in early field life. Therefore it is essential to shut-in the wells

83

when water-cut reach 95% meaning that it is no more economical to produce

oil when watercut reaches 95%.

Gas lift would be required in the future once the water cut starts to increase
for suitable wells.
6.6.8

Reservoir Surveillance Plan

Good reservoir management strategy requires surveillance of the reservoir

pressure. Thus, annual static bottom hole pressure (SBHP) measurements
need to be conducted regularly. The BHP pressure data would be used to
continually monitor the reservoir pressure and areal pressure distribution. It
would allow re-evaluation of reservoir production strategy and also help in
determining the aquifer strength more accurately.

Initial flowing and buildup test (FBU) should be carried out, which would be
used to obtain the initial reservoir pressure, permeability, skin, reservoir
boundary and other useful parameters. The initial FBU data will be analyzed
to ensure the reservoir characteristics are considered in revising the reservoir
management.

Close monitoring should be done for daily oil, gas and water production rate
from all wells. Regular Assessment of the reservoir performance is required
to ensure the development plan is working or requiring any adjustment. Data
acquired would be important for history matching purpose and model
refinement.

Conduct a stabilized production test for each operating well at least once per
month to track well behaviour. The measurement of surface condition such as
tubing head pressure (THP), choke size and casing head pressure and API
gravity of the produced liquid hydrocarbon will also be recorded during the
production test.

From the production test, there was no sand production. Since the sand of this
reservoir is poorly consolidated based on core observation, the reservoir is
expected to produce sand sooner or later. Thus, sand production need to be
monitored on monthly basis to assess the integrity of the wells.

84

Updating the simulation model from time to time will be required to

incorporate new data and observe any divergence from actual performance
and decision should be made accordingly
6.6.9

Considerations for Enhanced oil recovery

Enhanced oil recovery (EOR) is an important consideration which a reservoir

engineer should make in order to improve the recovery especially at the later stages
of field life. EOR can begin after a secondary recovery process. EOR method is
considered as tertiary recovery in Gelama Merah reservoir management plan. In
order to ensure the success of EOR method, few available EOR methods were
screened according to the fluid and reservoir properties. Table C.5-1 Appendix C.5
shows the screening criteria for EOR.

Hydrocarbon Miscible flooding

Hydrocarbon-miscible flooding consists of injecting light hydrocarbons through
the reservoir to form a miscible flood. Hydrocarbon miscible flooding recovers
crude oil by
1. Generating miscibility (in the condensing and vaporizing gasdrive);
2. Increasing the oil volume (swelling);
3. Decreasing the oil viscosity; and
4. Immiscible gas displacement, especially enhanced gravity drainage with the
right reservoir conditions.
Hydrocarbon Miscible flooding is recommended for the oil with gravity API >
23 and viscosity < 3, which does match our reservoir conditions of Gelama
Merah field, but the limitations of this EOR method for recovery of oil is viscous
fingering which could results in poor vertical and horizontal sweep efficiency,
Large quantities of valuable hydrocarbons would be required.

Chemical Flooding
The primary goal for chemical flooding methods is to reduce the interfacial
tension (IFT) between oil and water. Chemical flooding can be considered as
EOR method for Gelama Merah field, however, detailed economic analysis
would be required as chemical flooding could turn out to be expensive. For

85

Gelama Merah field, polymer flooding can be considered as polymer flood could
improve the sweep efficiency during any water flood with the help of mobility
control agent that should sweep evenly through the reservoir, thereby increasing
the viscosity of water with the help of polymers.

CO2 Flooding
CO2 flooding can be considered as EOR method for Gelama Merah filed. CO2
flooding is carried out by injecting large quantities of CO2 into the reservoir.
CO2 extracts the light-to-intermediate components from the oil and, if the
pressure is high enough, develops miscibility to displace the crude oil from the
reservoir. In addition CO2 is much more effective in lowering the oil viscosity
than N2 and CH4. This method can be consider as EOR for Gelama Merah field
in the future if a good source of low-cost CO2 is available. CO2 flooding can
cause problems, especially if there is early breakthrough of CO2 in producing
wells. Therefore, a proper completion and facilities design are required in order
to mitigate the CO2 corrosion. Table C.5-2 and Table C.5-3 in Appendix C.5
show details technical screening guides for CO2 flooding.
6.6.10 Uncertainty Analysis

Lack of well data (uncertainties in SCAL properties)

The dynamic volumetric calculation and the fluid properties data (PVT) is based
on 2 well data alone as there was no other information available.

The PVT data used is based on calibration of newer fluid composition based on
the measured bubble point pressure. No actual lab data is present to confirm the
properties of fluid obtained from PVTi, i.e Properties obtained from PVTi
@2116 Psia were compared with the properties obtained form 2014 Psia,
assuming the properties will not differ much from the data given.

Understanding the reservoir properties is important to better estimate the initial

oil in-place and gas in-place. Averaging rock properties without proper control
might either lead to the underestimation or over estimation of the expected oil
and gas reserves.

The heterogeneity of the reservoir is uncertain because the data obtained is only
from 2 wells i.e Gelama Merah-1 and Gelama Merah-ST1.

86

The cores obtained from Gelama Putih-1 were assumed to be at the same depth
with Gelama Merah-1, i.e (having the same properties at the mentioned depths in
both wells) which might not be true interms of rock and fluid properties which
could differ from place to place.

Insufficient core data might have resulted in poor correlation of SCAL properties.

6.7 References
Ahmed, T. (2000). Reservoir Engineering Handbook. Gulf Publishing Company.
Dake, L. P. Fundamentals of Reservoir Engineering.
Craig, F. J. (1971). The Reservoir Engineering Aspects of Waterflooding.
Heriot-Watt University. (2009). Reservoir Engineering.
Heriot-Watt University. (2009). Reservoir Simulation.
Harrison, B., & Jing, X. D. (n.d.). Saturation Height Methods and Their Impact on
Volumetric Hydrocarbon In Place.
Novinpour, F., & Mousavi, S. C. (n.d.). Utilizing Petrophysical Logs and Core
Analysis to Define Rock Properties in a Mixed Lithology Iranian Reservoir.
Jaben, J. J., Martin, F. D., & Seright, R. S. (1997). EOR Screening Criteria Revisited
Part 1: Introduction to Screening Criteria and Enhanced Recovery Field Projects.
Jaben, J. J., Martin, F. D., & Seright, R. S. (1997). EOR Screening Criteria Revisited
Part 2: Application and Impact of Oil Prices.

87

7 Drilling Engineering
7.1 Introduction and Objectives
One of the main objectives for the drilling engineering is to create a possible design
of wells from the targets that has been given from the reservoir engineer while
making it economically sound and at concurrently obtain as much relevant
information as possible to further understand the reservoir by using logging tools
whenever possible.
This can be done by first aim is to know the location of the targets, obtain
information of any offset wells that may interfere with the targets, try to get a proper
location for the drilling platform and once the location has been selected, the
trajectories of the well can be made.
Even though the trajectories are made, pore pressures need to be calculated to get a
possible casing designs for each of the trajectories while at the same time fulfil the
requirements for the production technologists to create their own configurations to
the well.
All of the above requirements must be fulfilled to get a plausible well design targets
and as such, the objectives that was considered for this specific project are:
1. Design the trajectories with low dog-leg severity
2. Distance in measured depth to be drilled to be as low as possible
3. Within the limits of the capability of the drilling rig selected with the
estimated measured depths for all wells
4. Create a casing designs within the pore pressure and fracture pressure
estimation
5. Will not interfere with any offset wells or facilities
6. Estimate the cost for drilling
With the objectives and sequence known, the method to achieve the goals is by using
the Landmark Software. The Landmark software is sub-divided into different

88

software as there are different types, each with its own specialty. The types of
software used are:
1. Compass
2. Casing Seat
3. Stress check

7.2 Drilling History

At the end of 2002 and early 2003, Located 43km away from Labuan and 130km
from Kota Kinabalu, two exploration wells were drilled in Gelama Merah whereby
one was a vertical well and the other was a sidetrack of the vertical well with the corordinates of latitude 05 33 49.98 N and longtitude 114 59 06.34 E in offshore
Sabah. Reasons for the sidetrack are the possibility of finding potential extra
5MMbbls of hydrocarbon in the up-dip position of Unit 9 and to make full use of the
availability of the drilling rig to minimize the cost and time of drilling. Information
with regards to the wells is tabulated below:

Table 7.1: Summary of previous well data

Well name

Gelama Merah - 1

Gelama Merah-1 ST-1

Spud date

30th Dec 2002

14th Jan 2002

Reach date

5th Jan 2003

22nd Jan 2003

Actual Depth mRKB

1636

1797

Actual Depth mTVDSS

1635.8

1580.3

Status

Plugged and sidetracked

Plugged

DF Elevation (m)

27.3

27.3

Water depth (MSL -

42.8

42.8

DF to seabed (m)

70.1

70.1

Type

Vertical

Deviated

GOC (mTVDSS)

1492

1492

OWC (mTVDSS)

1507.7

1507.7

Maximum deviation

1.91

39.81

Seabed) (m)

89

angle
Deviation at TD

1.39

35.79

The wells were previously drilled using a semi-submersible platform called the
Hakuryu III and took an overall duration of 28 days. There were issues that rose
during the drilling of the past wells mitigations to be suggested for drilling any future
wells in Gelama Merah in each corresponding subsequent points. All corresponding
depths mentioned after this has a datum point from the drilling floor.
Information from the wells were recorded in the form of Mudlogging and wireline
logging, four logging suites were ran on Gelama Merah-1 which were the Super
Combo, MDT (Modular Formation Dynamic Tester), CSI (Combinable Seismic
Imager) and the SWC (Side-Wall Core). As for the case of Gelama Merah-1
Sidetrack-1, only the super combo was a successful run. An MDT logging was
attempted but the tool was stuck at 1571m which requires the tool to be fished out
using the drillpipe.
In attempt to further understand the geology of the reservoir, the SWC was done
where 26 cores were shot between the depths of 1086m and 1617m and 22 cores
were retrieved while 4 cores were empty although no particular reason was
mentioned on why it came up empty even though the recorded wireline logs has
shown the wellbore size to be quite consistent (12 ) throughout the section.
Mudlogging evaluation was also recorded in both the Gelama Merah-1 and the
Gelama-Merah-1 Side track-1 wells and the recorded information from both wells
and with information from the cores are compiled below (Note that the compiled
information is condensed from the geological section of report):

For Gelama Merah-1:

In between the interval of 553m-1120m, there are interbedding of Sandstone which
are mainly soft to friable in texture, with partly medium hard, which indicates that it
is unconsolidated, Claystone that are mainly soft to firm comprising of mainly of silt

90

and very fine quartz grain with some traces of carbonate rocks such as dolomite and
pyrite. Dolomite was also present with a hard to very hard texture.
As for the Interval of 1120m to 1320m, there are interbedding of claystone having
soft texture, comprises of partly silt with traces of carbonaceous matter and thin
sandstone that are mainly soft to friable in texture, with a mixture of silt.
In the interval of 1320m to 1636m, there is the presence of interbedded sandstone
and claystone. The sandstone is mainly soft to friable in texture, partly medium hard
again with traces of carbonaceous matter. For the claystone, it is very soft to soft in
texture, partly silty with very fine quartz grains and as before, traces of carbonaceous
matter were observed.
The Gelama Merah-1 ST1 well was drilled from a depth of 560m to a total depth of
1797m.
Between the intervals of 560m to 1200m, dominant sandstone interbedding with
claystone and dolomite were observed. The sandstone is mainly soft to friable and
partly moderately hard in texture with traces of carbonaceous matter, pyrite and
dolomite present. Claystone in the interval is very soft to soft in texture, partly
soluble and it comprises of mainly silt and some traces of very fine quartz grain and
the dolomite is moderately had to hard in texture.
For the interval of 1200m-1600m, the layer is dominant with claystone with minor
sandstone. The claystone has a soft to moderately hard in texture, partly soluble
comprising of mainly silt and partly very fine quartz grains and as before, there were
traces of carbonaceous matter. The sandstone is moderately hard to hard in texture,
mainly comprises of loose quartz grains and traces of carbonaceous matter were
present as well.
Finally in the interval of 1600m to 1797m, interbedding of sandstone and claystone
with minor dolomite were recorded. The sandstone here is moderately hard to hard in
texture, comprises of loose quartz grains with traces of carbonaceous, claystone
having very soft to soft in texture. It comprises of slit and traces of very fine quartz
grains. Dolomite grains here are moderately hard to hard in texture.
91

There is an evidence of erosion on layers U3.2, U4.0, U5.0, U6.0, U7.0, and U8.0 as
when they are correlated between the two wells, there are evidence supported by the
layers which are laterally discontinuous on Gelama Merah-1 ST1. The erosion also
gives to the evidence of an angular unconformity, which forms stratigraphic traps.
Stratigraphic traps are formed from an arrangement of seals and reservoir rocks.
Correlation of layers U9.0, U9.1 and U9.2 through both wells show that there is
lateral continuity of these layers, although the thickness varies from one well to the
other.

7.3 Drilling Targets

One of the first item to make a decision for was the number of wells to be drilled and
as previously mentioned in the reservoir engineering section, there are 8 targets
identified and therefore, 8 wells will be required to be drilled. The co-ordinates for
the wells are tabulated below:

Table 7.2: Co-ordinates of the targets to be drilled

Well name

Co-ordinates

Gelama Merah Producer - 1

276875.82

614958.09

276970.42

614958.09

277171.56

614933.09

276299.56

614633.1

276326.31

614683.09

276483.44

615033.09

276233.94

615233.09

276232

615333.09

276234.61

615458.09

276228.29

615583.09

276299.56

614633.1

276326.31

614683.09

276483.44

615033.09

276153.9

615983.1

Gelama Merah Producer - 2

Gelama Merah Producer - 3

Gelama Merah Producer - 4

Gelama Merah Producer - 5

92

Gelama Merah Producer - 6

Gelama Merah Producer - 7

Gelama Merah Producer - 8

276320.84

616383.1

274394.83

614328.98

274357.37

614329.75

274157.37

614325.06

276724.4

615733.09

276864.91

615983.09

275786.56

615558.09

275682.59

615658.09

275555.01

615758.09

With the known co-ordinates above, the following diagram can be made with all the
targets in place:

Figure 7.1: Diagram showing all the target locations with the exploration wells in place

It can be seen clearly the location of the exploration wells may pose as a problem in
hitting the targets but this has been considered when attempting to obtain the
trajectories using the landmark. One of the main considerations to take into account
is the number of locations for the drilling rig to be placed.

93

7.4 Platform Location

Given with the nature of the targets covering a wide range of the reservoir, an
optimum location which will ensure the aforementioned objectives could be
achieved. One of the main problems in the selection is not only the targets being
clustered in one section but with the Gelama Merah Producer-6 being in the far
sections of the reservoir, there is also the Gelama-Merah-1 and the Gelama Merah-1
ST-1 right in the middle of the targets to be drilled.
Another decision required is the number of locations to place the well and it was
decided to drill using one drilling rig at one location to ensure that the costs of the
drilling to be kept as low as possible as multiple locations can lead to increasing
costs as well as the drilling time to be extended due to rig moves. The addition of
extra facilities will further escalate the price for the overall project and therefore
selecting multiple locations to drill the well has been taken out of consideration for
this project.
As a reference for the location of Gelama Merah, the Geographic Reference System
uses a Geodetic System of Universal Transverse Mercator with a Geodetic Datum of
WGS 1984 in the map zone of Zone 51N. This is the actual reference datum to be
used to enable Landmark to calculate the co-ordinates of the rig.
This lead to an extensive study requires to be done to find the ideal location to satisfy
the objectives. The first objective is to consider a decent location where all the
targets could be reached should a rig be placed at the location and this is shown in
the figure below:

94

Figure 7.2: Possible location to place the rig (highlighted orange)

Reason to place the rig in such location is because of the location of Gelama Merah
Producer 6 which is at the edge of the reservoir and the location could extensively
reach all of the other targets but this requires further refinement. The next step
involves in a study to the rig at within the possible location and this was done using
the landmark location and making extensive trial runs to ensure that each trajectory
be achieved within the safety limits. The trajectories for each of the well will be
further elaborated in the subsequent section.
After performing the study using landmark, it was concluded that the area can be
sub-divided into 5 sections, each with their own effect should the rig be placed in the
section which can be seen in the figure below:

95

Figure 7.3: Subdividing the area for rig placement

The consequence when placing the rig in each section is tabulated below:

Table 7.3: Summary of consequence of placing rig in each section

Section
1

Consequence
GMP-6 can be drilled easily
All other well have a measured depth reaching close to 4000m
Extremely high Dog-leg severity for GMP-4

GMP-6 reached up to 5000m to be drilled

All other wells can be drilled without any problems
Extremely high Dog-leg severity for GMP-2, GMP-3 and GMP-4

At some cases the measured depth actually reached 3000m for GMP-3
GMP-2 and GMP-3 collided in some scenarios
GMP-6 reached up to 4000m to be drilled

All wells could be drilled but the measured depth for each well will go
beyond 3500m for GMP-5 and GMP-7

It was found that only when the rig is placed in Section 7.5 which will give decent
results. The final selection for the rig location was found to be at N 614 400, E
276100 or in terms latitude and longitude of 05 33 49.98 N and 114 59 06.34
E.

