Guidance for Complying with BOEM NTL No. 2010- N06 on Worst Case Discharge for Offshore Wells Society of Petroleum Engineers August 26, 2010 Chair: Tim Magner, Chevron Committee Members Jonathan Harris, Apache Corporation James Wells, ATP Oil & Gas Corporation Ron Harvey, Century Exploration New Orleans, Inc. Curt Killinger, Challenger Minerals Inc. (CMI) / Transocean Connie Bargas, Cobalt International Energy, L.P. Dan Smallwood, ConocoPhillips Phillip Bednarz, ExxonMobil Martin Wolff, Hess Corporation Ted Skinner, Marathon Donny Torres, Newfield Exploration Stuart Hara, Shell John Leonard, Stone Energy Ashley Africa, Woodside Energy Akhil Datta-Gupta, Texas A&M University Tad Patzek, University of Texas Richard Hughes, Louisiana State University 1
Table of Contents Disclaimer... 3 Background... 3 Calculation Procedure... 4 Step 1: Determine Uncontrolled Flow for each hole section... 5 Step 2: Determine the Time Required to Drill a Relief Well... 5 Step 3: Provide a Rate Profile for Production Decline... 6 Step 4: Calculate the Total Spill Volume... 6 Recommended Submission Outline... 6 Data and Documentation Requirements... 8 Appendix A: Useful definitions and Clarifications... 12 Appendix B: Useful References... 13 2
Disclaimer This document was created by an SPE Committee in response to the U. S. Department of Interior Bureau of Ocean Energy Management (BOEM) Notice to Lessees (NTL) No. 2010-N06 requiring Worst Case Discharge Calculations (WCD) and documentation. This guidance is not an endorsement of the methodology put forth by the NTL on a Worst Case Discharge Calculation. This document is intended to be only a guideline and it is still up to each company responsible for making the submittal to the BOEM to understand the regulations and ensure that specific data requirements have been met. It is anticipated that a continuing series of Frequently Asked Questions (FAQs) and or regulations relating to NTL No. 2010-N06 will be issued over the next few months to clarify specific points and give more detail on the acceptable form for submittals. It is recommended that an SPE committee be formed to develop global practices to estimate potential spill volumes from uncontrolled well events technical guidance on best Background In the wake of the Deepwater Horizon incident, the BOEM has revised and increased the requirements for Worst Case Discharge Scenario calculations. This draft guidance document was created by an SPE Committee during a Workshop held in Houston, Texas on August 25 and 26, 2010. The intent of this document is to assist Industry with conformance to the NTL requirements in a manner that will promote transparent, complete and uniform calculations for all offshore operations in United States waters. NTL No. 2010-N06 states: Due to the explosion and sinking of the Deepwater Horizon, the resulting deaths of 11 people, and changing conditions caused by the blowout of the BP Macondo prospect weil that was being drilled by the Deepwater Horizon, the MMS (now BOEM) requires additional information concerning your planned activities. Pursuant to the regulations at 30 CFR 250.284 and 250.201 (b), the MMS may require you to submit additional information necessary to evaluate your proposed or existing plan or document. In accordance with the regulations, the MMS may also require you to provide information to demonstrate that you have planned and are prepared to conduct your proposed activities in a manner that conforms with all applicable federal laws and regulations, is safe, conforms to sound conservation practices and does not cause undue or serious harm or damage to the human, marine or coastal environment pursuant to 30 CFR 250.202. This NTL describes the information you must submit to MMS. The purpose of each submittal is to provide BOEM with full and complete documentation to assess each proposed drilling well should another major spill happen. The discussion should include the estimated 3
flow rate, the maximum duration of potential uncontrolled blowout and the total volume. This Total Spill Volume and Worst Case Discharge Scenario Rate will be used to address each company s Oil Spill Response Plan portion of the regulations. The documentation is expected to include a complete description of the potential worst case discharge as required by 30 CFR 250.213(g) and 250.243(h) and as supplemented by several recent FAQs concerning the NTL (see Appendix). Documentation requirements in the NTL state that each submittal must: Describe the assumptions and calculations that you used to determine the volume (daily discharge rate) of your worst case discharge scenario required by 30 CFR 250.219(a)(2)(iv) (for EPs) or 30 CFR 250.250(a)(2)(iv) (for DPPs and DOCDs). Provide all assumptions you made concerning the well design, reservoir characteristics, fluid characteristics, and pressure volume temperature (PVT) characteristics; any analog reservoirs you considered in making those 3 assumptions; an explanation of your reasons for using those analog reservoirs; and the supporting calculations and models you used to determine the daily discharge rate possible from the uncontrolled blowout portion of your worst case discharge scenario for both your proposed or approved EP, DPP or DOCD worst case discharge scenario and your proposed or approved regional Oil Spill Response Plan (OSRP) worst-case discharge scenario used in your comparison. The NTL also states that this calculation is required for both oil and gas wells. The regulatory definition of oil includes oil, condensate that has been injected into a pipeline, or gas and naturally occurring