A comprehensive production optimization strategy allows transfer of targets and constraints among all levels of the production process. This allows capture of the optimization’s full value, maximizing reserve recovery and return on investment as well.

The upstream oil and gas industry faces a complex set of conflicting issues, including a shortage of qualified professionals, increasing energy demand, and reserves increasingly difficult to locate and produce. While the industry has traditionally focused on improving exploration efforts to address its challenges, a new focus on the production lifecycle promises to help operators efficiently increase production and lower costs. Specifically, operators that implement a comprehensive production optimization strategy — one that integrates key objects across the production process — stand to maximize their reserve recovery and ultimately increase return on investment.

Although comprehensive production optimization for the upstream industry is a relatively new concept, Landmark has studied it extensively to identify best practices inside and outside of the E&P industry. A successful solution must take into consideration the siloed optimization objectives at the various levels and the management system issues related to ownership of work processes involved in an integrated strategy.

To date, upstream operators have largely implemented production optimization processes in an isolated and independent manner at different levels of the production process. For example, production is optimized at the business level by focusing on maximizing recovery and net present value of the asset or reservoir. Or a producer may focus on the installed or operational levels of the production chain by optimizing specific wells, gathering networks, or surface facilities. Each of these efforts can improve production, but it isn’t until these divided processes are fully integrated that operators will realize the true value of production optimization.

A downstream view

About 20 years ago, the downstream oil and gas industry, and specifically refineries, faced a similar set of issues with the design and implementation of effective production optimization strategies. Lessons learned by the downstream industry can now be leveraged by upstream operators to maximize the value of their production optimization efforts.

Like the current upstream environment, downstream operators first optimized processes at individual levels or sections of the production chain in order to meet localized objectives. In most cases, these objectives were derived from siloed operational environments and organizational processes rather than production-related issues. For example, an operator choosing to optimize at the operations level in a refinery could focus exclusively on one fluid catalytic cracking unit. While this might yield incremental improvements in production, these benefits would not result in notable progress at the overall refinery level.

As the technology progressed and lessons learned accumulated, this multilayered approach gradually evolved into a comprehensive optimization strategy that now addresses key goals at three main levels of the production process: business or asset, installed, and operational. The hallmark of this strategy is the transfer of necessary data, targets, and constraints from one level to the other in an efficient and consistent manner.

At the business level, optimization efforts focus on issues that have the greatest impact on profitability of the refinery and the operator’s return on investment, including selecting the best available crude in the market and determining the processing configuration of the refinery based on current market demand and contractual commitments.

Within those parameters, optimization at the installed level determines the best use of refinery facilities once crude selections have been made, taking into account storage capacity, uptime, and scheduled and unscheduled maintenance. At the operating level, the focus is on optimizing daily operations and maximizing high-value products within the targets and constraints determined by the other levels while maintaining refinery operational safety and integrity.

Downstream lessons learned

Downstream’s integrated, multilayered approach to optimization now stands to benefit the upstream industry.

Upstream, business, or asset-level optimization can be used to maximize production for the entire reservoir. The installed level supports this goal by working towards full use of the facilities and equipment available and accounting for both foreseeable and unexpected events such as maintenance and intervention. Operations optimization works within the constraints from the other levels to appropriately adjust the variables that determine day-to-day operation, such as choke-valve positions, pressure, and artificial lift.
Of course, the two industries have differences that affect upstream operators’ ability to adopt and use downstream strategies. Downstream processes are characterized by well-defined inputs, well-understood processes conducive to rigorous modeling, substantial field measurements, and relatively easy access to control elements and sensors.

In contrast, the upstream industry struggles with uncertain reservoir parameters, which make modeling difficult and hard to validate due to limited field measurements, as well as control elements and sensors that are not readily accessible. However, despite the industries’ varying challenges, there are definite similarities (Figures 2 and 3), and upstream operators can glean clear insights from downstream processes.

As mentioned earlier, optimization targets and constraints at each individual level affect the goals of the others, so the true key to realizing the value of production optimization is creating an integrated environment where the information and data from all levels can flow freely. This involves not only linking applications and technologies, but also encouraging collaboration between professional disciplines that are traditionally siloed. Optimizing production to reach an asset’s operational potential is of no use if it is not aligned to objectives from all levels of the production process.

Further, just as downstream optimization strategies vary from refinery to refinery, upstream strategies must be specific to the particular asset at hand. For example, the optimization strategy for a tight gas onshore asset may be focused heavily on the installed and operations levels, driving production increases by focusing on equipment reliability and well productivity issues. In this case, asset- or business-level issues may become less important because of their limited influence on the production or cost side of the equation. On the other hand, in an oil-producing offshore asset, a production optimization strategy may be strongly driven by the optimization of production at the asset or business level to guarantee a certain level of recovery and to fully capitalize on the investment required.

For both industries, comprehensive models and data validation and reconciliation are fundamental to the successful implementation of optimized production processes — perhaps even more so in upstream, due the complexities and uncertainties inherent in production. Downstream operators have successfully applied a range of state-of-the-art modeling, planning, and scheduling technologies in an integrated manner to maximize production throughout the business, installed, and operational levels. Because there is no single technology available to cohesively model and optimize the elements of all three levels in the upstream industry, operators will have to adopt a similar integrative approach using flexible, open technologies and software in order to achieve the ultimate production optimization goals.

More effective upstream execution

Landmark has implemented its comprehensive production optimization strategy for several oil and gas operators that have attained operational efficiencies and increased production as a result. Comprehensive optimization has enabled operators to evaluate different production scenarios and determine optimal monthly and daily production plans in a matter of minutes.

Traditionally, this task has been prohibitively difficult, taking days or weeks or, in some cases, not being completed at all. This new approach has also promoted collaboration among the different sectors of the asset team by giving each a clear view of the work processes, goals, and constraints of the others.

Specifically, the deployed system enabled one operator to improve well availability and asset uptime by 50% during the start-up phase alone. In another instance, a fit-for-purpose production optimization model enabled incorporation of real-time field data to continuously optimize over several possible scenarios. In the case of any unexpected changes in operating condition, it allows the operations personnel to quickly analyze the impact of different production scenarios and choose the optimal course of action.

Typically, unplanned events are often handled by individual operator’s expertise and do not benefit from a system assisting in making an informed decision.

Oil and gas operators will continue to face challenges when attempting to optimize production. However, by adapting technologies and proven best practices from other industries, upstream operators can minimize the adoption time of these technologies and increase the success rate in their own operations. Specifically, through adoption of a comprehensive production optimization strategy, upstream operators stand to realize the full benefits of production optimization, including increased efficiencies, less non-productive time, and greater recovery.

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