96

7.5 Well Trajectories

With a rig location, it is now possible to create trajectories for the well. There are a
few matters that require further study. In particular is the location of the offset wells
that can create problems in the drilling design. This is where using the Compass
software in Landmark as one of the features available is the anti-collision capabilities
using the landmark software. This enabled the study of trajectories with a selected
drilling platform location and will ensure that the trajectories made will not collide
with any existing offset wells.
Another factor to be taken into account when designing the well is the dog-leg
severity. For the designs for all of the wells, the dog-leg severity is to be kept at a
minimum angle as possible while still maintaining the trajectory to hit the targets.
The basis in designing the trajectories into the well will have the following
configurations to be placed into the software:
1. All the wells will be built based on the optimum align setting which will
allow the software to calculate a trajectory at the lowest build up rate as
possible to hit the targets
2. The dog-leg severity is to be kept at a minimum as possible
The anti-collision is made to set at the default settings as it will attempt to make sure
that the wells are not close to each other in accordance to its algorithm and by having
it to calculate the distance from the centre of the wellbore from one well trajectory to
another trajectory.
As it can be seen in the previous section, the GM-1 and the GM-1 ST-1 is right in the
middle of the targets and this cause a problem when it comes to creating the
trajectories but this problem could be overcome by a slightly risky method which is
to drill between the two wells. This can be described with the figure below:

97

Figure 7.4: Highlighted area showing the window zone which could be used to drill the targets

After inputting all the necessary information required by the software, the trajectories
can then be obtained and the final design is shown below:

Figure 7.5: Top view of the trajectories

98

Figure 7.6: Side view of the trajectories

Figure 7.7: Top view showing trajectories with the exploration wells

99

Figure 7.8 Side view showing the exploration wells and the producing wells

The anti-collision did detect that the GM-5 and GM-7 were close to the GM-1 and
the GM-1 ST-1 respectively, it did not generated an error report indicating that it is
possible to drill the targets although it did produce a warning which mentions that the
wells are being close. On the other hand, crossing through the GM-1 ST-1 well
would generally be considered as a hindrance as the well is an open hole well which
may have just been cement plugged but caution will still be taken to ensure that the
wells does not intersect with each other.
With the calculated trajectories, the depths of the wells can then be summarised the
table below:

Table 7.4: Summary of the producer wells to be drilled

Well name

Depth

Well type

1424 mTVD
Gelama Merah Producer - 1

Horizontal
2329.7 mMD

100

1417 mTVD
Gelama Merah Producer - 2

Horizontal
2280.9 mMD
1408 mTVD

Gelama Merah Producer - 3

Horizontal
2306.2mMD
1430 mTVD

Gelama Merah Producer - 4

Horizontal
2132.7 m MD
1435 mTVD

Gelama Merah Producer - 5

Horizontal
2858.1 mMD
1434.9 mTVD

Gelama Merah Producer - 6

Horizontal
2800.4 mMD
1428 mTVD

Gelama Merah Producer - 7

Horizontal
2595 mMD
1428.9 mTVD

Gelama Merah Producer - 8

Horizontal
2358.5 mMD

7.6 Rig Selection

With the known approximation of the required to be drilled for all of the wells, the
technical capability of the drilling rig must be considered so as to be able to drill all
of the objectives safely. The suggested capabilities for the rig must be able to deliver
the following:
1. Capable to drill wells up to 3500m MD
2. At least having 9 slots for the drilling template
3. Can withstand the weather conditions during the South East Asia Monsoon
season as well as capable of withholding water depths above 50 meters
4. Has loading capabilities of handling 3000m of drillpipes (excess of 1 million
pounds of weight)

101

5. Having mud pumps capable of delivering high pressures of mud when

needed, Three mud pumps would be preferred, two pumps used while drilling
and one pump to be used as back-up
6. Solids control capable of handling fine sands as records from past wells
indicate the presence of unconsolidated formations.
It is known that the water depth level was 42.8 metres and taking into account the
drilling depths as well as the weather conditions, two types of rigs were considered
which is either the Tender barge or the Jack-up rig (particularly an IC300).
Both of the rigs can easily fulfil the requirements although there is one factor that
differentiates between the two which gives the decision to use a Jack-up. The
deciding factor is the cost of hiring the rig. Although a Tender barge can
accommodate more slots and drill further but the cost according to Rigzone showed
the Jack-up rig to be about half the price of the Tender rig.
The drilling rig in mind to be hired is a readily stacked rig named West Janus in
Malaysia having the following specifications:

Table 7.5: Rig Equipment

Derrick:

Dreco 147' x 30' x 30'; Capacity: 1,330,000 lbs

Drawworks:

National Oilwell E-3000 2,460 HP

Mud Pumps:

2 x National Oilwell A-1700-PT triplex, 1600 HP

Top Drive:

Maritime Hydraulics DDM-500 Electric driven

Rotary Table: Oilwell 49.5 in. diameter Powered by one 1600kW motor

Table 7.6: Rig Construction Details

Classification:

DNV

Rig Design:

Gusto Engineering

Built By:

Rauma Repola Oy at the Rauma Repola Finland shipyard

Delivery Year: 1986

Flag:

Russian Federation

102

The rig is readily stacked in South-East Asia and fulfils the issues raised. The West
Janus is an independent leg Cantilever having a rated water depth of 300ft and a
drilling depth of 21000 ft. Although other rigs are also available in South-East Asia,
this rig would be considered as ideal for the time being.

7.7 Available Well Configuration

After getting the possible trajectories for each of the producer wells, there are a few
items which require considerations. The foremost information that needs to be
decided first the final hole size at the target depths of each well and this information
can only be planned after the following information was known:

The desired production or completion tubing to be used

The type of completion to be done to the well (is sand control required?)

The type of logging to be done to the well as there might be some difficulties
when performing any logging with a highly deviated well

There is a need to know if any contingency hole to be drilled

There is a need to know if the rig is capable to drill the proposed producer
wells

The main reason for the above consideration is that when attempting to calculate for
the casing size, kick tolerance, setting depths and given that the well configurations
are all horizontal, this is a serious decision as it will affect the entire project. Given
that the wells to be drilled are all producing well, the decision of the contingency
hole could be cancelled off as it is mostly during the exploration stages where you
would decide on extending the wells further down to obtain more data and in terms
of the logging tools to be used, it is not as extensive as the logging programs that has
been done on the exploration stages.
When it come to the completion designs, the tubing size to be selected which will be
further elaborated in the production technology side will be either a 3 tubing or a
2 tubing and with the possibility of adding sand control equipment and therefore

103

an 8 open hole would be required at the target depths for each of the wells to be
drilled.
The reason for a 8 open hole is required is due to the tubing size completion
strategy and as majority of the cosmetics or jewellery for the tubing are readily
available off the shelves for an 8 open hole and thus will lower the costs rather
than having a 6 open hole or having a 12 open hole as some modifications or
fabrications will be needed to be done to provide the target production rates specified
by the reservoir engineer for the production technologists to achieve.
As such, the decision now is to have a well configuration as follow:

Figure 7.9: Available well configuration

The above configuration was decided based on the fact that it is one of the most
typically used configurations and thus the equipments can be readily available when
needed.

7.8 Drillbit Selection

For the case of drilling the exploration wells, two types of bits were used which is
the roller cone bit and the PDC bit but there were problems encountered when using
the PDC bit as it did not performed as expected and hence, there was a need to have

104

a bit change back to a roller cone to finish of the hole section. A summary of the bits
used is tabulated below:

Table 7.7: Summary of the drillbits used when drilling the GM-1

105

Table 7.8: Summary of the drillbits used when drilling the GM-1 ST1

Based from what could be understood from the exploration wells, the most suitable
bit to be used will be the Roller cone bit. Although a bit run cost analysis could be
considered, there are two problems in the attempting to make the study where the
first is that the cost of the bit is not entirely known and although it could be
estimated, this is where the second problem lies. The second problem is that the
analysis can only be made on roller cone bits and the manufacturer type only shown
that the bit types used were suitable in medium to soft formation and with the PDC
bit only being used once for a distance of 4 metres, it could not be used to represent
as a firm justification to take PDC out of consideration.
Therefore the type of bits that would be considered to be used in the 24, 17 and
the 12 hole section will be the roller cone bit and for the 8 hole section, the
use of a PDC bit may be considered as at the target depths for the wells, the

106

formation is mainly conformable and therefore using a PDC bit may actually
enhance the drilling rate of the wells.
As a contingency, an 8 roller cone bit will be prepared as well should the
performance of the PDC bit follows the same performance during drilling the
exploration wells.

7.9 Drilling Fluid

When drilling the exploration wells, the type of mud used when drilling both of the
exploration wells is tabulated below:

Table 7.9: Mud types used during drilling the exploration wells

Gelama Merah-1 and Gelama Merah-1 ST-1

Type

26" hole phase (70.1m to 110m)

Seawater with high viscosity sweep

17" Phase (110m to 553m)

Seawater with high viscosity sweep

12" Phase (553m to 1636m)

KCL / PHPA

And as for the range of mudweight used was from 8.9ppg which gradually increased
to 12.5ppg. There was also no mentioned of any mud losses or any kicks encountered
although again high background gas was recorded inside the mud when drilling the
Gelama Merah-1. As for the drilling of the production wells, the design involves in
using some information from past wells as experience has shown no problems
although some improvements has been considered in terms of additives and to give
extra weight to the mudweight to counter the problems of increasing gas cuts in the
mud.
The setting considered for the wells is just like the exploration wells with the first
two phases to use seawater with high viscosity sweeps and with the 12 and the 8
sections to use KCL/PHPA but this time with increased mudweight and higher
viscosity to improve the prevention of unconsolidated formation to collapse as a
mitigation method. This also could prevent the gas to enter the borehole. The
estimations is found by adding a 100 psi overbalance at certain depths after the
107

casing shoe and this has led to the design to have mudweight ranging from 8.9ppg to
12.8ppg.
The aforementioned range above lies between the mudweight window which can be
seen in the pore pressure and fracture pressure plot. To elaborate further in the
mudweight window, it can be considered as the upper and lower bounds in the
drilling fluid density before any losses or formation fluid invasion occurs. As a safety
factor, a 0.5ppg window was added between the upper and lower gradient to act as a
safety buffer. The main risk of decreasing the size of the window could lead to
chances of instability of the wellbore to be higher but this is to ensure there is a
safety net in the design as having a high overbalance of mud can lead to mud losses
or differential sticking or with low weight could lead to wellbore collapse. This will
be further discussed in later sections in the safety and hazards with mitigation.
Therefore the mud design during drilling the wells will have the following settings:

Table 7.10: Mud design to be used during drilling the Gelama Merah Producer wells

Hole section Mudweight range (ppg)

Type

24"

8.9 - 9.2

Seawater with high viscosity sweep

17 1/2"

8.9 - 9.2

Seawater with high viscosity sweep

12 1/4"

9.4 - 11.9

KCL / PHPA

8 1/2"

12.0 - 12.8

KCL / PHPA

Taking the unconsolidated formation into the picture, the mud design should also
include a low shear rate design with a minimal flow rate to prevent the erosion of the
filter cake while drilling which is the rationale behind getting three mud pumps. This
is to ensure constant mud being pumped at low pressures per mud pump yet at the
same time allows large volumes to flow at low rates.
The mudweight used may actually be lower than the range being used as increasing
the mudweight is not usually the answer to any hole instability problems and
increasing the weight may actually amplify the problems.

108

7.9.1

Pressure Profiles Considerations

Gelama Merah pressure profile study

The pressure profile for Gelama Merah was not readily available at the point of study
although it was mentioned in the final well report that information in the Overburden
stress, fracture pressure and pore pressure were calculated. The overburden pressure
during were made from the bulk density obtained from the Schlumberger wireline
logging tools in the Bokor Tenggara-1 well which was not in-hand at the time of
making this project therefore pore and fracture pressure estimations were required to
be made. The calculations were based on Eatons method using the sonic log data
available and the steps to obtain the pressure profile can be seen in the Appendix
D.1.

7.10 Casing Design

In terms of the casing design, the setting to be used will have a basic structure from
the GM-1 field. This includes the 20 conductor casing, a 13 3/8 intermediate
casing and a 9 5/8 production casing. These settings used in landmark are casings
which are readily available off the shelves and therefore the design will mostly
consist of the default information available in the software.
Using the Casing seat software, it will then calculate possible casing shoe depths
based on the pore and fracture pressures inputted and this will automatically generate
a casing design for each well and the kick tolerance used for the casing setting depths
is.
The range for the casing shoe depths differ for each of the producer well and the
summary is tabulated below:
Table 7.11: Summary of casing shoe depths
Well name

GMP-1

GMP-2

GMP-3

GMP-4

GMP-5

GMP-6

GMP-7

GMP-8

20" Conductor

125.12

130

130.14

130

130

130

125

130.15

13 " Intermediate

573.81

566.71

770.71

768.59

1270.22

568

1293.99

766.13

9 " Production

1967.14

2079.83

2150.45

1757.68

2595.59

2508.38

2345.83

2094.31

Target Depth

2399.84

2351.49

2376.32

2202.82

2928.24

2870.49

2665.13

2428.59

Setting Depth (m MD)

109

During the design phase of the casing seat, the final casing (9 ) was placed with a
setting depth just before the targets to allow the final section (8 ) to be an open
hole covering the target zones provided. The kick tolerance used for each section is
as follow:
Table 7.12: Kick tolerance used in designing the casing shoes

Casing size Kick tolerance (bbls)

20

10

13

25

50

All of the design factors for the safety including the pipe body and the connection
have been considered and the values used have been tabulated below:
Table 7.13: Design factors used in the casing designs

Pipe body
Burst

Connection
1.100

Burst/Leak

Axial
Tension

1.100

Axial
1.300

Tesion

Compression 1.300
Collapse

1.000

Triaxial

1.250

1.300

Compression 1.300

Input required when making the stress checks to be included in the burst and collapse
design is the production data which is the packer depth, brine weight and the specific
gravity gas gradient. The packer depth is assumed to be just at the 9 casing shoe
and for the brine selected for the packer fluid depended on the equivalent mudweight
of the water from the MDT information obtained from the GM-1 well. The water
gradient was 0.4295 psi/ft in which at the average target depths will give a rough
pressure of 2100 psi and adding for the 150 psi overbalance for brine will give an
EMW of 8.6ppg which will be used for the packer fluid. The specific gravity of gas
was obtained from the production technology data and was found to be 0.65.

110

Other factors were taken into consideration when making the burst or collapse study
for the casing design obtained from the design. Listed below are the considerations
that were taken into account when making the Burst loads for a well:

Displacement to gas

Gas kick profile

Fracture at shoe with above gas gradient

Fracture at shoe with 1/3 bottom hole pressure at surface

Lost returns with water

Pressure testing

Cement pressure testing and

Drilling ahead

For the study for the burst loads in the production casings, the list below shows what
was taken into account:

Pressure test

Cement pressure test

Tubing leaks

Stimulation surface leak and

Injection down casing

As for the Collapse load calculation, to further make the design much more
justifiable, the following factors were taken into consideration:

Cementing loads

Fluid evacuation below and above the packer

Gas migration

A final description of the study will then be automatically generated and to further
improve on the design, the casing material and be selected but at the same time the
collapse or burst rating of the pipe must not exceed the pressure exerted by the
formation in the casing. A sample of how the results appear for the Gelama Merah

111

Producer-8 is placed in Appendix Figure D.2-1, D.2-2 and D.2-3. All other wells
have shown the same trend by using the selected casing material.
For the casing design selection, there is a need to know the conditions of the
reservoir and the conditions at the surface as well. The reservoir has traces of carbon
dioxide with temperatures reaching 155 degrees Fahrenheit. No traces of Hydrogen
sulphate were mentioned and by accordance of the casing steel grade standard and
code, the following casings were considered:

Table 7.14: Casing material selection

Casing type

Material Selection

Connection

20 Conductor

J-55

BTC

13 3/8 intermediate

L-80

BTC

9 5/8 production

L-80

BTC

The reason for using the J-55 steel for the 20 is because the steel grade is one of the
most common casing available in the market and although the K-55 have the same
minimum yield strength, the deciding factor is the ultimate tensile strength as the K55 has a higher UTS than the J-55 and having a thicker wall making it as a better
option to be used as it can for higher temperature wells but with the J-55, it can have
better mechanical and thermal fatigue resistance and crack resistance than the K-55
so as to endure the monsoon seasons. There may be need to add further materials to
coat the casings to prevent corrosion by seawater.
As for the selection of L-80, the deciding factor on why it is to be used is to protect
against corrosion in the reservoir. Even though there are just small traces of carbon
dioxide in the well, it should not be taken lightly as there could be a possibility that
the concentration may increase throughout the development phase.
The type of connection structure selected will be the buttress thread connection on
the basis that it is one of the most typical casing connection types to be used.

