"Technological exploits, rising productivity...Under the sea, below the ground, deep inside the mountains the oil industry seems to be pushing back the frontiers of the possible", wrote the French business magazine CAPITAL in its September 97 issue.

The global oil industry has indeed undergone remarkable change, under the impact of both innovation and the willingness to adapt. The difference has been acknowledged and acclaimed by a wide variety of observers, even those not particularly familiar with the upstream part of the oil industry. Despite an increasingly challenging environment, the changes have led to an impressive decline in discovery and production costs, especially on the technical side. By way of example, in a company like TOTAL, technical costs ­ that is, the sum of operating costs, depreciation charges and exploration expenses ­ declined from $14/bbl in 1990 to $9/bbl in 1996, with the hope of cutting the figure to $7/bbl by 2000.

These and other advances, which have transformed the upstream segment into a very high technology industry, are evident in all aspects of exploration and production operations.

Geosciences

The objectives in geosciences are clear: to increase the probability of discovery, to improve the description of reservoirs, regardless of their complexity, size, depth or visibility, and to recommend development plans for recovering as much oil and gas as possible.

In this regard, 3D seismic has played an essential role. This technology had been around since the 1970s and its theoretical advantages ­ tighter samplings and sharper images ­ had long been recognized. However, its use became widespread only in the early 1990s, when technological progress and research findings from oil companies and specialized contractors made it technically feasible and cost-effective.

A 1992 survey on the use of 3D seismic in upstream operations revealed that, even at that early date, investments in 3D data acquisition were rising sharply, whether for field delineation and development or for intensive exploration. The trend has since accelerated, as illustrated by the quasi-exponential growth in the volume of data acquired in recent years. This increase is being driven by several factors, the most important of which are:

• Strong demand for more precise data in designing development projects.
• The need to resolve increasingly complex oil problems.
• The spectacular technological improvements in 3D seismic data acquisition, processing and interpretation.

 

Now that 3D seismic is commonplace, current efforts focus on reducing its cost. Accordingly, optimization of future exploration/production projects will grow with the 3D technology being cost-effectively applied to a larger, more diverse range of cases.

Further downstream, considerable progress has also been made over the past 10 years in the various techniques which help create geological reservoir models.

• Field studies and joint projects conducted by the oil industry (notably in France) have adapted sedimentological models of different types of environments (carbonates or deep-sea).
• The development of laboratory analysis techniques based on rock samples, such as special core analysis and residual salt analysis, has helped classify reservoirs by rock type ­ that is, by reservoir elements that behave in a similar way during the production stage.
• Seismic data is used to replicate, whenever possible, the internal properties of a reservoir. Although this method still presents many problems, its use is expanding rapidly.

This improved understanding of the subsurface obviously allows reservoir engineers to more accurately predict the behaviour of hydrocarbon deposits; i.e., the reserves and production profile of a given development plan and very importantly, it helps to improve final recovery factors.

In a nutshell, two types of decisive advances have been achieved in recent years:

• Reservoir engineering has increased its ability to assimilate and integrate progress made in related professions or disciplines, such as geosciences, drilling, process engineering, and information technology.
• More directly, we have improved our understanding of recovery mechanisms and how to formulate them in forecasting models.

This means that for every discovery, we can make better development decisions, by describing the deposit more accurately, by selecting the best sequence of recovery processes, and by optimizing the location, type and number of development wells to drill. As a result, not only can discovered reservoirs be managed more efficiently, with possibilities of extension and improved recovery processes, but also some previously classified as difficult or marginal fields can be cost-effectively developed. At TOTAL, these advances have focused on gas injection, an Improved Oil Recovery (IOR) process designed to push recovery capabilities beyond the limit of what can be achieved by more conventional methods like water injection.

In many cases, recovering 45 to 50% of the oil in place using conventional methods is now an entirely realistic objective, whereas just 30 years ago, the best hope was for one third. Recovering an additional 10 to 15% through carefully managed IOR processes is now feasible for projects that are economically viable for 10 to 15 years. According to our estimates, which encompass fields in Algeria, Libya, the Middle East (excluding Iran) and South America, around 1.5 million b/d of oil are lifted by gas injection worldwide. Major hydrocarbon gas injection projects have recently gotten underway in the Bab and Bu Hasa fields in Abu Dhabi, in naturally fractured reservoirs in Iran, in Alaska's Prudhoe Bay (a prime example of this type of project), in Colombia's Cusiana field and, lastly, in the TOTAL-operated Handil field in Indonesia.

Alternating water and gas injection in nearly miscible conditions is one of the most promising new technologies to explore. We also need to continue tracking and exploring the future potential of injecting air, nitrogen, carbon dioxide or flue-gas. This is why TOTAL recently built a pilot facility for injecting air into the Horse Creek field in the United States. After a few months of operation, initial results are very encouraging.

 

Drilling

The ability to drill horizontal and extended reach wells has significantly reduced development infrastructure and, consequently, opened access to large additional reserves that in the past would not have been commercially viable. This represents a major breakthrough, and horizontal wells are now considered important tools for development and, in some cases, delineation. Extended reach wells of eight kilometres are now routinely achieved by TOTAL in Argentina.

