Reviving overlooked properties can unlock profits for operators who take a systematic approach to life-cycle field management.

A significant reserve of unrecognized profitability is locked up in neglected producing properties.
By reviving overlooked properties through a process of expense reduction or production enhancement, newfound profits can be made at low cost. A systematic approach to life-cycle field management can achieve excellent economic returns with indicators rivaling some new field developments.
Aspects of production operations that offer the greatest promise for optimization typically include labor, equipment, processes, services and practices associated with oil and gas production. A systematic approach developed to evaluate neglected properties and determine how to quickly maximize field profitability includes:
• identification, evaluation and development of significant opportunities for production volume increases and operating cost reductions;
• performing the evaluations on the basis of best practices as perceived by the industry; and
• completion of a field review and subsequent recommendations quickly and with minimum disruption to ongoing field operations.
How wells are overlooked
Following the 80/20 rule, where the best 20% of properties generate 80% of the revenues, 20% of the properties receive the lion's share of available resources while the remaining 80% receive only a small share of the remaining resources. This contributes to the fact that the decline rate in production is higher than the decline rate in reserves.
As time goes by and neglected properties receive less and less attention, the potential for significant improvement grows to a point at which it becomes highly profitable to invest time and resources to improve production and profitability. Although the rate of return resulting from investing resources in neglected properties can be equal to or greater than that of high-profile properties, the total profit generated will be less. It is not uncommon to find production increases from field optimization in the range of 20% to 30%.
Identifying optimization prospects
Good candidates for field optimization fit the following criteria:
• field or location is mature (more than 10 years old);
• production to date accounts for 75% or more of reserves;
• production has declined to less than 25% of design or actual peak periods;
• field or location is large or complex with a high number of producing wells;
• field or location can be defined with an organization chart, monthly operating expenses for 2 years and production figures by well, battery and facility for at least 2 years; and
• field or location has been operating with little or no new drilling, workover or stimulation activity.
There is really no such thing as a bad prospect. All prospects can benefit from evaluation. However, good prospects generally yield the greatest number of opportunities to increase profitability. Experience demonstrates that even those properties assumed to be fully optimized benefit from a comprehensive, high-level assessment. Improvements often are found that result in increased profitability.
Conducting the study
A field optimization study (FOS) is conducted to gather data and observe operations to help the operator create a maximum return on the property through higher production or expense reduction (Figure 1). The study should be completed within a short period of time and with minimal disruption. The development of potential opportunities for profitability improvements also should require minimal resources and investment.
Step 1 - Define study scope. All interested parties must have a clear understanding of what the study will cover, what is required to complete the study and what is expected when the study is completed. The scope should address physical field details, location, facilities and aspects of the operation to be studied, such as surface facilities (wellhead) to point of sale, near-wellbore (perforations) to point of sale, or reservoir to point of sale.
The required participation from involved parties should be defined as: information to be made available, resources needed to prepare and provide that information, and the impact the study is expected to have on ongoing production and field operations. Ultimately, the work scope should address goals that can be achieved with available information and resources, and should make all parties aware of expected study results.
Step 2 - Gather initial data. A certain amount of data is needed to ascertain the study's magnitude and the required effort and resources. Specific information might include:
• general description of the field and facilities;
• field maps showing wells and facilities;
• number of active producers;
• types of lift;
• description of treating facilities and batteries;
• process flow diagrams;
• size and type of compressors and other major equipment;
• historical production rates;
• organizational charts and work schedules for the various positions;
• operating expense statements for the previous 2 years;
• production projections and drilling programs;
• list of major contractors for labor and services; and
• name and type of any software used for scheduling and documenting maintenance and inventory control.
It is advantageous to appoint and involve a FOS team leader at this time.
Step 3 - Form study team. Based on steps 1 and 2, the FOS team leader determines the expertise and number of team members required to complete the field visit. A typical FOS team will consist of a production engineer, a facilities engineer and an operations specialist. Additional personnel, such as a corrosion and treating specialist, a process engineer and a rotating equipment specialist, may be added depending on the type of field being studied.
Step 4 - Prepare for field visit. Preparation for the field visit is critical. The FOS team must analyze information obtained to determine if further data are needed for planning the field visit and whether additional expertise should be added. From an analysis of the organizational chart and job functions, the FOS team identifies individuals to interview during the field visit.
The FOS team leader reviews this list with participants to set a date for the field visit, confirm availability of individuals to be interviewed and develop an efficient interview schedule. Prior to the field visit, management should notify field personnel about study objectives and plans. (It is important that field personnel know the purpose of the study, and why their involvement and input is critical to its success). This step should be completed within 1 to 2 weeks.
Step 5 - Conduct field visit. During the field visit, interviews are conducted with field personnel to review company and personnel objectives, processes and ideas related to field operations. Field records are reviewed and inspections conducted on field and facility sites. Attention also is given to any issues impacting quality, health, safety and the environment. Information gathered from the interviews and inspections is investigated to the extent necessary while on site to identify and define potential opportunities. The field visit typically is a 3- to 10-day process, depending on the number of properties to be visited, travel time between locations and the number of personnel to be interviewed.
Step 6 - Present initial findings. At the end of the field visit, a summary of preliminary findings and potential opportunities, along with any observations, is assembled and presented to field personnel. This begins the feedback process as soon as possible, especially on sensitive or safety-related issues.
Step 7 - Evaluate opportunities. The technical aspects, cost estimates and economic evaluations of potential opportunities identified during the field visit are reviewed to determine tangible opportunities for action. A detailed report is prepared, including a basic summary of findings, an outline of steps taken in the evaluation process, a list of recommendations for action and a summary of expected benefits. Alternatives for improving recovery such as workovers, well prioritization, compressor optimization, water disposal, water shut-off methods, artificial lift types and the chemical program also are included in the report. This phase should take from 5 to 8 weeks.
Step 8 - Conduct final presentation. The study is concluded with a presentation and discussion with key operational, technical and managerial staff. The presentation should be limited to a brief overview of the opportunities with supporting details.
Bringing in best practices
Such studies can be performed either in-house or by a consultant. If a consultant performs the study, costs normally range from 0.5% to 3% of projected increases in profitability. Consultants specializing in production optimization view a large, diverse selection of properties and observe various industry approaches to facilities, production installations, operations and maintenance practices, chemical treatment, completions, artificial lift and problem solving. With this knowledge, they are able to evaluate and recommend a best practices approach.
There can be substantial benefits inherent with an outsider who is not biased by past operational issues, procedures or company politics. Experiences gained through the study process permit identification of approaches that do not optimize operations and those that fall into the category of "it's always been done that way here." Field operators and pumpers may have experience in the same area for most of their careers, limiting their knowledge base. However, consultant teams easily have combined experience in 50 to 100 different areas.
In addition, specialized software packages often are available to facilitate field modeling, bottleneck determination, specialized equipment evaluation, production stimulation and wellbore enhancement.
When to take action
Buyouts, mergers, acquisitions and downsizing measures during the past 20 years, together with periods of downturn and decreased industry activity, have led to plenty of opportunities for operators to revitalize neglected properties. Any time action is taken is good, but the best time to capitalize on optimization opportunities is during an industry downturn, when reduced costs and increased profitability are the primary business drivers. Profitability generated by optimized field management creates a solid foundation for the next inevitable upturn.

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