112

7.10.1 Casing Cementation Programme

After placing the casings into the open hole, it is then required to cement the casings
into place. The function of the cement which is typically made up from calcareous
and argillaceous rocks is to prevent any movement of fluid between the permeable
zones and to provide support of the wellbore, preventing any collapse of the
formation inside the reservoir while drilling. It will also give support to the casing
string being put in place while providing protection against corrosion from the
reservoir fluids.
There are different classes of cements available and in terms of selection of which
cement to use is heavily dependent on the conditions of the well being drilled.
Classes ranged from A to J and each class depend on how deep the well is being
drilled as well as the temperature of the reservoir at its own specific target depths.
One of the basic cements considered for the design is the Class G or the Class H
cement. The properties of the cements are effectively similar in terms of both can use
accelerators or retarders with moderate to high sulphate resistance by using water as
the addition to create the cement. The main difference between the Class G and the
Class H is that the Class G cement has a much finer texture as oppose to the Class H
with a courser texture.
Looking back into the exploration wells, the type of cement used was the Class G
cement was the Class G cement, as there were no problems were encountered during
the cementation programme, for the basis of cementing programme calculation and
estimation, the same type of cement will be used for the producing wells.
With Class G cement being used, the available information from previous well
reports informs that the weight used was at 15.8ppg with a yield of 1.19ft3/sack. This
will be used as a basis for the calculating the estimated amount of cement sacks
required. As for the mixwater, referencing from the Harriot Watt Drilling
engineering notes suggest using a value of 4.96 gallons/sack.

113

The casing seats for each of the wells have been mentioned in the previous section
and therefore the calculations are done manually based on each casing section for
each well. Below is the summary for the cementing calculations:

Table 7.15: Cementing summary for all the producing wells 1 to 4

Table 7.16: Cementing summary for all the producing wells 5 to 8

114

Summing up the total amount of cement (791.53 tonnes) to be used and by using the
estimate for the yield of the class G cement, the total number of sacks of Class G
cement is estimated to be at 27,971 sacks of cement. Note that this estimate includes
a 10% excess used while calculating the volume of cement.

7.11 Logging Programme

Obtaining information from the wells is one of the rule of thumb in the drilling
industry and it was already mentioned in the previous sections the type of logging
programme which has been done in the exploration wells. For the case of the
producer wells, it will not be as extensive as the logging programme during the
exploration phase but there will still be plans to get hold of as much information of
the reservoir as possible. Logging while drilling tools will also be used throughout
the drilling programme of GMP-1 to GMP-8 as well as Measurement while drilling
tools given that all the wells are deviated with a horizontal section for the 8 open
hole section.
The logging programme suggested for a well is commonly in the 12 hole section
which includes the Super combo (Includes Density, Neutron, Sonic, Calliper and
Resistivity tools), Modular Formation Dynamic Tester, Cement bond logging and
Side-Wall Coring but the sidewall core and the MDT will only be run at certain wells
only (referred as Full logging programme). Wells that do not include the SWC and
MDT logging will only run the supercombo and the cement bond loging tool
(referred as Partial logging programme). A summary of the logging programme is
tabulated below:

Table 7.17: Logging summary for the field development project

Gelama Merah
Producer #
1
2

Logging job
Full Logging programme
implemented
Partial Logging
programme implemented

115

Coring job

Coring to be done
Coring not to be done

3
4
5
6
7
8

Partial Logging
programme implemented
Partial Logging
programme implemented
Full Logging programme
implemented
Full Logging programme
implemented
Full Logging programme
implemented
Full Logging programme
implemented

Coring not to be done

Coring not to be done
Coring to be done
Coring to be done
Coring to be done
Coring to be done

The wells were selected for the coring due to coverage of the reservoir. The Gelama
Merah Producer wells number 2, 3 and 4 were not selected for the Side Wall core
logging because the wells were close together hence the coverage has been
considered as adequate for any correlation to be done.

7.12 Potential Drilling Hazards and Mitigations

7.12.1 Shallow Gas
Given that high concentrations of gas has been recorded when drilling the GM-1 and
GM-1 ST-1 well, there is a possibility of shallow gas pockets to be present should
any gas migration has occurred to anywhere close to the surface and

to be

encountered when drilling any new wells in this field. This poses as a drilling hazard
as this is a potential cause for the increased likelihood of a gas kick to occur if this
field was found out to be a gas field but to date, the only mitigation would to either
drill any pilot hole prior to opening up and continue with drilling operations which is
not highly recommended as previous wells drilled showed no signs of shallow gas or
to drill with slightly heavier mud that previously used or to drill with caution while
monitoring for any abnormal drilling parameters recorded.

116

7.12.2 Unconsolidated Sand problems/Stuck pipes/ wellbore stability

The situation could happen when drilling into unconsolidated since bond between
particles are weak, particles in the formations will separate and fall down hole. If
there are a lot of unconsolidated particles in the annulus, the drilling string can
possibly be packed off and stuck. This brings the issue of wellbore stability as it can
create an over-gauged hole. Should there be an over-gauged hole recorded in the
wireline logs, problems will arise during running in hole of any BHA, logging tools,
running in the casing and even during the cementing jobs.
There are some observable indications of stuck pipe due to unconsolidated
formations. One way is to continue observing the shale shakers if there are unusually
high contents of gravel or sand with increasing mudweight, rheology of the mud and
high sand contents in the drilling mud. Other warning signs include abnormally
increasing pump pressure or drilling torque with losses recorded in the drilling fluid
levels in the mud tanks. If during pulling out of hole, abnormal drag seen can be an
indication of unconsolidated formation with a possibility of bridging.
Should there be any one of the warning signs observed, first mitigation plan is to
circulate at low pressures. Preventive measures would be to use high viscosity mud
to aid in hole cleaning and the drilling mud to be kept constantly at its specification.
The ROP should be controlled at the depths with known lithology of unconsolidated
formation.

7.12.3 Lost Circulation

Lost circulation occurs when there are unusually high mud losses even while mud is
still being pumped into the well via the drillstring. Although these losses could be
considered as seepage into the formation but the losses into the formation must be
taken note off. The reservoir has high unconsolidated formation sections and these
sections pose as possible zones for lost circulation to occur. The implication for lost
circulation occurrence will be in the daily mud costs as new mud is required to be
made on-site and can further escalate the drilling cost.

117

The mitigation for such problems is in the preparation of Loss circulation material
on-site. A small mud tank should be prepared at times when drilling the 12 and
the 8 sections.

7.12.4 Shale Instability

Shale instability will occur when water in the mud is absorbed by shale formations
causing swelling effect on formations. When there is high amounts of water, shale
will not be able to hold their particles together and finally falls apart into the well.
This can lead to borehole collapse and can cause stuck pipes to occur.
The only mitigation is to maintain a level of clay inhibitor in the mud during drilling
as well as monitoring the shale shakers for unusual amount of clay or gumbo
appearing to surface. Should the warning indication appears, the drilling operation
must be halted for a while to ensure that the mud being used is at its correct recipe or
if any additional additives is required to be added.

7.12.5 Presence of CO2, H2S or Hydrocarbon Gases

The presence of gas has been recorded during the drilling of both wells with C1 to
C5 began to be recorded from 1330 to 1485m in GM-1 with the highest peak of
31.59% at 1348m while in GM-1 ST-1, the presence of C1 to C5 was recorded at
1670 to 1682m having a gas percentage of 9.13%, highest gas peak recorded at
1645m having a percentage of 11.82%. Given that gas contents were monitored
during the drilling of both wells, there were no indications of any presence of H2S in
the reservoir so far.
As for CO2, there were records mentioned in the reservoir fluid properties although it
was deemed to be at safe concentrations at 0.69 mol% in the well stream so the
casings would not be at risk due to corrosion by carbon dioxide in the system.
There was no information of H2S ever mentioned in the offset reservoirs from the
study of geology although even if the gases were not present, caution would still be

118

taken using the H2S indicators/alarms. Gas readings will be constantly monitored
during any drilling phases.

7.12.6 Presence of Faults

It was highlighted that the field was close to the Morris Faults in the western side of
the East Baram Delta, this gives clear indication on the importance on selecting the
drilling location as well as the well trajectory as there is the possibility of hitting the
eastern side of the Morris fault. Although during the drilling of the GM-1 and the
GM-1 ST-1, there was no indication of faults being encountered as no abnormalities
were seen according to the temperature logs, gamma ray logs and the D-exponent
curves but this does not mean that caution should not be taken during drilling and
since no seismic data is available at this point, there is no possible way to tell if the
field has any presence of faults. The only mitigation to this is during drilling and to
take note for any abnormalities that may be seen.

7.12.7 Abnormal Pressures

Taking information from the final well report, no abnormal pressure readings were
recorded as there were no records of faults as discussed in previous sub-topics
although there were mentions of increasing pressure readings from the depths of
1318mMD while drilling the exploration wells but this is not due to the formation
and was concluded to be due to the increasing background gas readings. This was
also deemed unrelated to any overpressure occurrence in the reservoir so it can be
concluded that any form of abnormal pressure would not be expected when drilling
the producer wells.
7.12.8 Possibility of any transmission line or gas lines
Prior to any installation of the facilities, a sonar reading will be required and this can
help in detection of any transmission line or gas line that may have been installed.
This pose as a problem should any accidents occur as it could disrupt not only the
project itself but will also affect the public in general and interrupt
telecommunication services. There is also a possibility of hazardous substances to

119

escape into the environment due to the negligence of surveying the possibility of any
gas lines in the vicinity.

7.13 Well Control

7.13.1 Blow-Out Preventer (BOP) Configuration
By definition, a Blow-out Preventer is an important safety tool to be used as a last
resort when the well being drilled has an uncontrolled flow from the reservoir (called
a kick) or a blow-out if the kick escalates to large volumes and high pressures. The
equipment consists of either an annular or ram preventer which is capable of holding
back pressure and fluid when used. The BOP is intended to be a fail-safe device
when used.
Referring to the final well report, there was no detailed background information on
the BOP used apart from the well diary which mentions brief details of the BOP
being tested. The available information suggested the BOP used to be as follow:

Table 7.18: BOP configuration from the exploration wells

Section

BOP Type

Possible highest Pressure rating (psi)

Upper

Annular

3500

Middle

Pipe

5000

Lower

Pipe

5000

The fracture pressure estimates have shown that the highest pressure at the target
depth to be at an average of 4264 psi and taking this as a basis on selecting the BOP
design, the setting for drilling the producer wells will be similar to what was used
before which will be a BOP with a handle rating of 5000 psi for the middle and
lower sections using pipe rams and an annular preventer for the upper BOP would be
sufficient.

120

7.14 BHA Performance Considerations

Due to the nature of the wells having deviated trajectories, the approach to ensure a
good performance during drilling is the consideration of the BHA. Because of the
nature of the reservoir, it may be preferable to kick-off early to maintain a build
angle so as to hit the targets at its proper trajectory. This is due to the difficulty in
controlling the direction in unconsolidated regions. When building up the trajectory,
it would be wise not to start building the angle at the bottom of a casing shoe to
prevent keyseating of the casing shoe and at the same time not to kick off at a deep
depth so as to avoid building in unconsolidated zones.
When attempting to build the trajectory, maintaining the WOB similar to what was
applied in the sidetrack wells may be advisable where the WOB used at a highest of
17000 tonnes.

7.15 Drilling Time Estimates

An important factor when making a Field Development Project is to estimate the
drilling project duration. For the drilling of the Gelama Merah Producer wells, all of
them follow a similar template, the only difference that dictates any extended
number of drilling days is due to the depth to be drilled or if the side-wall coring to
be done for the well. The template for drilling the well is as follow:

121

Table 7.19: Template for drilling a producer well

The drilling estimates can then be done for each of the producing well and is
tabulated below:
Table 7.20: Showing the duration of drilling for each of the producer well

Gelama Merah Producer #

Duration (days)

24.21

22.48

22.77

21.43

28.77

28.06

26.93

24.72

122

As it can be seen above, the longest time to drill the well is the Gelama Merah-5 with
28.77 days and the shortest time to drill the well is about 21.43 days which is the
Gelama Merah Producer-4. Take note that the drilling duration estimation tabulated
above includes both the drilling and completion time and does not consider the rig
move and abandonment yet. Further breakdown on the drilling duration can be seen
in the Appendix Section D.3 Drilling Days Estimation.
For the drilling of the Gelama Merah Producer wells, the aim is to spud in the year
2015 and with the know drilling time estimates and the tentative spud date. The
drilling dates can then be estimated for the entire life of the drilling operations.
Taking the rig move and mobilisation, the duration is estimated to take 21 days with
a week as a contingency window. Tentatively now the aim is to get the first oil by
June 2015 which result in the expected drilling time to be in May and the rig move
to begin in April 2015. Summarised below is the estimated drilling time for the
whole drilling operations and the plot of the drilling estimations can be seen in the
Appendix D.3.

Table 7.21: Summarised table for the combined drilling operation estimate

And as it can be seen the duration for the overall drilling operations including the
demobilisation will take about 256 days or roughly about 8 months in total. The
aim is to also produce immediately after drilling one well. To summarize, the
tentative drilling time is tabulated below:

123

Table 7.22: Tentative drilling operation dates

Activity

Tentative date

Rig Move date

11th March 2015

Spud GM-1

1st April 2015

GM-8 completion done

17th October 2015

End of Rig Demobilisation 31st October 2015

7.16 Costs Estimates

The drilling costs estimates has been made for each of the well and the costing for
each well covers the overall activities which includes the mud, cementing, daily rig
rate, logging, completion to name a few. All of the price estimates were obtained
either from the Que$tor software as advised by Mr. Rozmee Ismail or as advised by
Mr. Ramlan Latif, the drilling consultant who gave a template of drilling activity
prices when he came to give consultation on our project. Additional information with
regards of the rig cost was taken from Rigzone and the average cost of a Jack-up was
found to be US$89,000 which will be used in the cost estimation.
Using the Que$tor software, the following costs were obtained and a further
breakdown of the drilling costs can be found in the Appendix D.4 Drilling Cost
Estimation:

Table 7.23: Total drilling cost estimate using Que$tor software

Drilling

Costs (US$)

Equipment

$8,699,000

Materials

$15,378,000

Installation

$33,646,000

Design and project management $1,425,000

Insurance and certification

$2,369,000

Contingency

$6,159,000

Total

$67,665,000

124

The overall cost from Que$tor only generates the costs for the overall drilling
operations and as a quality control; each well was calculated separately by using the
relevant information previously mentioned and has been calculated by using the
template provided by Mr. Ramlan Latif. The summary for each of the well cost is
tabulated below:
Table 7.24: Estimated cost for each well

Price in 000's
Well

Estimated cost

GMP-1

$8,105

GMP-2

$8,003

GMP-3

$8,296

GMP-4

$7,217

GMP-5

$9,459

GMP-6

$9,311

GMP-7

$8,530

GMP-8

$8,113

Total

$67,034

From what can be concluded, the costs for the wells in total can be estimated
reaching up to US$67 million and this can be further seen that the cheapest well is
the GMP-4 at US$7.2 million as it has a short drilling depth and logging was not
considered. The highest costing well is the GMP-6 as the well has one of the longest
distance to be drilled and logging was taken into consideration.

The

breakdown

for each of the well can be seen in Appendix D.4-5.

7.17 Drilling Optimizations and Sustainability

7.17.1 Installation of Conductors
During the fabrication of the facilities, it may be advisable to pile a larger conductor
casing rather than to drill the 20 conductor. This way the wells could be drilled even
further using the 20 casing and can aid as a protective component for the drilling
operations by using a thicker conductor casing. A suggestion would be using an X-56
grade for its thickness.
125

7.17.2 Casing While Drilling

Although this technology has yet to be used in actual fields, but this brings promise
to decrease the drilling time as this technology implements itself by drilling while
carrying a casing which is expandable and the idea is that once the target depth has
been reached, the casing will expand and cementing procedures can be carried out
immediately. This can cut down the drilling time by eliminating the need to run in
the casing.
This technology could be put into practice in an unconsolidated formation as this
lowers the possibility for any stuck pipes or casing to occur. The problem lies in the
possible practicality, costs of using this technology and the reliability of using such
technique.
7.17.3 Monitoring Drilling Performances
Mudloggers will be required to provide up-to-date information on the overall drilling
operations at all costs. Any abnormalities must be notified and rectified as soon as
possible to prevent any possibilities of Non-Productive Time (NPT) to occur. Bit
cost runs analysis from GM-1 can aid in improving future drilling of other producer
wells and to help in maintaining the costs of mixwater to be used for drilling fluids,
the cuttings generated from drilling should be processed and the water to be treated
and recycled, ready to be use at all time.
These simple steps are aimed to improve on the drilling times of future wells to be
drilled as learning from past experience can aid in lowering the possibility of NPT
and/or decrease Invisible Lost Time (ILT).

7.18 References
Renpu, W. (2011). In Advanced Well Completion Engineering. Elsevier.
Mouchet, J. P., & Mitchell, A. (1989). In Abnormal Pressures While Drilling.
Editions Technip.
Devereux, S. (1998). In Practical Well Planning and Drilling Manual. Pennwell
Publisher.
126

Rabia, H. (2002). In Well Engineering and Construction. Entrac Consulting.