Paralleling the increasingly widespread use of horizontal wells has been the development of multiple drain technology, which can produce several horizontal sections from a single well. This offers several advantages:

• High well productivity, accelerating production without increasing the number of wells.
• Access to additional reserves, thanks to the ability to cost-effectively develop smaller reservoirs.
• The possibility of drilling a greater total drainhole length in a reservoir. This reduces the risks of gas coning, which is especially important when developing an oil rim.
• The possibility of delineating, with less risk and at a lower cost, an unfamiliar area of a reservoir, thanks to a drain drilled in an existing well.

This technology is changing very quickly, but it already offers a remarkable variety of applications:

• New or reentered wells.
• Lateral drainholes drilled from an open or tubed hole.
• Lateral drainholes left open, drainholes protected by a pre-perforated liner, or ce-mented drainholes.
• Possibility of selective production or reentry.
• Possibility of drilling multi-drains with coiled tubing through on-site completion.

The development of multi-drainhole technology has gained speed in the past two years, led by the advent of high-tech systems capable of handling the most challenging cases, such as a lateral drainhole tubed and cemented, then selectively completed. Indeed, major oil companies like Shell, as well as TOTAL, now believe that, of all the innovations, multi-drainhole technology offers the greatest potential for use in drilling oil wells. It is thus a key technology for both current and future development programs, as well as for the revitalization of old deposits.

 

Oil and Gas Facilities

Technological improvements and new concepts have proliferated in all aspects of oil and gas installations, from development plans to equipment definition. The resulting gains in productivity, weight and size have naturally generated cost savings.

I will discuss only two areas where major changes have occurred. These are ultra-deep offshore facilities and multiphase transportation, both of which represent significant breakthroughs for the oil industry.

In recent years, there has been a spectacular surge in undersea operations, since reservoirs are now being produced from water depths exceeding 1,500 metres. Just 20 years ago, the Frigg field's transport network in 100 metres of water in the North Sea was considered a fantastic challenge and the industry was amazed at the innovations required to build it. Since then, advances in production technology have driven remarkable improvements. Midsize reservoirs can now be cost-effectively developed under ultra-deep conditions, even with oil prices at relatively low levels.

The technologies involved in subsea wellheads combined with production floating units and in aerial wellheads combined with tension leg platforms (TLPs) or deep-draft platforms have been used to build industrial scale developments, primarily in Brazil and the Gulf of Mexico. The stakes involved are high. At present, more than 40 billion barrels of oil have been discovered in deep offshore fields and in the next five years daily production from these areas is expected to triple from the current 1.6 million b/d.

Multiphase transport of well effluent, or "multiphasing" for short, has become part of the everyday vocabulary of the oil industry. Oil companies (and TOTAL the first among them) turned to multiphase transport primarily to save money. Its main objective is to lower the cost of surface installations by reducing to a minimum (or even eliminating) the need for offshore treatment facilities. These installations are transferred to the end of the pipeline in a more accessible or already equipped location, such as onshore terminals, production plants, or host platforms, thus providing substantial savings in development and operating costs, which could enable certain marginal projects to become profitable.

Still, for many years, multiphasing was perceived as a source of unknown and unpredictable operating problems. In fact, just a few decades ago, it was presented as a totally unacceptable option for a state-of-the-art development plan. Even now, some oil companies are reluctant to use it and many, if not all, oil engineering firms are unfamiliar with it. Admittedly, the technology requires expertise in handling outflows that are frequently three phase (gas, oil and water) and associated disciplines such as multiphase pumping or metering.

The principle has already been used to develop a number of industrial-scale projects, including the TOGI system between Troll and Oseberg in Norway, the 174-kilometre pipeline that carries Caister/ Murdoch's untreated effluent to the Theddlethorpe terminal in the UK, and the TOTAL-operated line that carries Dunbar's output to the Alwyn platform.

New concepts are also emerging in the liquefied natural gas industry, such as mini-LNG and floating LNG facilities. There has also been a renewal of interest in the Fischer-Tropsch process, used to convert gas directly into petroleum products

Conclusion

In conclusion, new exploration and production technologies are constantly modifying the basic economics of the oil industry, the conditions under which the various players compete and, in a broader sense, the geopolitics of oil. Many oil producing countries that had nationalized their industry 20 or 30 years ago are now turning back to international oil companies, primarily to benefit from the new technologies they have developed.

In this area, TOTAL has forged a philosophy consistent with its objectives and resources. While we do not systematically seek to be a pioneer in technological innovation, we have clearly demonstrated our determination to remain among the industry leaders.

TOTAL's technological research in oil and gas exploration/production is guided by three rules.

1. Encourage technological innovation by rewarding people who take calculated risks.

2. Seize technological opportunities by capitalizing on good ideas, regardless of where they originate.

3. Maintain and, where possible, enhance our technological expertise. To skillfully lead its projects and sustain growth, TOTAL must more than ever rely on its own strengths and on the excellence of its teams.