For the initiated, offshore well intervention seems like a no brainer. It’s low-cost additional production.

But, based on a benchmark of 46 offshore assets, one in eight wells is shut in. Well intervention rates remain relatively low. Yet, if the number of shut-in wells could be reduced to just the median, an additional 149,000 boe/d of production could be achieved from just those 46 assets alone, according to research by consultancy McKinsey & Co.’s Energy Insights team.

And that could just be the start, Dan Cole, general manager, Energy Insights, McKinsey & Co. told the European Offshore Well Intervention conference, held in Aberdeen April 25-26. Expand this work to a global level and the potential additional production could be far greater. Go a step further and improve the rate to above the median and the potential is significant.

“If you just got everyone to average out the number of shut in wells they have you would get nearly 150,000 barrels of oil equivalent extra production,” Cole said. “That is a big number. The average cost (of this work) is in single digit dollar numbers per barrel. It’s a significant prize out there now.”

Yet, well intervention, especially subsea well intervention, still hasn’t had the full attention many think it should deserve. Some of these shut-in wells are waiting to be re-opened, but are dependent on the right economic conditions—i.e. the cost of doing the work versus the benefit. Others might be permanently shut-in, due to specific issues, unless new technology is invented to reopen them.

Well intervention activity, along with many other segments of the offshore industry, has suffered since oil prices plummeted in 2014. The crash saw 10 consecutive years of cost increases, from 2008 to 2014, come to an end, including spending on well intervention. Capital spending reached a low-point in Q4 2016, but has been ticking up since then and this trend has continued into Q1 2018, according to Cole.

Operations spending tracked upwards between 2008 and 2014, at a rate of 10% a year (five times the background inflation rate), Cole pointed out. Operations spending has also started to increase, at 3% between 2016 and 2017, with a continuing trend into 2018.

Well intervention spending has also ticked upwards in 2017, both in terms of cost and as a proportion of total operational spending costs, said Cole.

In 2015, US$640 million was spent on well maintenance, he said. It then fell to $330 million in 2016, but then increased to £400 million in 2017. As a proportion of operational spending, those figures were 13.5%, 7.8% and 8.7%, respectively, Cole said.

Operators are seeing the benefits, but it’s patchy. Malaysian state-owned firm Petronas has been leading a campaign to both increase well intervention activity while reducing costs, leading to a change in contracting models in the country, said Shahril Mokhtar, head of completions (wells management) Petronas, part of Malaysia Petroleum Management (MPM), which regulates activity in Malaysia and is a field partner, speaking at the intervention event.

Since 2016, when MPM launched an integrated idle wells restoration (IIWR) campaign, it has seen project numbers increase from one to three in 2017 and 13 expected this year with more and more operators taking part, from independents to majors, Mokhtar said. The result has been increased incremental production and reduced costs to achieve it.

The North Sea is starting to see an increase in activity, too, said Cole. “This is mostly being driven by platform intervention activity, but subsea intervention is starting to increase,” he said.

There’s also been a shift in the type of work being done, he said, from a focus on getting shut-in wells back on stream to, more recently, seeking additional incremental production volumes. “We’re starting to see this globally,” Cole said. “There are plenty of opportunities out there.”

To better understand the drivers of this activity, McKinsey Insights recently completed a survey of 19 operators and service companies focusing on well intervention and what makes this activity work well. The answers focused on planning, organization and execution.

There’s quite a range, from low to high, in how well operators perceive they perform in these areas, however. Planning is about field developments and business plans. Execution involves metering and surveillance, reservoir management and well optimization. Organization includes performance management. Metering and surveillance performance was generally quite low, as was performance management. Even within one company, two teams were 13% apart in a scoring matrix assessing their ability to get incremental production from well interventions.

“It’s the difference between getting procedures in place and getting output,” Cole said. Success within the planning space is about “getting it seen that this is the thing to do, getting bed space (on platforms), getting rigs, the focus has been elsewhere,” he said.

There’s also an element of being able to prioritize, understanding where value comes from, he added.

Within execution, “what made the difference between good and great was an ability to get everything together within a specific time frame. Identify opportunities, get funding and execute in between some of the traditional business cycles.”

A company doing it well, which stated: “We know that well reservoir management are the cheapest barrels, so it has the largest support,” managed to achieve a 120% boost in production, 50% fewer well related production deferments, and a 100% increase in optimization well work, said Cole.

One of the challenges of this type of work is that one bad job can put an operator off doing others. “You have the human factor,” Cole said. “If you have one chance and it fails—and statistically some wells will fail—if that’s the only job, many don’t go back. The failures can weigh disproportionately on some operators. Those who get past this understand you do have failures, however. If you take a portfolio of jobs, it’s a great business.”

The majority of well intervention work has been restoration work, stopping wells falling over, and not necessarily production adding. Some focus is moving to incremental production thanks to proving the benefits and capabilities of well intervention, however. “Well intervention teams are now earning the right to go after production adding jobs. We are seeing at last an intent and increasing amount of production adding work. The majority has been restoring to date, but we’re seeing more improvement work.”

Some, at least, can see the additional volumes that could be achieved through well intervention work.

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