Heriot-Watt University. (2005). In Drilling Engineering.
Halliburton. (2011). In Landmark Software Manuals (Compass, CasingSeat,
WellPlan and StressCheck).
Baker Hughes. (2006). In Baker Hughes Drilling Fluids Reference Manual.
Aberdeen Drilling Schools. (2007). In Well Control for the Rig-Site Drilling Team
Training Manual.
PETRONAS Carigali Sdn Bhd. In Gelama Merah-1 and ST-1 Final Well Report.
(n.d.). Retrieved from Rig Zone: http://www.rigzone.com

127

8 Production Technology
8.1 Introduction
Detailed reservoir simulations were carried out to assess the potential of Gelama
Merah field and come up with an optimum option for the field development plan.
Resulting from the simulations, the best option to develop Gelama Merah field is by
drilling and producing from 8 horizontal production wells. The target plateau
production rate to be achieved is 9000 bbl/d.
The main topics focussed in this Production technology phase is; the consideration
for artificial lift, the requirement for sand control, and well completion design, which
will be elaborated in Sections 8.3, 8.4, 8.5 and 8.6 respectively.
8.1.1

Objectives

The main objective of a Production Engineer is essentially to maximize production in

a cost-effective manner. In order to achieve this objective, the well completion
designs must be able to (Production Technology, 2010):
o Provide a safe and cost-effective well completion design,
o Maximize well integrity and reliability of the completion over the production
life.
o Develop an intervention strategy during the life of the field to allow wells recompletion for any production enhancement activities.
Gelama Merah is considered to be a marginal field. The development requires
reservoir development plans with a minimum number of wells where there is little or
no need for well intervention to repair or modify the downhole installation. High
equipment reliability is thus a must (Production Technology, 2010).

128

8.2 Well Performance Prediction

WellFlo is the software used extensively for the production technology phase. This
software employs the concept of nodal analysis. The objectives of this section are:
o To create a base case by modelling Gelama Merah -1 vertical exploration well
o Modifying the base case for the Gelama Merah producers
o Selecting the optimum tubing size
o Running sensitivity analysis on the chosen tubing size to water cut and
depletion of reservoir pressure
8.2.1

Base Case Model

The required input data for the base case is the reservoir fluid properties, the well test
data and pressure transient analysis data which is presented in Table E.1-1 (in
Appendix E.1), Table C.4-1 and Table C.4-2 (see Appendix C.4).
A production test (DST#1) has been carried out in Gelama Merah-1 well using 3 1/2
OD production tubing. The tested reservoir is Unit-8 sand, perforated from 1521 m
to 1530 m-MDRKB.

8.2.2

PVT Correlation Matching

The PVT data is matched by using a suitable black oil correlation. Closest match was
given by the following correlations:

Table 8.1: The black oil correlation used to match the PVT data (Velarde, 1996)

Fluid Parameters

Correlation

Bubble point pressure (Pb), Solution GOR (Rs) Vasquez

and Oil Formation Volume Factor (Bo)
Oil Viscosity, o

Beggs

Gas Viscosity, g

Carr

Table E.1-4 shows the ranges of data used to develop the Vasquez-Beggs correlation
can be found in Appendix E.1.
129

The best flow correlation model for Gelama Merah-1 is Hagedorn and Brown (mod)
because this is the empirical correlation generally used for two phase flow in a
vertical well. It also gives the closest match to the well test results for flowing
bottomhole pressure and oil rate (Economides et al., 1994; Production Technology
notes, 2010). Gelama Merah reservoir is saturated meaning two phase inflow is
taking place therefore the applicable Inflow Performance Relationship (IPR) model
used is Vogel (Production Technology notes, 2010). The results for the simulations
are presented in Figure E.1-1 and Figure E.1-2 (see Appendix E.1). Figure E.1-1
shows IPR of Gelama Merah-1 with initial pressure 2116 psia and an AOF 4492
stb/d. The calculated productivity index (J) is 3.8478 stb/d/psi.
Figure E.1-2 shows an intersection point between Inflow Performance Relationship
(IPR) and Tubing Performance Relationship (TPR). The point represents the
operating point pressure which is 1726 psia with the corresponding oil rate of 1376.5
stb/d at 0% water cut and GOR of 310.7 scf/stb.
Base case done! The base case is then modified to fit the purpose for the Gelama
Merah Producers i.e. GMP-1 to GMP-8. The best flow correlation model for these
horizontal completions is Beggs and Brill. This correlation is applicable to any pipe
inclination and flow direction (Economides et al., 1994; Production Technology
notes, 2010).
8.2.3

Tubing Size Optimisation

In the Production Technology notes (2010), it is stated that the correct way to design
a well is to obtain an estimate of the expected production rates at various times in the
field's life (Obtained from the Reservoir engineer). The required size of the
production tubing is estimated to allow these volumes of fluid to be produced.
Production profile is analyzed and the wells are grouped together according to their
plateau production rate. Table 8.2: Grouping of the wells according to their plateau
production rate and identifying the target oil rate for simulation purposes.

130

Table 8.2: Grouping of the wells according to their plateau production rate and identifying the
target oil rate for simulation purposes

Group
1

Well

Average Oil Production

Average Target Oil

Name

Rate, stb/d

Rate, stb/d

GMP-1

2491

3300

GMP-2

1435

1700

GMP-3

1305

1700

GMP-7

1143

1700

GMP-5

821

1000

GMP-6

794

1000

GMP-4

584

700

GMP-8

387

700

Note: The average oil production rate is obtained from the plateau production rate
for 2 years and the average target oil rate include 30% extra volume for future
preparation just in case for any enhancement activities.
The only parameter that is under operational control of the Production engineer is the
wellhead pressure or the system backpressure. The remainder of the completion can
only be influenced by the engineer at the design stage. Hence, it is a must to carry
out sensitivity analysis on selecting the optimum tubing size to ensure that the
selected option is robust and fit-for-purpose during its lifetime (Production
Technology notes, 2010). Sensitivity analysis on wellhead pressure and tubing size
was carried out to find the optimum tubing size. Table 8.3 shows the optimum tubing
size for the Gelama Merah Producers. For GMP-1, GMP-2, GMP-3 and GMP-7, the
optimum tubing size is 3 . The rest of the producers i.e. GMP-5, GMP-6, GMP-4a
and GMP-8 require an optimum tubing size of 2 3/8.

Table 8.3: The optimum tubing size for Gelama Merah Producers

Group

Well
Name

Average

Tubing size

Wellhead

Target Oil

OD

ID

Pressure,

Rate, stb/d

(inch)

(inch)

psia

131

GMP - 1

3300

3 1/2"

2.992

330

GMP - 2

1700

3 1/2"

2.992

360

GMP - 3

1700

3 1/2"

2.992

360

GMP - 7

1700

3 1/2"

2.992

360

GMP - 5

1000

2 3/8"

1.995

360

GMP - 6

1000

2 3/8"

1.995

360

GMP - 4

700

2 3/8"

1.995

360

GMP - 8

700

2 3/8"

1.995

360

These are the chosen tubing size for the Gelama Merah Producers. For GMP-1,
GMP-2, GMP-3 and GMP-7, the optimum tubing size is 3 . The rest of the
producers i.e. GMP-5, GMP-6, GMP-4 and GMP-8 require an optimum tubing size
of 2 3/8 which is sufficient to allow the required volume of fluid to be produced.
Figure E.1-3 and Figure E.1-4 (see Appendix E.1), shows the sensitivity analysis to
tubing size (ID) and wellhead pressure for GMP-1 and GMP-2 respectively. From
the figure, the 2 3/8 OD tubing has the lowest operating rate. This tubing diameter
is too small for the required volume of oil. If tubing size is too small this may cause
excessive pressure drop which can restrict production. While, the 4 OD tubing
can achieve production rate much higher than necessary. Large tubing cost extra and
may cause inadequate reservoir inflow. The 2 7/8 and 3 tubing is able to achieve
the required production rate. However, 3 tubing is chosen to be the best option
over 2 7/8 because a relatively larger tubing diameter would be ideal for future
preparation for any enhancement activities (Production Tecnhology notes, 2010).
Figure E.1-5 and Figure E.1-6 (see Appendix E.1) shows the sensitivity to tubing
size (ID) and wellhead pressure for GMP-5 and GMP-5 respectively. From the
figures, the operating point rate for the 3 and 4 tubing can achieve production
rate much higher than necessary. The 2 7/8 and 2 3/8 tubing size is able to achieve
the target production rate. But, the 2 3/8 tubing is chosen over 2 7/8 because larger
tubing cost more than smaller tubing (Production Tecnhology notes, 2010).

132

8.2.4

Well Performance Sensitivity Analysis

In nodal analysis, the whole production system behaves as a single unit, finding a
common value of the production rate for inflow and tubing performance
relationships (IPR and TPR) at the same flowing bottomhole pressure. This allows us
to estimate the well productivity under todays actual or future expected producing
conditions. The sensitivity of the well design to the many factors which effect well
production as the well ages can be examined. So as to minimize the total well capital
and operating costs over its complete lifetime (Production Technology notes, 2010).
Some of the more frequently encountered sensitivity analyses are described below.
Effect of Water Cut and Depletion
Figure E.1-7, Figure E.1-8, Figure E.1-9 and Figure E.1-10 shows the operating rate
against water cut at different layer pressure for GMP-1, GMP-2, GMP-5 and GMP-4
respectively (see Appendix E.1.2).

Table 8.4: The result after running sensitivity analysis on water cut and layer pressure

Pressure, psia Water Cut, % Oil Rate, stb/d

GMP-1

GMP-2

GMP-5

GMP-4

2116

3293

2087

60

374

2058

70

2116

1708

2058

50

322.4

2029

60

2116

1012

2087

50

196

2058

60

2116

684

2029

30

228

2000

40

133

Production causes the decrease in reservoir pressure, for GMP 1, as the reservoir
pressure depletes, water cut increases and oil rate decreases. Further reduction in
reservoir pressure with an increase in water cut causes the well to stop flowing.
Running sensitivity analysis on water cut gives a good indication on when to start
using artificial lift. The requirement for artificial lift will be discussed in detail in the
following Section 8.3.

8.3 Artificial Lift Requirement

Initially, the field is producing by natural depletion. Fluid production from reservoir
development reduces the reservoir pressure and increase the fraction of water being
produced (Production Technology notes, 2010). At one point, further reduction in
reservoir pressure and increase in water cut may cause the wells to cease production
altogether. Artificial lift is required to flow the wells and restore the production at an
economical rate and maximize oil recovery (Taheri et al., 2006).
8.3.1

Advantages and Disadvantages of Major Artificial Lift Systems

The common major artificial lift methods are: Rod pumps, Electrical Submersible
Pump, Venturi Hydraulic pump, Gas lift and Progressive Cavity Pump (see Figure
E.2-1 in Appendix E.2) (Production Technology notes, 2010; Lea and Nickens,
1999). Table E.2-1 and Table E.2-2 in the Appendix E.2 list out the relative
advantages and disadvantages of major artificial lift methods respectively.
8.3.2

Artificial Lift Selection Criteria

A paper by Clegg et al., (1993) and Lea and Nickens (1999) extensively reviewed
the methods of artificial lift and comparing their advantages and disadvantages under
a broad range of categories ranging from the capital and operating cost, to gas and
solid handling ability, flexibility and offshore applications. This approach is very
efficient in selecting an artificial lift for a given field. The same method is utilized in
the pursuit of finding the optimum artificial lift for Gelama Merah field.

134

Elimination and selection process of artificial lift for Gelama Merah field is done by
first identifying the factors that influence the selection of artificial lift (Production
Technology notes, 2010):
o Well and Reservoir characteristics of Gelama Merah field

High GOR reservoir. This is an advantage for Gas lift, it improves lift
performance rather than presenting problems as with other artificial lift
methods.

o Field location

Gelama Merah is an offshore field. Sucker rod pumping may be eliminated

as a suitable form of artificial lift because of the limited deck area
(Production Technology notes, 2010).

Abundant supply of gas is available produced from the reservoir itself. This
is an advantage for gas lift.

o Operational problems

Sand production is a potential problem in Gelama Merah field. Some forms

of artificial lift e.g. gas lift are intrinsically more tolerant to solids
production (sand and/or formation fines) than other forms e.g. centrifugal
pumps. ESPs are poor in handling solids or sand, it requires < 200 ppm of
solids. Improved wear-resistant materials available at premium cost. Also
venture hydraulic pump has a poor solids or sand-handling ability (Clegg et
al., 1993).

In the end, gas lift is an optimum option for Gelama Merah field because:

High GOR is an advantage rather than a drawback,

Abundant gas supply is available,

Able to work in a reasonably deviated holes,

Able to tolerate some sand production.

8.3.3

Gas Lift Sensitivity Analysis

The objective of the sensitivity analysis is:

135

o To determine the number and positioning of the gas lift valves.

o To find out the optimum amount of gas required to improve the production
rate.

For GMP-1
Table 8.5 shows the result of production rate for GMP-1 without GLI and with GLI
at 50% watercut.

Table 8.5: The production rate without GLI and with GLI at 50% water cut for GMP-1

Water Cut Without GLI

(Fraction)

With GLI at 50% water cut

Injection Gas Rate Oil Rate Injection Gas Rate Oil Rate
(MMSCF/d)

(STB/d)

(MMSCF/d)

(STB/d)

3292.83

3292.83

0.1

2770.58

2770.58

0.2

2241.95

2241.95

0.3

1690.38

1690.38

0.4

1198.67

1198.67

0.5

807.79

0.8

1422.63

0.6

488.96

0.8

1059.79

0.7

N.O.P

0.8

734.78

0.8

N.O.P

0.8

450.42

0.9

N.O.P

0.8

206.67

The selected gas lift injection rate for GMP-1 is 0.8 MMSCF/d at 50% water cut
before the well is dead. This can be seen in Table 8.5.

Table 8.6: Summary of the optimum gas injection rate and the water cut when gas lift injection
is introduced

Well
Name
GMP - 1
GMP - 2

Optimum gas injection rate,

MMSCF/d
0.8
0.5

136

Water cut, %
50
40

GMP - 5
GMP - 4

0.2
0.2

40
30

Note: The water cut indicates when the gas lift injection is introduced.
The comparison for other Gelama Merah producers without GLI and with GLI can
be seen in Table E.3-1, Table E.3-2 and Table E.3-3 in Appendix E.3.

8.4 Sand Control Requirement

8.4.1

Sand Failure Prediction

Sand production from (relatively) unconsolidated reservoirs is frequently

encountered, and could prove to be expensive and have a significant impact on the
case of well operation and the economics of oil and gas production (Production
Technology notes, 2010). Sand can damage equipment such as valves, pipelines and
separators; it can cause poor performance in injection wells, which could caise
production loss (Morgan, 2006). Although no sand was detected during the drill stem
test, the possibility of some degree of sand production cannot be completely ruled
out. Based on the evidence from the petrophysical analysis, geological description of
Gelama Merah and information from nearby fields the need to consider sand control
is crucial. The evidences are presented below:

137

8.4.2

Sonic Transit Time and Depth Relationship

From the Formation Evaluation Appendix, Figure B.1-5 and Figure B.1-11 show the
compressional sonic transit time (tc) taken from Gelama Merah-1 well and Gelama
Merah-1 ST1 well respectively. The tc is plotted against true vertical depth (TVD).
The reservoir is found between the depth of 1467.0 m-TVDSS and 1509.3 m-TVDSS
(from petrophysical log). The plot shows the sonic transit time from the reservoir to
be greater than 100 sec/ft. This can be observed in Table E.4-2 (see Appendix E.4)
which shows the onsite rock strength estimation. Approximate sonic travel time
between 105 sec/ft and 130 sec/ft, the rock is classified to be friable.
8.4.3

Geological Description of Formations

From the Final Well Report, cutting samples were collected starting at 553 m for
below the 13 3/8 casing shoe while drilling the 12 hole. Observation from the
wells; Gelama Merah -1 and Gelama Merah-1 ST-1 indicates lack of cementation
properties in the formations. Table E.4-1 in the Appendix E.4 summarizes the
geological description of both wells.

