By Yange Ikyaa
A global-scale tracking of investment trends in petroleum industry upstream operations has shown that, in the next five years, oil and gas companies around the world will commit an estimated $58 billion to well intervention efforts in a bid to save cost by optimizing hydrocarbon yield from old or already existing wells rather than drilling new ones.
This is according to a new research conducted by Rystad Energy, a global energy research firm headquartered in the Scandinavian nation of Norway, which further explained that industry operators are more likely to undertake interventions into mature assets that have been producing for more than five years, with relatively high production rates, which are also starting to show signs of decline.
The intervention rate under review, which is a function of how many oil and gas wells can go through the intervention process, is forecast to reach 17 per cent in a five-year period running through 2027. This process is projected to involve about 260,000 wells worldwide, considering the fact that oil and gas production companies are constantly looking for more efficient and cost-effective techniques to increase productivity.
In monetary terms, Rystad Energy’s modelling shows that well intervention expenditure is projected to jump by almost 20 percent in 2023 alone and total $58 billion. It also considered this as a sign of the beginning of a surge in the years ahead, as the focus on efficiency in oil and gas industry operations intensifies.
“As oil demand picks up in the second half of this year, operators will look to ramp up production from existing fields, and well interventions will be a vital piece of the puzzle,” said Jenny Feng, supply chain analyst at Rystad Energy.
The Norwegian energy research group further stated that over $11 billion of the total expenditure will be directed to the wireline and perforating segment; while all together, intervention units and oilfield chemicals sectors will represent 35 per cent of the total spending.
It also claimed that, in addition, the sum of the investments in coiled tubing, water management, and intervention tools is expected to close in 2023, surpassing $20 billion.
A further breakdown of the data indicated that onshore interventions in Asia, South America, and Africa will lead the 9 per cent growth in activities related to intervention during 2024, a year expected to be significant for the well intervention market. On its part, North America is projected to account for 64 per cent of the total oil and gas wells ready for intervention by 2027, whereas Asia and South America will reach their maximum in 2026, with 41,413 and 9,703 wells respectively.
In Africa, where energy transition considerations are making funds for fossil-fuel related projects increasingly scarcer, including in Nigeria, the continent’s largest oil and gas producer, companies are showing more eagerness in recent years to ramp up production from pre-existing fields rather than taking up the challenge of drilling new ones.
According to government figures, there are over 7,000 oil wells or reservoirs in Nigeria, but less than half that number is being actively operated.
The country is ranked as Africa’s largest producer of oil and the sixth-largest oil-producing nation in the world, commanding a peak crude oil production capacity of 2.5 million barrels per day. However, it hardly gets an output of 75 per cent of available capacity, even when there is no cap placed on its production volumes by the Organization of Petroleum Exporting Countries (OPEC).
“We cannot have 7000 reservoirs and we are only producing from 1,300. We cannot afford to stay with a 40 per cent recovery factor. We are also optimizing the production to ensure that investors get a return on their investments while also reducing the cost of production,” said one senior government official in a note seen by Valuechain.
In 2021, the Nigerian government began the revocation of licenses for fields that were left dormant in order to address the production gap, and with a view to putting pressure on asset operators to optimize the use of the oil production facilities in question.
In the same year, it also revoked four oil wells owned by Chinese-linked Addax, namely OML 123, 124, 126 and 137, citing the company’s failure to develop the affected fields. The government further revoked the licenses of 11 marginal field operators for non-performance, including Dawes Island Marginal Field located in OPL 2006 at Okrika in Rivers State.
The government action was justified on the ground that nothing was done on the fields from the date of the award of the licenses up to the point of their revocation. For Dawes Island, it added that no field development plan was submitted.
However, the revocation of Addax licenses was eventually reversed by the Federal Government, with full restoration of ownership of the OMLs in question, the other revocations were totally enforced. The Addax oil fields are jointly operated with the Nigerian National Petroleum Company (NNPC) Limited.
In descending order, the top four oil-well operators in Nigeria include Shell, 11 Plc (formerly Mobil Nigeria), Agip (which is now a subsidiary of Eni), Elf (now part of Total), Gulf Oil Company (now part of Chevron), Chevron, ExxonMobil, Addax, Texaco (now MRS), ChevronTexaco (now Chevron), Total and Nigerian National Oil Company (NNPC) Limited.
