Forces That Will Shape Intelligent-Wells Development

Derek Mathieson, President and Chief Executive Officer, WellDynamics

This year, the oil industry celebrates the 10th anniversary of intelligent-well completions, a revolutionary technology that has grown from a vision in the early 1990s to an industry-changing reality today. As the technology moves into its second decade, it is an appropriate time to reflect on the factors that have shaped the evolution of today’s product lines and to consider the emerging market themes that will drive the next generation.

The origin of intelligent wells was prompted by a number of factors in the late 1980s:

The first generation of subsea wells was moving into production decline and presenting many challenges in the execution of strategies to restore rates.
Deepwater subsea wells, in which intervention would be prohibitively expensive, were being planned.
Drilling-technology advances were leading to the development of complex wells, including horizontals, multilaterals, and extended-reach.

In effect, well-construction capability had outpaced the tools and workflow of production management, presenting a set of technical hurdles for well and production engineers to overcome. The challenge was to remotely monitor and control different sections or zones within a wellbore without the need for costly intervention. This need eventually would become the definition of “intelligent wells” and culminated in the installation of a surface-controlled reservoir-analysis-management system in 1997.

Market Hurdles

The first generation of intelligent-completion technologies consisted of a range of integrated electrical or electrohydraulic systems that included both sensing and control capabilities. These initial systems were complex and costly, and they were subject to a number of early field failures. In addition, all but a few users were unconvinced of the actual value proposition and were uncertain about how to express that value in a clear business case for each well. Survival of the technology was challenged initially by market-imposed hurdles of reliability and economic viability. Both of these themes remained dominant over the first 5 years of evolution and led to two clear decisions about development of the second generation of products: focus on all-hydraulic solutions to mitigate risk and focus on simple open/close-type control in subsea wells to avoid intervention and justify the economic case.

Thus, from around 1998 to 2003, most intelligent-well installations were simple open/close hydraulic valves, predominantly applied in subsea wells in the North Sea and the Gulf of Mexico. This period produced a rich set of reference material on economic modeling of active reservoir-management technologies and, more importantly, led to a cultural change for many of the major oil service companies, as they began to embed reliability-engineering practices into the development of oil tools.

Market Diversification and Migration

As reliability concerns lessened with experience and economics were better understood, focus shifted from intervention avoidance to production optimization. Overcoming the initial evolutionary hurdles drove a diversification of technical solutions that eventually led to the variety of product lines that are available today. Interval-control valves, for example, while still hydraulic, are predominantly multiposition (or choking), allowing finer tuning of the flow of fluids into or out of the reservoir.

From 2003 through 2006, the market saw a distinct increase in activity, as many of the national oil companies and independents started to deploy the technology in earnest. During this period, both the number and diversity of applications increased across the globe. Maximum-reservoir-contact wells (triple and quadruple multilaterals with monitoring and control at each junction) in Saudi Arabia, snake wells (long meandering wells that connect multiple targets in thin oil rims) in Brunei, and high-rate deepwater injectors all illustrate recent activity.

Some missing links have become apparent as field-wide application of well monitoring and control technologies have become the norm. Surface digital infrastructure, which includes surface power, programmable-logic controllers, supervisory control and data acquisition, etc., is currently in the spotlight. While many of the individual technologies are widely available and understood, it is still challenging to bring together field-specific solutions that span all environments in which this technology is deployed and all of the generations of surface facilities within which it must be embedded.

In addition, as the industry enters a period in which we will face the challenges of fieldwide management, studies are under way to clarify operating philosophies so that the value promised by the technology can be delivered. This period is the backdrop for the Digital Oil Field, where many of the innovations will need to address both workflow and team structures, as well as technology.

Forces Shaping the Next Decade

Technology Convergence and Integration. The great technology innovations of the 1990s are converging and integrating as they mature. Expandable casings and liners, packers with swellable elastomers, and new distributed sand-control solutions are providing well-construction options that are opening a further range of solutions, especially for openhole, thin-oil-rim, and multilateral wells.

Focus on Operational Efficiency and Better Wells. Although the reliability and functionality in current systems are adequately high, they come at the expense of well-architecture complexity (i.e., the hydraulic solutions prevalent today generally need multiple umbilicals and connectors to be run into the well). As a result, concerns over risks associated with running the completions successfully in all environmental conditions—especially in deepwater wells—still exist. R&D efforts are significantly shifting to address these challenges, resulting in a range of new connector solutions, connectorless solutions built on cableless technologies, and renewed interest in the all-electric integrated solutions of the past.

Focus on Ultimate Recovery. Ultimate recovery is possibly the greatest underlying market theme for the next 10 years. The goal is to leave as little precious hydrocarbon resources behind as possible; in fact, many operating companies are now raising the bar, targeting ultimate-recovery goals of 70% or better. This trend alone is already focusing attention on a range of activities. The Digital Oil Field is very closely linked to this objective, and it remains to be seen how quickly the promise will be fulfilled.

More field integration and maturing automation likely will fuel technology growth, particularly in reservoir monitoring. In general, the sensors employed to date provide for feedback or reactive control (i.e., they detect a condition in the wellbore once it has occurred, and, with intelligent-well equipment, changes can be made to adjust to this condition). Although this capability is very much in line with production optimization, the addition of feed-forward control—sensors and computational models that predict far-field changes in the reservoir and suggest setpoint adjustments to optimize events that may be many months away from occurring—will be necessary to improve ultimate recovery.

As intelligent well technology enters its second decade, the industry is on the brink of a very interesting period in the market. The relatively linear growth of solutions over the past decade is moving into a period of viral growth, as yesterday’s breakthrough technologies converge with the emergence of many new disruptive technologies that could change the way we look at both well construction and management. Factoring in the underlying shift in market forces, the industry is ready to push the frontiers.

Derek Mathieson, SPE, is President and Chief Executive Officer of WellDynamics. He previously was Vice President of Business Development and Technology, and directed the company’s product research and development and marketing functions. He joined WellDynamics at its formation in 2001 and held the positions of Reliability Assurance Manager, R&D Manager, and Technology Director before assuming the Vice President role in 2006. Mathieson earned both a PhD degree and a BS degree in electrical and electronic engineering from Heriot-Watt University in Edinburgh. He is professionally registered with the UK Engineering Council.