8.4.4

Risk Regional Analysis

Malaysia offshore fields such as Kikeh and Dulang are facing sand production
problem. An Offshore Conference Technology (OCT) paper on Kikeh, the paper
documents the selection of sand control for Kikeh, the selected sand control is
Expandable Sand Screen. Another OCT paper on Dulang oilfield, the selected sand
control for the case study is Gravel-Pack completions.
All of the analysis above (Petrophysical, geological and risk regional) proves that
there is a potential for sand production in Gelama Merah.
8.4.5

Advantages and Disadvantages of Sand Control Method

The sand exclusion techniques applied as part of the well completion include stand
alone screen, open hole gravel pack, cased hole gravel pack, cased hole Frac and
Pack, selective oriented perforation, expandable sand screen and wire wrapped
screen. The main objective of installing sand control system is to provide a barrier to
138

keep sand from entering the well along with the hydrocarbons (Production
Technology notes, 2010; Morgan, 2006). Table E.4-3 shows the relative advantages
and disadvantages of sand contol options (King, 2009).
8.4.6

Sand Control Criteria

The open hole sand control techniques considered for Gelama Merah is,

Stand Alone Screen: Wire Wrapped Screen

Expandable Sand Screen

Open Hole Gravel Packing

From an SPE paper by Farrow et al.,(2004), one of the key parameter required to
select sand control is the Particle Size Distribution (PSD). However, no PSD data on
Gelama Merah was provided. From an SPE paper by Tiffin et al., (1998), the
commonly used criteria are,

Cs (=D10/D95) < 10 use Stand Alone Screen

o Cu (= D40/D90) < 3 and Fines < 2% use Wire Wrapped Screen

Cs >10 or Cu > 5 or Fines > 5% use Gravel Pack

Mentioned also in Farrow et al., (2004), open hole and highly deviated wellbore
excludes internal gravel pack, frac and pack, chemical consolidation treatment and
High Rate Water Pack (HRWP).
Since limited information were given, the chosen sand control for Gelama Merah
Producers is Expandable Sand Screen (ESS) because;

It is a new technology and gives a low skin (0 to 5) relative to gravel packing

(King, 2009). From an SPE paper by Hooshmandkoochi and Ghorbani (2007) the
producitivity performance of expandable sand screen have been to be very good
with an average skin of 0.3,

Ease of operation, resulting in reduced rig time and cost (Kabir et al., 1994),

Bigger wellbore ID over the pay section, thereby enabling deployment of

intelligent completions (Kabir et al., 1994),

Better wellbore stability (Kabir et al., 1994).

139

8.5 Well Completion Design

Earlier in the Petrophysics section, the reservoir thickness is found to be 42.3 m thick
overlain by a large gas cap and underlying bottom water. An SPE paper by Seong
and Hong (1995), stated that oil column of thickness between 30.5 m to 45.7 m is
considered to be thin-rim oil reservoir. While Economides et al., (1994) considered
thin-rim oil reservoir to be less than 15m. Nonetheless, the method employed to
extract the Gelama Merah reservoir is by using horizontal wells. This unconventional
well is preferred over the conventional well as reservoir simulations proved the
recovery factor for horizontal wells are much higher than the vertical wells i.e.
17.07% and 11.6% respectively.
Other benefits are horizontal wells proved to be excellent producers in exposing the
wellbore to maximum reservoir contact and drainage area for recovery economics
(Chen et al., 2011). Increase in reservoir exposure brings two benefit. In the short
term the production rate is higher and in the long term the cumulative production
from a horizontal well is greater giving more reserves per well and hence reducing
the number of well counts to achieve a desired plateau production rate (Production
Technology notes, 2010) . The entire horizontal length from heel to toe is completed
open hole with sand control. The length of the horizontal section ranges from 300 m
to 400 m. The production rate for each well varies from 400 bbl/d to 2500 bbl/d.
Figure 8.1 shows the well completion diagram for GMP-1. The diagram can be
utilized for other Gelama Merah Producers but the target depth, kick off point, open
hole horizontal length and the mid- perforation interval would differ for each wells.

140

Figure 8.1: Well completion diagram from GMP-1

141

Below gives a brief description on the completion component string used for the
Gelama Merah Producers (Production Technology notes, 2010):
o All wells are completed with a single production string; 4 wells having 3
OD tubing and the remainder 2 3/8 OD tubing.
o Production casing for all the wells is 9 5/8 casing which is set within the
reservoir.
o A 3 OD Tubing Retrieval Flapper Surface Control Subsurface Safety
Valve (TR- SCSSSV) will be installed. This valve is required when the
Christmas tree valves are not operational.
o Thick-walled flow coupling will be installed above and below the TRSCSSSV to prevent turbulent flow and erosion.
o Landing nipple with OD of 3 will be installed to provide access for
wireline tool and equipment to perform well servicing or pressure testing.
o Side Pocket Mandrel (SPM) and Sliding side door (SSD) allows
communication between the tubing and annulus for gas lift injection and
future displacement of workover fluid and also for unloading purposes to kick
off the well.
o A hydraulic retrievable packer for annular isolation:

Improves flow stability and production control.

Protection of the outer pressure containment system (the production casing

and the wellhead).

o The sand control adopted for all the producers is a 7 Expandable Sand Screen
(ESS). The horizontal section is open hole with ESS.

8.5.1

Wellhead / X-mas Tree

The wellhead is located just below the Rotary Kelly Bushing (RKB). The primary
functions are:
o To suspend the weight of all the casing strings i.e. 20 conductor, 13 3/8
casing, 9 5/8 casing.
o To seal off the annulus between casing strings at the surface.

142

o To act as an interface between the casing strings and Blowout Preventer

(BOP) stack.
A Christmas tree for subsea applications performs the following major tasks
(Crossland, 1984):
o Provides a primary means of control for well fluids through the master valve upper master valve - swab or wire line valve and a wing valve.
o It may also be provided with a means of varying well flow or pressure
stepdown by the inclusion of a choke.
o Provides a means of connection to the wellhead and sealing to same.
o Provides a means of locating over the tubing hanger and sealing to internal
porting in the tubing hanger.
o Provides vertical access into the tubing for insertion of wireline or coiled
tubing tools into the well.
8.5.2

Material Selection

No presence of H2S is found in both Reservoir Fluid Study report and Well Test
report. For CO2, the content calculated in the wellstream composition based on GOR
126 scf/stb is 0.69 mole % (Reservoir fluid study report). From a book by Bellarby
(2009) on Well Completion Design: for low to moderate temperature
environments (less than 300 deg F) containing CO2, little or no H2S and low
chlorides, 13 Cr has become standard tubing metallurgy and L80 13 Cr is included as
an API specification. Therefore the tubing material used for all the Gelama Merah
producers is L80 13 Cr.

Table 8.7: Summary of the well completion design for the Gelama Merah Producers

Group Well Name Well Type Description

1

GMP - 1

Horizontal

Single oil producer

- Tubing size (OD): 3 1/2"
- Open hole
- ESS

GMP - 2

Horizontal

Single oil producer

143

- Tubing size (OD): 3 1/2"

- Open hole
- ESS
GMP - 3

Horizontal

Single oil producer

- Tubing size (OD): 3 1/2"
- Open hole
- ESS

GMP - 7

Horizontal

Single oil producer

- Tubing size (OD): 3 1/2"
- Open hole
- ESS

GMP - 5

Horizontal

Single oil producer

- Tubing size (OD): 2 3/8"
- Open hole
- ESS

GMP - 6

Horizontal

Single oil producer

- Tubing size (OD): 2 3/8"
- Open hole
- ESS

GMP - 4

Horizontal

Single oil producer

- Tubing size (OD): 2 3/8"
- Open hole
- ESS

GMP - 8

Horizontal

Single oil producer

- Tubing size (OD): 2 3/8"
- Open hole
- ESS

8.6 Production Chemistry

This section will discuss the potential production problems and ways of preventing
them from occurring.

144

8.6.1

Wax Deposition

Wax is formed when the temperature in pipe goes below the cloud point. Wax can
become an obstacle and may restrict the flow of fluid. To maintain constant flow rate
the pressure drop across the pipe needs to be increased. The problem of wax deposit
can be solved by keeping the temperature of the pipe above the cloud point
(Production Technology notes, 2010). Since there is no trace of wax present from the
well test result of Gelama Merah field therefore no control measure for wax is
needed.
8.6.2

Corrosion

No presence of H2S is found in both Reservoir Fluid Study report and Well Test
report. For CO2, the content calculated in the wellstream composition based on GOR
126 scf/stb is 0.69 mole % (Reservoir fluid study report). CO2 corrosion can cause a
major problem especially after water breakthrough. The solution to prevent corrosion
of the completion string materials is by using the 13-Chrome which will offer
sufficient corrosive resistance for all downhole equipment.
8.6.3

Scale Formation

Scale is an organic or inorganic material in the surface facilities, the well itself or the
near wellbore formation. It is form due to chemical instability caused by conditions
changing in the production process. This scale may cause obstruction to the pores of
the formation or even the perforations (reducing well inflow) or block the tubing
(reducing well outflow) or impede the operation of well accessories e.g. prevent the
operation of the Surface Controlled Sub Surface Safety Valve (SCSSSV) (Production
Technology notes, 2010). Scale deposition occurs in the presence of water. Therefore
the preventive measures taken to avoid scale problem is by collecting water samples
and investigate if there is scale present.
8.6.4

Emulsion formation

There is no evidence that the crude oil from Gelama Merah field contains emulsion,
installation of emulsifier injection points at production string should be taken into
consideration to cater for this uncertainty.

145

8.7 Well Unloading Philosophy

Unloading or kicking-off is the process of removing a static column of fluid from a
wellbore before production begins. A well must be unloaded when:
o Fluid accumulated in the well and the level has reached a static point below
the surface.
o The well is full of kill fluid, for example brine, following completion or
workover operations and is ready to be put on production.
Typical examples of well unloading techniques for liquid unloading are Plunger lift,
Velocity string, Surfactants, Swabbing, Nitrogen Injection through Coiled Tubing,
Intermittent gas lift and Continuous gas lift (Zhou et al., 2011). Brief description on
some of the unloading techniques:
Swabbing - The process by which fluids are sucked into the borehole, from the
formation, when the drillstring is being pulled out of hole. This happens when the bit
has become covered in drilled material and the drillstring acts like a giant piston
when moving upwards. This creates a region of low pressure below the bit and
formation fluids are sucked into the borehole (Drilling Engineering notes, 2010).
Nitrogen injection through coiled tubing - Coiled tubing is run into the wellbore.
Nitrogen can be pumped through the coiled tubing while coiled tubing is run in hole
or after coiled tubing has reached a certain depth. The nitrogen aerates the liquid
column in the annulus. This reduces the hydrostatic pressure of the fluid in the
annulus, hence, the bottomhole pressure is reduced. When bottomhole pressure is
lower than the reservoir pressure, a pressure drawdown is created and the reservoir
fluid starts to flow into the wellbore (Zhou et al., 2011).
Continuous Gas Lift The unloading process occurs in two phases. In the first
phase, only kill fluid is being pushed into the tubing from the annulus by the
injection of high pressurized gas through the gas lift valves or gas lift mandrels in the
completion. In the second phase, gas enters the tubing from the annulus through the
gas lift valves. In the earlier stage of phase two, liquid continues to flow back into
the formation because the bottomhole pressure has not reduced to be less than
146

reservoir pressure. In this condition, there may exist countercurrent two phase flow
(rising gas and falling liquid) in the second phase process. As more gas is being
injected into the tubing the bottomhole pressure is reduced and is less than the
reservoir pressure. The formation starts producing liquid and flows into the wellbore.
Eventually the well stabilizes and unloading terminates (Tang, 1998; Production
Technology notes, 2010; Takcs, 2005).
After reviewing different type of well unloading techniques, the unloading process of
fluid in the wells of Gelama Merah field shall be done by using continuous gas lift
since gas lift is installed for all the producers.

8.8 Well Surveillance Philosophy

8.8.1

Permanent Downhole Gauge System (PDGS)

Dynamic reservoir data such as reservoir pressure, well productivity index and well
skin should be monitored regularly throughout the life of the field. This would help
reservoir engineers to come up with an optimum reservoir management plan.
Dynamic data are usually obtained from static gradient survey and flowing gradient
survey through wireline. However wireline is a problem with horizontal wells. An
alternative is a Permanent Downhole Gauge System (PDGS), the system measures
bottomhole pressure and temperature versus time. A serial system from acquisition
panel onsite or in a remote reservoir engineer office (Bezerra et al., 1992).
8.8.2

Inflow Control Device

Horizontal wells have few benefits over vertical wells in terms of well productivity,
drainage area sweep efficiency and delay water and gas breakthrough. However
increase in the length of wellbore has led to some problem. Increase in frictional
pressure losses with an increase in wellbore length. The inflow profile becomes
distorted so that the heel part of the wells produces more fluid than the toe (heel-toe
effect) when these losses become comparable to drawdown. This imbalance of flow
in turn causes premature water or gas breakthrough. Inflow Control Device (ICD)
provides a solution to this problem. ICD is a well completion device that represents a

147

flow restriction in the fluids path from the annulus to the base pipe. It equalizes the
inflow along the wellbore length (Birchenko et al., 2009; Fernandes et al., 2009).

8.9 References
Chen, C. J., Azrul, N. M., Farris, B. M., NurHazrina, K. Z., Aminuddin, M. M.,
Saiful Anuar, M. Y., et al. (2011). Implementation of Next Generation Intelligent
Downhole Production Control in Multiple-dipping Sandstone Reservoirs, Offshore
East Malaysia. 2.
Clegg, J. D., Bucaram, S. M., & Hein, J. N. (1993). Recommendations and
Comparisons for Selecting Artificial-Lift Methods. SPE, JPT.
Crossland, R. (1984). Simple Subsea Completions. 10-11.
Economides, M. J., Hill, A. D., & Ehlig-Economides, C. (1994). In Petroleum
Production Systems (pp. 31-161). Prentice Hall Petroleum Engineering Series.
Heriot-Watt University. (2005). In Drilling Engineering.
Heriot-Watt University. (2010). Production Technology.
Webb, T., Omar, J., Desormeaux, R., Moran, P., Selamat, K., Beare S., et al. (2003).
Kikeh Development: Sand Control Selection, Design and Implementation of ESS.
Weatherford International.
Md Noor, M. Z., Selamat, K., Kasim, A., & Salahudin, S. (n.d.). Revitalizing a
Mature Sand-Prone Field by Installing Enhanced Gravel-Pack Completions - A Case
Study. SPE 82243.
Zhou, Y., Smalley, E., SPE, & Opel, S. (2011). Determination of Optimum N2 rate
for Unloading Gas Wells with Coiled Tubing. 1.
Takacas, G. (2005). The Unloading Process. In Gas Lift Manual (p. 316). PennWell
Corporation.
Tang, Y. (1998). In Transient Dynamic Characteristics of Gas Lift Unloading (p. 3).
University of Tulsa.
148

King., G. E. (2009). Sand Control Method. George E. King Engineering.

Lea, J. F., & Nickens, H. V. (1999). Selection of Artificial Lift.
Morgan, N. (2006). Saving Sand. Frontiers.
Seong, C. K., & Hong, T. Y. (1995). A Review of Oil Field Development in
Malaysia.
Shafi'i, M. R., Salleh, I. K., Daud, W. A., & Anwar, M. L. (2003). Reservoir Fluid
Study (DST #1).
Birchenko, V. M., Muradov, K. M., & Davies, D. R. (2009). Reduction of the
Horitzontal Wells Heel-Toe Effect with Inflow Control Device. Elsevier.
Fernandes, P., Li, Z., & Zhu, D. (2009). Understanding the roles of Inflow Control
Device in Optimizing Well Performance.
Bezerra, M. F., & Da Silva, S. F. (1992). Permanent Downhole Gauges: A Key to
Optimize Deep Sea Production. Offshore Conference Technology 6991.
Abdullah, M. Z. (2003). Well Test Report of Gelama Merah-1.
Kabir M.R., Awang M.Z., Umar L., Omar, N., Yusof K, (1994). First Successful
Implementation of Expandable Sand Screen (ESS) Technology In An Open Hole
Horizontal Well Located In Baram Field, Offshore Malaysia A Case Study, SPE
84914.
Tiffin D.L., Larese R.E., and Britt L.K., (1998), New Criteria for Gravel and Screen
Selection for Sand Control, SPE 3943
Bellarby J., (2009), Well Completion Design, Development in Petroleum Science,
Elsevier.
Parlar M., State of the Art in Open Hole Sand Control Completions: Advancement &
Gaps,

Distinguished

Lecturer

Program,

Schlumberger .

149

Society

of

Petroleum

Engineers,

9 Facilities Engineering
9.1 Introduction
The main objective of the Facilities Engineer is to provide information on the surface
facilities based on the subsurface production in order to develop the Gelama Merah
field. This Facilities engineering section will include the following:

The Gelama Merah design basis and Philosophy

Development concept options and screening process

Gelama Merah Concept Selection

Pipelines and Hoist Tie-ins to existing Facilities

Facilities CAPEX estimation and Project Schedule

Operations and Maintenance Philosophy

Abandonment/ Decommissioning

The Gelama Merah field is located 130km from Kota Kinabalu and 43km from the
Labuan Crude Oil Terminal (LCOT), which is the nearest onshore crude oil terminal.
The closest existing facilities is the Samarang field facilities, which is about 12km
west of the Gelama field. The average water depth is 42.8m and it will be used in
selecting the preferred platform for the Gelama Merah field.
The option to use the Samarang existing facilities will be evaluated in this section
which will include improvement of its facilities capacity to handle production from
the Gelama Merah field.
The development of surface facilities of the Gelama Merah field and direct pipeline
connections to LCOT will also be considered as an option.