Recent data shows that Shell has operated 2,678 wells in Nigeria since its entry into the country in 1937. The company is credited with 63 drilling locations, seven gas shows, 50 plugged and abandoned gas shows, six oil shows, 278 plugged and abandoned oil shows, seven oil, and gas shows, 13 plugged and abandoned oil and gas shows, as well as 223 plugged and abandoned wells.
The data also shows that Shell has 1406 suspended oil-producing wells, one plugged and abandoned well tested with gas, 462 wells tested with oil, three plugged and abandoned wells tested with oil, 100 wells tested with oil and gas, eight plugged and abandoned wells tested with oil and gas, and three water injector wells.
Production well testing refers to the process of performing periodic measurements of well productivity. Main parameters to be measured are flow rates of oil, gas, and water, including their pressures and temperatures, both downhole and at surface, as well as fluid properties, such as density, shrinkage and composition, among others.
The primary objective of well testing is to understand the reservoir capacity to produce hydrocarbons, including natural gas and crude oil.
Then, 11 Plc, formerly Mobil Nigeria, has operated 843 wells in Nigeria, with 12 drilling locations, 18 plugged and abandoned gas shows, two oil shows, 45 plugged and abandoned oil shows, seven oil, and gas shows, 17 plugged and abandoned oil and gas shows, 69 plugged and abandoned wells, four suspended gas producing wells, 498 suspended oil producing wells, two suspended water producing wells, 26 wells tested with gas, 31 wells tested with oil, four plugged and abandoned wells tested with oil, 82 wells tested with oil and gas, 14 plugged and abandoned wells tested with oil and gas.
However, data for current status links the company with one oil-producing well, one plugged and abandoned oil show, two plugged and abandoned oil and gas shows, five plugged and abandoned wells, and two wells tested with oil and gas.
For Agip, now a subsidiary of Eni, the company has operated 548 wells in Nigeria, with original status data linking it to five drilling locations, one gas show, eight plugged and abandoned gas shows, one oil show, 47 plugged and abandoned oil shows, seven plugged and abandoned oil and gas shows, 62 plugged and abandoned wells, one suspended gas injector well, one suspended gas producing well, 326 suspended oil-producing well, one well tested with gas, 28 wells tested with oil, six plugged and abandoned wells tested with oil, 26 wells tested with oil and gas, as well as 10 plugged and abandoned wells tested with oil and gas.
Furthermore, current status data indicates that it has two plugged and abandoned gas shows, two plugged and abandoned wells, one proposed drilling location, and one plugged and abandoned well tested with oil and gas.
Then, for Elf, which is now merged with Total, the company has operated 526 wells in Nigeria, with original status data showing 15 plugged and abandoned gas shows, two oil shows, one plugged and abandoned oil show, nine plugged and abandoned oil shows, two oil and gas shows, five plugged and abandoned oil and gas shows, 100 plugged and abandoned wells, two proposed drilling locations, 16 suspended gas producing wells, 249 suspended oil producing wells, 23 suspended water injectors, four suspended water producers, one well tested with gas, five plugged and abandoned wells tested with gas, 17 wells tested with oil, one plugged and abandoned well tested with oil, 14 plugged and abandoned wells tested with oil, 33 wells tested with oil and gas, 16 plugged and abandoned wells tested with oil and gas.
However, data for current status shows that Elf has five abandoned oil-producing wells, one abandoned water injector, 13 gas-producing wells, 11 plugged and abandoned gas shows, 135 oil-producing wells, one plugged and abandoned oil show, 11 plugged and abandoned oil shows, six plugged and abandoned oil and gas shows, 98 plugged and abandoned wells, one proposed drilling location, two shut-in gas producing wells, 107 shut-in oil producing wells, six plugged and abandoned wells tested with gas, one well tested with oil, one plugged and abandoned well tested with oil, 26 plugged and abandoned wells tested with oil, 12 wells tested with oil and gas, 33 plugged and abandoned wells tested with oil and gas, 23 water injectors, and 3 water producing wells, amounting to 496 wells.