9.2 Design Basis and Philosophy

9.2.1

Design Basis

The following design considerations should be looked into when designing surface
facilities for our field to ensure safety, reliability and economically viable platform

150

and related facilities which will be used to maximize production operations. The
design considerations include:
Environment - Structures will be located in exposed, hostile locations. Information
on local wind, wave and current strengths and stability criteria for offshore structures
are essential.
Sea Floor Site - Sructures may be founded on the sea floor. Sea floor topography
and soil profile will influence design and may infact constraint the choice of the
structures to be built.
Production - Petroleum is produced from wells which are normally drilled from the
platform The oil, gas and water production rates need to be carefully determined.
Pressure maintenance may also be required and provision for the future installation
of facilities must be provided Accommodation must be provided for drilling and well
maintenance rigs, marine risers and well control facilities.
Processes - Produced fluids must undergo primary separation and treatment before
transmission to shore. All injected fluid must be treated to reduce formation damage.
Design specifications for separator, vessels, pump and filters must match fluid
properties and reservoir requirements.
Flexibility - Additional slots must be allocated for upside potential and reserve
growth. Provisions for gas export, should the gas market exists must be allowed to be
taken into consideration.
The above considerations are based on the SPE 29307 paper by Chen Kah Seong and
Teh Yat Hong on the review of offshore oil fields development in Malaysia.
9.2.2

General design information

Tabulated below are the reservoir fluid physical properties, reserves and
development data (Table 9.1 and Table 9.2). The production and pressure forecasts
can be found in Table F.1-1 and Table F.1-2 in the Appendix, respectively.

151

Table 9.1: Physical properties of Gelama Merah reservoir fluid

Average GOR

310.7scf/stb

API

23.7

Viscosity of oil

1.1752cp at 2014psia

Density of oil

49lb/ft3

Gas specific gravity

0.6588

H2S content

none

CO2 content

0.69%

Wax content

none

Table 9.2: Reserves and Development data of Gelama Merah

STOIIP

87.67 MMbbl

Recovery factor

17.07%

Recoverable reserves

14.964 MMstb

Field life

15 years
Gas cap drive and Fluid

Driving Mechanism

expansion

Reservoir Pressure

2116 psia

Reservoir Temperature

155 F

Pressure gradient

0.3357 psi/ft

Temperature gradient

2.5 C/100m

Well spacing

700 m

Water depth

42.8 m

Distance from existing onshore

structure

43 km from LCOT

Distance from existing offshore

12.76 km to Samarang

structure

Field

Number of Wells Drilled

Artificial lift used

Gas Lift

152

9.2.3

Design Philosophy

The design philosophy of the Gelama Merah field is based on the design guidelines
compiled by PETRONAS and international standard codes and requirements
recognized by the Malaysian Government. This is to ensure a safe, reliable and
economically feasible design is achieved for the Gelama Merah field.
Listed below is the proposed design philosophy for the Gelama Merah field:

Unmanned facilities

Minimum maintenance

Accommodation tender assisted rig or barge

Meet simultaneous production and drilling operations and workover

requirements.

Remote well testing on monthly basis.

Maximize remote monitoring and control capability from supply terminal at

Labuan.

15 years of operating life and 30 years of design life.

9.3 Development Concept and Screening Process

Three main platform options are taken into consideration in evaluating the best
development concept for the Gelama Merah field. Platform options include: Satellite
Wellhead Platform, Subsea Wellhead Platform and Central Processing Platform.
Option A Satellite Wellhead Platform: Three sub-options are taken into
consideration:
A1) Satellite wellhead platform and full well stream to Samarang complex.
A2) Connecting the Satellite Wellhead platform to a floating production and storage
unit.
A3) Connecting the Satellite Wellhead platform to a mobile offshore production unit
with storage facility.
Option B Subsea Wellhead Platform: Three sub-options are taken into
consideration:
153

B1) Subsea wellhead platform with full well stream pipeline to Samarang Complex.
B2) Connecting the Subsea wellhead platform to a Floating Production and Storage
unit.
B3) Connecting the Subsea wellhead platform to a Mobile offshore Production unit
with storage facility
Option C Central Processing Platform: Two sub-options are taken into
consideration
C1) Central processing platform and tie-in with Samarang, which export oil pipeline
to LCOT.
C2) Central processing platform and pipeline to LCOT.
Options A1, A2, B1, B2, C1 and C2 have been selected for economical analysis
using the Que$tor. The options A3 and B3 are not considered in this economic
analysis because the Mobile Offshore Production Unit is not available as an option in
the software. The OPEX, CAPEX, abandonment costs and total costs of each option
are shown in the Table 9.3 below:

Table 9.3: CAPEX, OPEX and Abandonment Costs for facilities options

Development

Estimated

Capex

Opex

Abandonment

(US$ million)

(US$ million)

(US$ million)

Option A1

126

215

43.0

384

Option A2

263

416

57.0

736

Option B1

224

233

0.00

457

Option B2

283

511

16.0

810

Option C1

234

309

58.0

601

Option C2

267

305

67.0

639

Concept
Options

Total cost
(US$ million)

See Table F.1-3 in the Appendix for the valuation of the developments concepts in
terms of advantages and disadvantages. The costs breakdown for each option is in
the Appendix F.2 (Table F.2-1 to F.2-4).

154

Based on the economic analysis, advantages and disadvantages the best development
concept for the Gelama Merah field is the Satellite Wellhead Platform and FWS to
Samarang (Option A1) because it gives the lowest total cost of USD 384 million
compared to the other options.

9.4 Gelama Merah Facility Selection

9.4.1

Description of Selected Option

According to the screening process done in the previous section the selected
development concept is a fixed structure, 4-legged satellite wellhead and a full
stream pipe to Samarang complex. The Platform will be unmanned and comprised of
9 conductor slots (8 wells + 1 contingency).The schematic diagram of the Gelama
Merah development concept is shown in Figure 9.1 below.

Figure 9.1: Schematic diagram of Gelama Merah conceptual facility design

155

9.4.2

Process Flow Descriptions

A full well stream production will flow from Gelama Merah Well head platform
through a major flow line, production header multi-phase meter and enter into the
multi-phase pump which will discharge the full well stream production at a pressure
of 480psia. The production will reach the Samarang processing platform at a
pressure of 260psia.the production from the Gelama Merah field will be combined
with the Samarang field production, undergo processing and then evacuated through
pipeline to LCOT for exporting. The schematic for the process flow description is
shown in Figure 9.2 below.

Figure 9.2: Conceptual Process Flow Diagram design

9.4.3

Description of Substructure and Topside

The substructure will consist of a 4-legged steel jacket pile steel insert structure with
9 conductor slots. It will be designed to withstand the loads from the superstructure.
Risers, caisson and landing will be present on the jacket.

156

The topside will consist of compressors, production, drilling, water injection, power
generation and utility modules. It will also provide access for servicing equipment
which includes wire line and coiled tubing with sand clean out capability and
hydraulic work-over units. Launchers, receivers, and wellhead facilities will be
accommodated on the 9 conductor production deck. A mezzanine deck will also be
provided on the top of the superstructure.
9.4.4

Description of Surface Facilities and Equipment

Production, Flowlines, Control and Manifolds

The Production and test manifolds will allow each production completion to flow to
either production header or test header. Flowmeter will be used for well test
operations
Crude oil processing
The full well streaming will be separated in a 3-phase production separator i.e. gas,
oil and water and crude oil will be stabilized in a surge vessel.
Gas compression and Dehydration
Production separator gas will be transported to a compression system for meeting the
gas lift requirement and export requirement to Samarang A platform. Gas
dehydration systems will be available for substitution.
Water/ Gas injection Systems
Water injection systems will include sea water lift, course and fine filters, minox deaeration tower, sea water injection pumps, hydrochlorinator and chemical injection
skid. No water or gas injections systems will be installed at initial phases of
production, but accommodation for future installations will be reserved.
Crude oil transfer and Gas metering
Crude oil in the surge vessel is pumped to a metering system and transported to
Samarang A (SMP-A) facilities, where it will be combined with the Samarang crude
oil. Gas metering system is also installed for recording the gas export.

157

Wellhead/ Hydraulic Control Panel

A wellhead or hydraulic control panel will be installed the pump are driven on
instrument air.
Gas lift system
The need to utilize gas lift is a must in the future because when certain water cut is
reached the well becomes dead and production stops altogether. Therefore space for
gas lift surface facility will be considered for future usage.
Platform Utilities and Service facilities
Platform utilities include electrical power, instrument air, pedestal crane, portable
water, and chemical system.
Electrical Utilities and Service facilities
Gas turbine will be installed to provide power to gas compressors, water injection
system and crude oil transfer pump, crane and instrument air compressor.
Drainage System
Closed drain vessels will be installed on the platform to collect process oil from high
pressured hydrocarbon system, and to facilitate well unloading operation .Open drain
system will also be installed on platform for emptying into an open drain caisson.
Flare Boom / Vent system
The flare boom will be sized and installed with zero venting concept under normal
operations. The vent system will be responsible for providing services for system
depressurization, well unloading and pressure relief during emergency cases.
Instrument Air System
Instrumentation valves wellhead control panel and fusible plug loop will be operated
by the instrument air system.

158

Process Control System

The hybrid distribution control system will be used as the process control system for
the Gelama Merah field. It can control discrete applications process and different
foundation field bus devices will be set up on floor to achieve minimum cable and
exploit highest possible diagnostic capabilities. Remote monitoring and control of
important process variables will be via Samarang A (SMP-A), to supply base at
LCOT, with independent operating station the Gelama Merah wellhead platform
control room.
Safety Shutdown System
A safety shutdown system such as safety instrumented system using SIL level
classification will be installed for detecting fire and a gas system is also installed for
gas and fire protection.
Platform Communication Systems
A digital microwave radio system and a marine VHF radio system will be with direct
routing to and from Samarang A (SMP-A) facility for effective communication
between the two fields.
Platform Safety, Intruder detection and Life support facilities
Adequate communication and emergency evacuation equipment will be installed on
the platform to ensure a safe and well planned evacuation schemes in any emergency
situation. Fire-fighting system should be installed in every section of the platform for
informing workers in case of flame detection and fire water pumps to put off the fire.
Surveillance systems must be also installed on platform to detect flame and intruders.
Multiphase Pump and Meter
Exporting of multiphase production to Samarang complex will require a multiphase
pump on the Gelama Merah wellhead Platform. A multiphase pump will be designed
and installed with a discharge pressure of 480psia so that the multiphase production
will reach Samarang complex at a pressure of 260psia.

159

9.5 Pipelines and Host Tie-ins to Existing Facilities

9.5.1

Pipelines

This section will discuss on the Installation and pipeline diameter selection from the
Gelama Merah field to Samarang processing SMP-A platform. The pump power and
the efficiency will be considered in selecting the pipe diameter. The pipeline system
will be designed for 100 years return period for storm conditions and 30 years of
design life according to Petronas Carigali design philosophy guidelines.
To determine the best pipeline diameter to evacuate the fluid from Gelama Merah
wellhead to the Samarang processing facilities the PIPESIM software is used. The
design will be based on the maximum liquid rate of 15000 stb/day and a minimum
inlet pressure of 260 psia into Samarang facilities and a discharge pressure of 480
psia from Gelama Merah field. The sensitivity analysis for the pipeline diameter is
shown below.

Figure 9.3: Sensitivity analysis for pipeline diameter

According to the sensitivity analysis for pipeline diameters, 5, 6, 7, 8, 9, and 10

inches, the most suitable diameter is the 9 inches for FWS to Samarang complex. A
pump power of 1000 Hp with an efficiency of 40% is selected on the bases of the 9
inches inner pipe diameter. The inner walls of the pipe will be designed so that it can

160

withstand the inner flow pressure .The sensitivity for the pump power and the
efficiency is shown in the Figure 9.4 below.

Figure 9.4: Sensitivity analysis for pump power and efficiency

Installation of offshore pipelines requires careful and continuous monitoring of the

configuration of the outstretched pipeline to ensure structural integrity. Pipeline
needs more downward force to prevent it from drifting. Crude oil flowing through
the pipeline adds weight to the steel pipe, therefore more weight is needed to hold the
pipe in place. Since the Gelama Merah field is located in shallow water, the most
cost efficient way to add weight to the pipeline is to coat the pipe with concrete.
The terrain of the ocean floor varies with gullies, outcrops, hills, and escarpment.
The rule to any pipeline installation is a survey by depth-finding sonar to establish
the safest and most economical route. The following constraints should be
considered when selecting a pipeline route.

The length of the pipeline and its crossings

Construction method

Operational methods

Existing pipelines and platforms

161

9.5.2

Hoist Tie-ins

The scope of work required for the tie-in to Samarang processing platform includes
the following

Fabrication and installation of riser/receiver at Samarang platform SMP-A

Structural strengthening is not required for upgrading Samarang platform

SMP-A

9.6 Facilities CAPEX Estimation and Project Schedule

9.6.1

Facilities CAPEX Estimation

The estimated total cost of the Gelama Merah surface facilities is approximately
USD 126 million. See Table F.2-1 in the Appendix for the estimate breakdown of
Option A (Satellite Wellhead FWS to Samarang).
9.6.2

Project Schedule

The project schedule for the Gelama Merah field is in Figure 9.5, and the first oil
production will be accomplished in May 2015.

162

Figure 9.5: Project Schedule of Gelama Merah field

9.7 Operation and Maintenance Philosophy

9.7.1

Operation Philosophy

The operation of the Gelama Merah field will be based on the PETRONAS
guidelines, the Malaysian Production operation philosophy and the safety and health
department. The operating philosophy for the Gelama Merah field will include the
following:
Health Safety and Environment Management System
The HSE-MS will be responsible for protecting personnel hydrocarbon production,
structural facilities and the environment as a whole.
Effective Man Power Utilization
Employing skilled and experience workers and the use of latest technology for
design purpose and equipment selection should be considered in the operation of the
field.
Cost Effectiveness
It should be based on the energy utilization, corrosion management and Strategic
maintenance programs.

163

Periodic Inspection, Evaluation and Correction

To achieve an effective strategy for maintenance and operation activities, system and
equipment availability should be matched against their design philosophy.
Maintenance Philosophy
The main objective of maintenance is to minimize expenditure without jeopardizing

Personnel safety.

Environmental protection.

Asset protection.

Maintaining equipment efficiency and integrity.

Maintenance Philosophy is based on the PETRONAS CARIGALI inspection and

maintenance guidelines. Design for maintenance program for the Gelama Merah
field will include the following guidelines:

The design shall adopt fit for purpose concept where possible using
minimal operator intervention, reliable components with the available and
credible records.

Equipment choice and systems shall be based on proven technology and

system with regional spares and technical support.

State of the art and advanced control system should be utilized with selfdiagnostic and predictive maintenance capacity.

Standardization between system skids, trains and platform.

Optimize preventive maintenance.

Standardizing of systems and equipment types will be incorporated to

minimize spare holdings, and trainings.

9.8 Abandonment/Decommissioning
The economic life of a project terminates when the net cash flow becomes negative
and therefore the field is abandoned. An effective and reliable plan must be put in
place to remove the well platforms and pipelines without environmental damage.

164

Several factors should be considered in the decommissioning process, and these

include environmental protection, health and safety, cost and public opinion.
The decommissioning of the Gelama Merah field will be based on the International
maritime organization and PETRONAS guidance. The following guidelines will be
used for decommissioning-:

Platform will completely be removed on abandonment.

The jacket piles shall be cut below mudline.

Pipelines to and from platforms shall be pigged and plugged and abandon in
the field.

All wells shall be killed, plugged off and cut off below mudline.

9.9 References
Seong, C. K., & Hong, T. Y. (1995). A Review of Oil Field Development in
Malaysia.
Jahn, F., Cook, M., & Graham, M. (1998). In Hydrocarbon, Exploration and
Production (First ed., p. 155). Elsevier B.V.
Leffler, W. L., & Meisner, T. O. Gas Pipeline in Non-Technical Language.
PETRONAS Carigali Sdn Bhd. (n.d.). E & P - Field Development Plan (FDP).
Arnold, K., & Stewart, M. (2008). Design of Oil Handling Systems and Facilities. In
Surface Production Oepration (Third ed.). Elsevier.

165

10 Economics
10.1 Introduction
Economic analysis is a systematic approach to determine the optimum use of scarce
resources, involving comparison of two or more alternatives in achieving a specific
objective under the given assumptions and constraints. Economic analysis takes into
account the opportunity costs of resources employed and attempts to measure in
monetary terms the private and social costs and benefits of a project to the
community or economy.
In this section, the Gelama Merah field development will be evaluated based on the
cash flow of each development option proposed by the Facilities Engineer and also
varying production profile options. The most suitable option will be selected based
on the economic parameters namely, Payback Period, Maximum Capital Outlay
(MCO), Terminal Cash Surplus (TCS), Profit to Investment Ratio (PIR), Net Present
Value (NPV), and Internal Rate of Return (IRR). The best option selected will
undergo the sensitivity analysis to investigate the implications of changing the input
parameters towards the NPV. The input parameters involved in this sensitivity
analysis are oil price, oil production, CAPEX and OPEX.

10.2 Objectives
The objectives of economic analysis on the Gelama Merah field are:
i. To develop an economic model using the fiscal terms regulated on Gelama
Merah field development.
ii. To perform the economic analysis for the options proposed and select the best
option for the field development.
iii. To identify the most significant variables impacting economics through
sensitivity analysis and rank them in order of magnitude.

166

10.3 Field Summary

There will be eight horizontal production wells completed open hole with
Expandable Sand Screen (ESS) completion in the Gelama Merah field as proposed
by the Reservoir Engineer and the Production Technologist. The total oil recovery is
estimated to be 14.96 MMbbl by the Reservoir Engineer and the first oil is expected
to be produced in May 2015. The field will produced for 15 years as stated in the
Production Sharing Contract (PSC) which will be up until April 2030. The field
schedule is shown in Figure 10.1:

Figure 10.1: Gelama Merah Project Schedule

10.4 Fiscal Term

Every country has different fiscal term model. Malaysia carries out its exploration,
development and production activities through its National Oil Company, Petronas,
through Production Sharing Contracts (PSC) with a number of international oil and
gas companies and with its wholly owned subsidiary, Petronas Carigali Sdn. Bhd.. It
is governed by Petroleum Development Acts of 1974, Petroleum Income Tax Act of
1967 and Petroleum Income Tax Amendment Act 1976.
10.4.1 Production Sharing Contract (PSC)
Malaysia PSC basically has the contractual system where the remaining profit (after
cost recovery) is shared between government and contractor.

167

The 1985 PSC is used in this Gelama Merah field economic evaluation. This contract
started effectively on 1st January 2007 and will expire on 31st December 2031.
However, the time origin for the project cash flow is 1st January 2012 which also
corresponds to the development decision. This is going to be the base year for any
evaluation in economic parameters.
Table 10.1 and Figure 10.2 provides the details on the fiscal term of this PSC.

Table 10.1: Terms and Details of PSC for Gelama Merah field

Terms

Details
1st January 2007

Effective Date
Contract Duration

24 years

o Exploration

5 years

o Development

4 years

o Production

15 years (from first commercial production)

Royalty Rate

10%

Cost Oil Ceiling Rate

50%

Profit Oil Split

PETRONAS : Contractor
70 : 30

PSC Base Price

Export Duty Rate
Research Cess

US$ 26.5289 and escalated at 5% p.a.

10% of Profit Oil Exported
0.5% of Contractor Entitlement

Petroleum Tax Rate

Supplemental Payment

38%
70% x (PSC Oil/Gas Price Base Price) x (Contractors
Profit Oil Export Duty)

Abandonment Fund

USD 5 Million/ year

Capex Allowance
10% per year (10 years)

o Fixed Structure
o Facility/ Pipeline

20% initial + 8% annual (subsequent 10 years)

o Tangible Drilling

20% initial + 8% annual (subsequent 10 years)

o Intangible Drilling

100% write off

168

Figure 10.2: PSC Concept

10.5 Economic Assumptions

Several assumptions were made in order to help in the economic evaluation and in
developing the project cash flow. The assumptions made are as follows:
i.

Time Origin
The effective date where the PSC started is 1st January 2007. As for the cash
flow, year 2012 is taken as the base year for all the economic evaluation.

ii.

Project Evaluation
The economic evaluation is based on look forward evaluation.

iii.

Oil Price
The oil price is based on Brent crude oil and is taken to be USD 80 per barrel
constant throughout the evaluation.

169

Like prices of other commodities the price of crude oil experiences wide
price swings in times of shortage and oversupply. Figure 10.3 shows how the
oil price fluctuates from 1947 to October 2011.

Figure 10.3: Historical Brent Oil Price from 1947 - October 2011

How the oil price will change in future is really difficult to predict. Table
8.5.1 shows how the oil price from 2006 to 2016. The future oil price is based
on NYMEX Brent Crude Oil Futures Quotes and Market Price.

Table 10.2: Range of Brent Oil Price (2006-2016)

Year

Oil Price/ USD

2006

58.30

2007

64.20

2008

91.48

2009

53.56

2010

71.21

2011

87.48

2012

111.18

2013

110.47

170

2014

104.69

2015

99.66

2016

95.89

The oil price went up and down as can be seen from Table 10.2. Thus,
average of USD 80 per barrel is taken and used in the economic evaluation.
iv.

Produced Gas
The produced gas belongs to PETRONAS as stated in the contract.

v.

Costs
All costs were provided by the Drilling and Facilities Engineer with the
application of Que$tor software.
Exploration and appraisal expenditures prior to 2012 are considered as sunk
costs and not included in the cost recovery or the cash flow.

vi.

Operating Expenditure (OPEX)

o Fixed OPEX

Fixed OPEX is assumed to be 4% of CAPEX excluding the drilling

costs.

o Variable OPEX

Variable OPEX is the tariff paid to Samarang field for the tie-back
facilities and is assumed to be USD 6/ bbl.

vii.

Cost Escalation

Both CAPEX and OPEX are escalated at 3% per annum. In addition,

inflation is also assumed to be 3%.

viii.

Discount Rate
The discount rate of 10% is taken and applied in this economic analysis.

ix.

Hurdle Rate
The hurdle rate taken in this evaluation is 10%.
171

10.6 Development Options

There are 3 development options proposed for Gelama Merah field.
o Option 1: Natural Depletion
o Option 2: Gas Injection
o Option 3: Water Injection
All three options use the same production profile with plateau rate of 9000 bbl/d for
two years as the base case. They also use the same type of facilities which is Satellite
Wellhead Platform with Full Stream (FWS) to Samarang as proposed by the
Facilities Engineer in previous section.
In order to select the best option between those three, economic analysis is
performed. Based on the economic parameters obtained, the best option can be
selected.
10.6.1 Economic Analysis Results
The results obtained for all three options are tabulated in Table 10.3 below:

Table 10.3: Economic Results for Different Development Options

Parameters

Unit

Remarks

Option 1

Option 2

Option 3

Natural

Gas

Water

Depletion

Injection

Injection

Undiscounted Parameters
Payback Period (MOD)

Years

2.7

3.8

3.4

Payback Period (RT 2012)

Years

2.9

4.4

3.8

MCO (MOD)

USDMill.

87.7

165.7

135.4

MCO (RT 2012)

USDMill.

82.0

154.4

126.6

TCS (MOD)

USDMill.

71.4

30.3

40.9

TCS (RT 2012)

USDMill.

55.4

17.4

28.1

0.8

0.2

0.2

PIR (MOD)

172

PIR (RT 2012)

0.7

0.1

0.3

Discounted at 10%
NPV (MOD)

USDMill.

23.8

(5.5)

4.0

NPV (RT 2012)

USDMill.

15.5

(12.7)

(3.4)

IRR (MOD)

22

12

IRR (RT 2012)

19

* Brackets ( ) indicates negative values

From Table 10.3, comparing all three options, Option 1 which is natural depletion
gives the highest NPV [0.10] than Option 2 and 3 that is USD 15.5 Million. The
NPV [0.10] for Option 2 and 3 is even negative which surely need to be rejected
because they are uneconomical. Looking at other economic parameters, Option 1 is
still the most attractive one since it has a reasonable number of years in recovering
investments which is 2.9 years, lowest Capex spent of USD 82.0 Million, highest
profit (Cash Surplus of USD 55.4 Million) and also highest investment efficiency
(PIR and IRR of 0.7% and 19% respectively). Thus, Development Option 1 which is
natural depletion will be selected.

10.7 Production Profiles

The previously selected development option which is natural depletion will now be
further analysed with different production profile. It has been stated in Section 10.6
that the production profile base case has the plateau rate of 9000 bbl/d for two years.
In this section, we will manipulate the plateau rate and again run the economic
analysis to select which production profile is the most economical.
o Option A: Plateau rate of 9000 bbl/d for two years
o Option B: Plateau rate of 7000 bbl/d for two years
o Option C: Plateau rate of 6000 bbl/d for two years

173

10.7.1 Option A: 9000 bbl/d for Two (2) Years

This option has a plateau rate of 9000 bbl/d for two years starting from the second
year and production will start decreasing after the third year until the end year of
production. Table 10.4 and Figure 10.4 represent this option.

Table 10.4: Production Profile of Option A (9000 bbl/d)

Year

Oil Rate

Oil Rate

(Mbbl/day) (MMbbl/year)

Cumulative Oil
(MMbbl)

4.500

1.575

1.575

9.000

3.150

4.725

9.000

3.150

7.875

7.270

2.545

10.420

4.667

1.634

12.053

2.996

1.049

13.102

1.924

0.673

13.775

1.235

0.432

14.207

0.793

0.277

14.485

10

0.509

0.178

14.663

11

0.327

0.114

14.777

12

0.210

0.073

14.851

13

0.135

0.047

14.898

14

0.086

0.030

14.928

15

0.055

0.019

14.948

16

0.036

0.012

14.960

174

Production Rate (Mbbl/d)

Option A: 9000 bbl/d

10
9
8
7
6
5
4
3
2
1
0

Years

Figure 10.4: Production Profile of Option A (9000 bbl/d)

10.7.2 Option B: 7000 bbl/d for Two (2) Years

This option has the plateau rate of 7000 bbl/d for two years starting in the second
year of production as well. Production rate reduced after the third year towards the
end of production. Table 10.5 and Figure 10.5 represent this option.

Table 10.5: Production Profile for Option B (7000 bbl/d)

Year

Oil Rate

Oil Rate

(Mbbl/day) (MMbbl/year)

Cumulative Oil
(MMbbl)

3.500

1.225

1.225

7.000

2.450

3.675

7.000

2.450

6.125

6.138

2.148

8.273

4.691

1.642

9.915

3.585

1.255

11.170

2.740

0.959

12.128

2.094

0.733

12.861

1.600

0.560

13.421

175

10

1.223

0.428

13.849

11

0.934

0.327

14.176

12

0.714

0.250

14.426

13

0.546

0.191

14.617

14

0.417

0.146

14.763

15

0.319

0.112

14.875

16

0.244

0.085

14.96

Option B: 7000 bbl/d

Production Rate (Mbbl/d)

8
7
6
5
4
3
2
1
0

Years

Figure 10.5: Production Profile for Option B (7000 bbl/d)

10.7.3 Option C: 6000 bbl/d

The plateau rate for this option is 6000 bbl/d for two years which also started in the
second year of production. Production rate decreased as well until the end of
production year. The production profile is presented in Table 10.6 and Figure 10.6.

Table 10.6: Production Profile for Option C (6000 bbl/d)

Year

Oil Rate

Oil Rate

(Mbbl/day) (MMbbl/year)

176

Cumulative Oil
(MMbbl)

3.000

1.050

1.050

6.000

2.100

3.150

6.000

2.100

5.250

5.437

1.903

7.153

4.451

1.558

8.711

3.643

1.275

9.986

2.982

1.044

11.029

2.441

0.854

11.884

1.998

0.699

12.583

10

1.635

0.572

13.155

11

1.338

0.468

13.624

12

1.095

0.383

14.007

13

0.897

0.314

14.321

14

0.734

0.257

14.578

15

0.601

0.210

14.788

16

0.492

0.172

14.960

Option C: 6000 bbl/d

Production Rate (Mbbl/d)

7
6
5
4
3
2
1
0

Years

Figure 10.6: Production Profile for Option C (6000 bbl/d)

10.7.4 Economic Analysis Results

The results for all three options analysed are tabulated in Table 10.7.
177

Table 10.7: Economic Results for Different Plateau Rates

Parameters
Unit
Plateau Rates
bbl/d
Undiscounted Parameters (RT 2012)
Payback Period
Years
MCO
USDMill.
TCS
USDMill.
PIR

Option A
9000

Option B
7000

Option C
6000

2.9
82.0
55.4
0.7

3.5
90.6
64.9
0.7

3.8
94.9
64.9
0.7

Discounted at 10% (RT 2012)

NPV

USDMill.

15.5

13.7

10.1

IRR

19

16

14

Years

2025

2030

2030

Economic Limit

From the results obtained, Option A is the best amongst others and thus Option A
will be selected. This is because, it has the highest NPV discounted at 10% compared
to the other two options with USD 15.5 Million. Apart from that, the other
parameters also contribute to why this option is chosen. Option A can recover its
investment in 2.9 years time. This is the shortest period compared to the other two
options.
From the other parameters, we can see from the Maximum Capital Outlay, Option A
has the least financial commitment to the project which means it represents the least
amount of money needed to be invest in this project compared to Options B and C
with USD 82.0 Million.
Looking at the Terminal Cash Surplus, even though Options B and C have higher
surplus compared to Option A, it does not represent the project as a whole because
this surplus is basically the end point of the cumulative curve. The surplus for Option
A is less than the other two is also because Option A has reached its economic limit
in 2025.
As for the Profit to Investment Ratio, all three options will have 70% extra return
from what have been invested.

178

The Internal Rate of Return shows that Option A has the highest value of 19%. It is
the most efficient option compared to the others.
10.7.5 Net Cash Flow Profile
The net cash flow profile for Option A is illustrated in Figure 10.7.

Net Cash Flow (RT USD 2012)

80
60

USD MM

40
20
0
-20
-40
-60
-80
-100

Years
Annual NCF

Cum. NCF

Figure 10.7: Net Cash Flow Profile for Option A (RT US$ 2012)

From Figure 10.7, the negative annual NCF for the first four years (2012 2015)
implies that Capex is committed and spent before the facility becomes productive.
The first oil is expected to be in mid 2015 but with only a small amount of oil
produced in this year. The Maximum Capital Outlay (MCO) is estimated to be USD
82.0 Million as reflected by the minimum value on the cumulative NCF curve. As for
the Payback Period, it is estimated that it will take 2.9 years to recover the
investment. For the Terminal Cash Surplus (TCS), it is estimated to be USD 55.4
Million. The Internal Rate of Return (IRR) is calculated to be 19%. Figure 10.8
indicates how the IRR is obtained graphically.

179

IRR Estimate
60
50

NPV

40
30
20

19
%

10
0
0

10

-10

15

20

Discount Rate

Figure 10.8: IRR Estimate

Figure 10.9 represents NCF for Option A both in money of the day and real terms:

NCF in MOD and RT 2012

Annual NCF (USD Mil.)

80
60
40
20
0
-20
-40
-60

Year
NCF mod

NCF Real Terms 2012

Figure 10.9: Option A NCF in Money of the Day and Real Terms 2012

10.7.6 Revenue Split

Figure 10.10 shows how the revenue is being split for Option A at NPV [0.10]:
180

Revenue Split at NPV [0.10] (RT USD 2012)

Capex
Opex
USD 90.7 Mil. USD 56.6 Mil.
14%
9%

Contractor
USD 15.5Mil.
2%

Petronas
USD 228.1 Mil.
32%

Government
USD 307.7 Mil.
43%

Total: USD 698.7

Figure 10.10: Revenue Split at NPV [0.10] (RT US$ 2012)

From the pie chart in Figure 10.10, the total revenue discounted at 10% equals to
USD 698.7. Government gained the largest percentage of 43% followed by Petronas
with 32%, Capex and Opex with 14% and 9% respectively. Contractor left with only
2% of the revenue with USD 15.5 Million.

10.8 Sensitivity Analysis

In this section, we will investigate how the change in NPV for Option A will be by
changing a number of input parameters. Those variable inputs that are going to be
changed are oil price, oil production rate, Capex and Opex. Figure 10.11 is the
sensitivity plot or also known as the Spider Diagram while Table 10.8 is the
summary of the data represented.

181

Option A Spider Diagram (RT 2012)

NPV [0.10] (USD Million)

35

-30%

30
25
20
15
10
5
0
-20%

-10%

0%

10%

20%

Capex

Opex

30%

Proportional Change
Oil Price

Production Rate

Figure 10.11: Sensitivity Analysis for Option A

Table 10.8: Sensitivity Parameters of Option A

Parameters
Oil Price
Production
Rate

Base Value
USD/ bbl

80

Minimum Value

Maximum Value

Units

Fraction

Units

Fraction

60

0.75

100

1.25

Mbbl/d

Rate varies annually

Capex

USD Mill.

126

95

0.75

158

1.25

Opex

USD Mill.

117

88

0.75

146

1.25

It appears from this analysis that the NPV is more at risk from a collapse of
production rate than from any other single factor. If production rate fall more than
25%, the NPV will be negative. Variation of production rate seems to be the only
likely parameter change, which on its own could reduce project NPV to zero. It can
also be seen from Figure 10.11 that oil price has the bigger impact on the NPV
compared to Capex and Opex since the gradient for oil price is more steeper than
Capex and followed by Opex. As we know, the steeper the leg of the spider plot,
the more sensitive the project towards the parameter. However, sensitivity analysis
only took into account one parameter at a time

182

10.9 Conclusion
The natural depletion option is the best option to develop the Gelama Merah field
because it is the only option that generates positive NPV of USD 15.5 Million after
discounted at 10%. It is also the option with the lowest Maximum Capital Outlay;
USD 82.0 Million and the earliest option that can recover the investment which is in
2.9 years.
The field is also chosen to produce with the peak production rate of 9000 bbl/ d
instead of 7000 bbl/ d and 6000 bbl/ d because it gives the largest NPV [0.10] of
USD 15.5 Million. It also generates attractive values for other parameters with
payback period of 2.9 years, Terminal Cash Surplus of USD 55.4 Million, Profit to
Investment Ratio and Internal Rate of Return of 0.7% and 19% respectively.
Based on the sensitivity analysis done, the production rate and the oil price are the
two most important parameters. Reduced in any of these parameters can put the NPV
at risk of being negative.

10.10 References
Heriot-Watt University. (2005). Petroleum Economics.
Jahn, F., Cook, M., & Graham, M. (1998). Hydrocarbon Exploration and
Production.
Said, A. (1982). Overview of Exploration for Petroleum in Malaysia Under the
Production Sharing Contracts.
Putrohari, R. D., Kasyanto, A., Suryanto, H., & Marianna, I. (2007). PSC Term and
Condition and Its Implementation in South East Asia Region.
(n.d.).

From

Overview

of

Malaysia

PSC:

www.ccop.or.th/ppm/document/CAWS4/MalaysianPSC.pdf
(n.d.).

From

Crude

Oil

Methodology

and

Specifications

www.platts.com/IM.Platts.../methodologyspecs/crudeoilspecs.pdf

183

Guide:

(n.d.). From Crude Oil Price History: www.nyse.tv/crude-oil-price-history.htm

(n.d.). From NYMEX Brent Crude Oil Futures Quotes and Market Price:
quotes.tradingcharts.com/futures/quotes/SC.html

184

11 HSE and Sustainability Development

11.1 Introduction
A structured Health, Safety and Environment Management Systems (HSE-MS) is an
essential and integral part of business in the Oil and Gas industry following lessons
learnt from catastrophic incidents such as Piper Alpha and Gulf Mexico recently.
Furthermore, Oil and Gas companies are required to demonstrate that HSE issues can
be managed effectively, now that the stakeholders are more aware about the risks
involved in this industry and also call from governments for self-regulation in HSE.

11.2 HSE Management Philosophy

Health, Safety and Environment (HSE) management plays a vital role to ensure a
successful development of Gelama Merah field, which shall be in accordance with
PETRONAS HSE Management System (HSE-MS). By adopting this HSE
management system, Health, Safety and Environment issues can be managed in a
consistent and systematic manner. The HSE Plan, therefore, shall be developed and
implemented throughout Gelama Merah field development.
11.2.1 HSE Management Policy
In the PETRONAS Corporate Policy Statement on Health, Safety and Environment,
it states that PETRONAS is committed to give priority to Health, Safety and
Environment matters, wherever PETRONAS operates and shall endeavour to prevent
and eliminate the risk of injuries, health hazards and damage to properties.
PETRONAS shall take proactive steps towards the conservation and preservation of
the environment.. Furthermore, the policy states that PETRONAS shall provide the
necessary resources, organisation, system and training and shall communicate with
employees, contractors, customers, suppliers and the public with regard to
appropriate matters on Health, Safety and Environment.
11.2.2 Risk Acceptance Criteria
The facilities shall be designed, constructed and operated such that the risks are
minimised by using the ALARP process. Such risks include individual risks,

185

facilities risks, offshore societal risks and others. A formal quantification of risk and
mitigation measures will be required in order to demonstrate that risks have been
reduced to a reasonable and practical level.

11.3 HSE Management System

Figure 11.1 shows the PETRONAS HSE Management System, which are divided
into three main standards:
1. Health Standards
2. Safety Standards
3. Environmental Standards

Figure 11.1: PETRONAS HSE Management System

The key focus areas of this system are:

Every personnel involve in the project must accept that HSE is an integral
part of the business and a structured HSE management system is required to
demonstrate this

HSE Leadership must be demonstrated at all levels through positive

behaviours

Understand the HSE risks in the project at different categories and actions are
in place to reduce these risks to As Low As Reasonably Practicable.

The effective implementation of the HSE Management System via audits and
reviews and also feedbacks for continuous improvement

186

11.3.1 Gelama Merah HSE Objectives

The development of the Gelama Merah field shall be in line with the following
objectives:

The design of the Gelama Merah facilities shall be in accordance with the
relevant PETRONAS Technical Standards (PTS)

The design of the Gelama Merah facilities shall be fundamentally safe, which
can be verified by means of systematic reviews such as the Hazards and
Operability and Safety studies (HAZOP) and risk assessment reviews.
Probabilities of hydrocarbon releases and ignition sources are reduced and
consequences of major accidents are mitigated. All practicable steps are taken
to protect the land, sea, atmosphere, plants and animals against any harmful
effects that might arise from the design and operation of the facilities.

The design of Gelama Merah facilities shall in corporate the control of

substances hazardous to health, effluent discharges and solid wastes, gaseous
emissions, and noise and vibration. Hazardous Materials Identification
(HAZID) reviews shall be conducted rigorously. Considerations should also
be given for ergonomics in equipments and layout design.

There shall be no compromise in safety of the approved design during

subsequent activities of procurement, fabrication, installation, hook-up and
commissioning, and production operations. Means of proper control of any
design changes; i.e. modifications, additions, deletions, or substitutions of
any equipment, materials, processes philosophies, etc. shall be enforced.

The selection and engagement of contractors whose management systems for

HSE are comparable or at par with HSE-MS and commitments towards
health safety and environmental protection can be clearly demonstrated.

All project specific HSE-MS for the entire field life must be developed to
ensure that the facilities are operated in a safe and responsible manner. To
this end, the HSE-MS should encompass plans for safety cases and
emergency responses.

All hazards with the potential to cause a major accident shall be identified,
risks evaluated and measures to be taken to control such risks. This is to
ensure the relevant statutory provisions will be complied with.

187

Execution of an Environmental Impact Assessment (EIA) study in

accordance with Malaysian Environmental Quality Act 1985.

Environmental consideration requirements shall be addressed in all phases of

the Gelama Merah project. An external consultant shall be engaged to prepare
a baseline EIA for the development of the Gelama Merah field. Gelama
Merah operations shall comply with the requirements of the EIA, relevant
Malaysian Laws and Regulations, and PCSB guidelines and policies on the
environment during design, construction, commissioning and operations.
11.3.2 HSE Hold Points

HSE Hold Points shall be held to ensure that all the HSE activities requirements
stipulated in the PCSB HSE-MS shall be carried out. A HSE Hold Point is a team
activity that serves as a check and/or internal audit that all the relevant HSE issues
have been addressed and approved prior to the commencement of the subsequent
phases of the project.
11.3.3 HSE Responsibilities
All of the employees, including contractors and third party members on behalf of the
operators are expected to show leadership and commitment towards the HSE
requirements.

11.4 Occupational Health and Safety Issues

The Gelama Merah field shall be developed as an unmanned satellite platform which
is tied-in to host platform at Samarang Complex via a full well stream (FWS)
pipeline system. The satellite platform shall be operated remotely from the host
platform. Routine checks, operations and maintenance activities will be carried out
on a periodic basis by personnel. Therefore, there are no major health and safety
issues anticipated during the routine operational maintenance phase at the satellite
platform except for severe weather during monsoons.

188

11.5 Safety System

11.5.1 Safety Shutdown System

Sense an abnormal operational or equipment condition

Shutting in or isolating necessary system components, or even the entire

system

Sounding alarms, starting fire extinguishing systems, and depressuring all

piping and pressure vessels

Primary purposes:
o Protect human life
o Prevent ecological damage
o Protect the investment
11.5.2 Flare and Emergency Relief System

Relief System

Discharging gas by manual or by an automatic pressure relief valve to

atmosphere

Equipments involve: pressured vessel or piping system

The relief system parts:

relief valve of rupture disc,

the collection piping,

a gas scrubber for liquid separation, and

a gas vent

Flare System

Discharging gas through a control valve from a pressured system to

the atmosphere during normal operations

Should be designed to ensure that vessels and tanks will not be over
pressured and to accommodate the maximum volume that could be
vented

189

11.5.3 Emergency Evacuation Plan

In the event of emergency where personnel are required to leave the premises, the
appointed Operation Installation Manager is responsible coordinating the evacuation
operation, including communication with the PCSB Emergency Response Team.

11.6 Environmental Obligations

11.6.1 Environmental Impact Asssessment (EIA)
As part of the requirement, an approval has to be seek from the Department of
Environment (DOE) prior to the implementation of the project by submitting an EIA
report. Table H.1-1 in the Appendix shows the list of laws and regulations related to
this project.

EIA Procedures
The Gelama Merah project is not allowed to proceed until the EIA report has been
granted an approval from the Director General of Environment Quality. The EIA
procedures consist of three major steps:
1. Preliminary Assessment
2. Detailed Assessment
3. EIA Review

11.7 Environmental Concerns

Environmental concerns should be addressed on the two important activities in the
Gelama Merah development, which are; upstream activities such as exploration,
development and production of crude oil or natural gas, and downstream activities
such as tankers, pipelines, retailers and consumers.
At the upstream level, the environmental issue is more on the marine pollution whilst
at the downstream activities, the environmental concerns include gas emission,
transporation, storage and utilisation of oil and gas.

190

11.7.1 Upstream Activities

Pre-Installation
o Environmental conditions to be met by the project proponent and all its
contractors involved in the offshore fabrication work
o Warning to fishermen and other seafarers by means of notification of
any activities
o Proper planning and coordination of activities by experienced
contractors
Installation
o Proper planning to minimize time and monitoring to ensure recovery of
affected areas
o Proper segregation and disposal of all waste types
o All contractors to adhere to project proponents safety requirements
Commissioning
o To use the dosage and method recommended of any chemicals such as
biocides, inhibitors, hydrotest chemicals etc. by manufacturers.
o To use chemicals that have low toxicity and that are environmentally
friendly (where possible)
o Oil absorbent pads should be available onboard
Drilling
o Maximise recycling of drilling mud. Spent drilling mud should be sent
onshore for disposal and not disposed offshore. Synthethic-based mud
will be used but no oil-based muds will be employed.
o Drill cuttings that cannot be discharged overboard should also be sent
onshore for disposal.
o Drilling mud and drilled cuttings are considered as drilling waste, which
can potentially damage the marine environment if not disposed of in a
proper manner. Such damaging impact include toxic contamination,

191

bioaccumulation and fish tainting. Therefore, the Gelama Merah project

shall comply with the regulations on the discharge of drilling wastes:

Water-based mud that contain free oil or inverse emulsion mud or

cuttings generated using these muds shall not be discharged
overboard

Muds that are contaminated with oil shall not be discharged.

Production
o Since water production from Gelama Merah shall be evacuated directly
to Samarang Complex via FWS for processing, the operator at the host
platform shall therefore abide to the regulations, which require the
Effluent Discharge Quality (EDQ) to be below the PETRONAS
maximum requirement of 40ppm. A continuous monitoring should be
conducted to ensure that any water discharges overboard adheres to the
set standards.
11.7.2 Downstream Activities
Waste Handling, Storage and Disposal

The handling and disposal of toxic and hazardous waste materials is

covered

under

the

Environmental

Quality

(Scheduled

Wastes)

Regulations 1989. As part of the waste management concept, a historical

record must be documented which explains the life- cycle of the waste
from its creation to its disposal.

The implementation of the waste management concept can be found in by

the following requirements:

o Notification of Waste Generation

Any scheduled waste must be notified to DOE in writing within

one month of its generation.

New waste categories or any changes in the quantities as a result

of any adjustment in the operations, DOE must be notified
immediately.

192

Records of Waste Generation

Up-to-date record of scheduled waste generated, treated and

disposed of must be maintained.

o Storage of Waste

Storage of scheduled waste must be done in durable, clearly

labelled containers to prevent spillage or leakage into the
environment.

o Transport of Waste

The transportation of waste to its designated destination must be

monitored.

The nature of the waste must also be informed to the transport

contractor as well as instructions to be taken in the event of an
accident during the transportation.

o Disposal of Waste

Scheduled waste can only be disposed of at licensed premises,

according to the Environmental Quality Order 1989.

In the event of no disposal facilities available, scheduled waste

must be contained and store on-site or offsite until such premises
are made available.

Gas Venting and Flaring

No gas venting or flaring at the Gelama Merah platform as the gas

production is evacuated to Samarang via FWS pipeline.

Noise Pollution

Environmental noise levels generated on the platform shall not exceed

85dB.

193

11.8 Quality Assurance

The Gelama Merah project shall comply with PCSB policy on Quality Management
to achieve the highest standards of Environment, Safety, Quality, Reliability and
Operational Integrity. To ensure that the project is completed on time, within budget
and in accordance to all specified requirements, the project will adopt a Quality
Management System, which has the following objectives:

Provide assurance and maintain control in ensuring that all services and
products resulting from its activities are in accordance with the specified
requirements.

Demonstrate that any non-compliance has been appropriately endorsed,

documented and resolved/close-out.

Ensure that records and hand-over documentation are properly planned,

compiled and completed during work.

The project team, contractor team and asset team shall be in close communication to
optimize process flow and meeting of various requirements especially in terms of
preparation and HSE.
The project shall also be in line with the 5 PETRONAS Quality Principles, which
also conforms to the ISO 9000/ISO 14001 quality framework:
1) Conformance to requirements
2) Prevention
3) Doing right things right every time
4) Price of non-conformance
5) Proactive leadership at all levels

11.9 Abandonment/Decommissioning
During the abandonment process at the end of the field life, the main components
that considered are the platform, jacket and pipelines.
The abandonment and decommissioning activities for the Gelama Merah field shall
be conducted in accordance to the International Maritime Organisation (IMO)
194

guidelines. This guideline stipulates that an abandoned or disused offshore

installation or structure on a Continental Shelf or an Exclusive Economic Zone
should be removed as soon as reasonably practical once it is no longer serving the
prime purpose for which it was originally designated.
The IMO guidelines also provide for leaving offshore installations wholly or
partially in place if complete removal:

Is not technically feasible

Would involve extreme cost

Would involve an unacceptable risk to personnel or the maritime

environment

11.10 Sustainable Development

Sustainability is about respecting the process at work, in our ecosystem so as to
ensure, or at least prolong our survival as species, and concerns our level of
connectedness with future generations.2 In other words, it is to meet the present
needs without compromising the ability of future generations to provide for their
own need (Brundtland). Countries agreed to commit with sustainability of the
worlds resources during the 1992 UN Conference on Environment and
Development in Rio De Jeneiro. Therefore, the Malaysian government has written
policies to ensure the petroleum in the country is sustained.
National Energy Policy Objectives 1979 to ensure an efficient, secure and
environ- mentally sustainable supply in the future as well as to have an efficient and
clean utilisation of energy.
National Depletion Policy 1980 to ensure a strategy is in place to safeguard the
reserves.
Four Fuel Strategy 1981 to reduce heavy reliance on oil as the main source of
energy.
2 Stallworthy, Mark, Sustainability, Land Use and environment: A Legal Analysis. Cavendish Publishing Ltd. 2002. UK

195

International Standards
The difficulty of the oil and gas industry has resulted companies to adopt best
practice for protection of the environment. Guidelines have been issued by
influencial bodies as follows:

International Association of Oil and Gas Producers (OGP) (Formerly known

as the Oil Industry International Exploration and Production Forum)

The American Petroleum Institude (API) World Conservation Union

(IUCN) United Nations Environmental Programme (UNEP)
11.10.1 Sustaining Development in Gelama Merah Field

The main objective of this Field Development Project is to optimise and maximise
the production performance of the Gelama Merah field in the long run. Therefore, in
order to realise this, strategies and detailed measures have been laid out by the
teams reservoir engineers, production technologists, drilling and facilities engineers.
Reservoir Management

Surveillance of the reservoir pressure

Initial flowing and buildup test shall be carried out to ensure reservoir
characteristics are considered in revising the reservoir management

Frequent (monthly) production tests shall be carried out to track well

behaviour.

Secondary (IOR) and tertiary (EOR) recovery development option

Close monitoring shall be done for daily production rates of oil, gas and
water from all the wells. Data would be important for history-matching
purposes and model refinement

Updating the simulation model from time to time to incorporate new

data and observe divergence from actual performance

Drilling Engineering

Mudloggers shall provide up-to-date information on the overall drilling

operations

196

Abnormalities must be notified and rectified as soon as possible to

prevent Non-Productive Time (NPT)

Bit cost runs analysis shall be carried out to improve future drilling of
other producer wells

Production Technology

Production optimization plans such as using Hybrid system for the

artificial lift e.g. gas lift and ESP, and production logging

Production surveillance including water-cut, GOR and pressure

Consider new technologies applicable to the field such as sand control

method, elastomer swellable packer for zonal isolation.

Surface Facilities

There shall be routine checks and maintenance on the surface facilities

Well testing equipment, procedures and schedule in place

Collaborate closely with the production technologists in monitoring

production and performance

11.11 References
Foo, S. M., & Yusoff, M. R. (2002). Environmental Impact Assessment - Malaysia
Perspectives.
Evans, D. B., & Yong, E. F. (1994). Environmental Issues in Oil and Gas
Development in Malaysia.
Pillai, G., & Kho, M. (2002). Implementing a Consistent HSE Management System
Groupwide in a National Oil Company - Corporate Challenges.
Halliwell A. (2011). Why Safety & Why Now? Safety considerations in the Field
Development Project. HWU IPE Oilfield Development Project.

197