condensate. Thus, gas wells are not exempt from the calculation. BOEM has stated that they will review each submittal as well as conduct an independent calculation. An operator s omission of information for the calculation is likely to result in the BOEM staff choosing their own WCD values. The WCD calculation and approval process is expected to become more explicit as BOEM states reasons for not approving specific permits. BOEM has committed to share weekly updates of what items have caused these submissions to be recycled. Revised formal regulations including additional clarifications are expected to be issued in September, 2010. BOEM has stated that they expect to spend about 150 man-hours (one man-month) per submittal. Calculation Procedure It is necessary to consider each hole section that will be drilled as a possible candidate for the Worst Case Discharge Scenario during an Uncontrolled Flow event. It is recommended that the Worst Case Discharge Scenario evaluation includes these four steps: Step 1: Evaluate all potential hydrocarbon-bearing intervals in each section of the hole to be drilled and determine the Uncontrolled Flow for each hole section following the guidelines 4
described below. The hole section with the highest Uncontrolled Flow scenario will be considered the Worst Case Discharge Scenario for reporting. Step 2: Estimate the time required to drill a relief well for the hole section to be considered for Worst Case Discharge Scenario reporting. Step 3: For the hole section considered as the Worst Case Discharge Scenario for reporting, provide a single rate profile for production decline or depletion for all zones including those which may be commingled. Step 4: From the flow rate projection determined in Step 3, calculate the total potential spill volume over the time required to kill the well. Note that BOEM requires both hardcopy and electronic copy formats for all documentation. The submittal should include documentation files and software input and output files. Step 1: Determine Uncontrolled Flow for each hole section The NTL indicates that the Worst Case Discharge Scenario should include all hydrocarbon-bearing zones in each open-hole section as it is planned to be drilled. An analysis should be conducted on each zone from each hole section to determine individual zone contribution. The Uncontrolled Flow should include the combined flow from all zones in each open hole section that could be commingled in a blowout scenario. Note that both gas and water bearing sands in each hole section should be included in order to realistically model the lift profile. Clarifications from BOEM indicate that calculations are not limited to those zones defined as productive (>15 of hydrocarbons) by the regulations. BOEM has stated that all zones capable of flow should be included. There has been no additional guidance on how thick a zone must be to add materially to the WCD calculation. For selection of input parameters for each zone, the intent is that the output of the flow rate calculation should approximate the best technical estimate. The WCD rate and resulting total potential spill volume estimates will be used for logistics planning in the company Oil Spill Response Plan and should be best estimates. The hole section with the highest Uncontrolled Flow will be selected for Worst Case Discharge Scenario reporting. For the selected hole section, detailed documentation must be submitted as outlined below. For other sections of the hole, documentation should be limited to data necessary to support the logic behind the model for sand and hydrocarbon presence and, if hydrocarbons are thought to exist, data to support the Uncontrolled Flow rate calculation for that section. Step 2: Determine the Time Required to Drill a Relief Well 5
For the section of the hole selected for Worst Case Discharge Scenario reporting, the best estimate of the time required to drill a relief well and kill the uncontrolled flow. The time required should include: - days to secure a rig, de-mob/mob and be ready to drill at the relief well site, plus - time to drill the relief well and intersect the blowout well at the base of the previous casing point, plus - days to kill and cement the blowout well Ensure that sufficient documentation is included to confirm the expected value days to drill the relief well to the target depth and clearly show the calculation of the total days required. Step 3: Provide a Rate Profile for Production Decline A rate profile for production decline for the hole section to be considered for Worst Case Discharge Scenario reporting may be estimated several ways. For wells with well-defined geologic models, a simulation or material balance model may be used to estimate rate decline with pressure depletion. If using a limited or bounded reservoir model, clearly indicate the maximum drainage area and show how it conforms to structure maps. Include sufficient reservoir performance or history match data to substantiate the expected pressure decline with rate and cumulative production. For wells with no immediate offsets or an uncertain geologic model, supporting assumptions should be provided for pressure depletion or water production within the calculation period. It is recommended that appropriate analogs and analytical methods be used; however, simulation models may be used to provide a production rate projection. Step 4: Calculate the Total Spill Volume The total potential spill volume to be reported for discharge scenario reporting will be defined as the sum of the production from the flow rate profile over the time required to kill the well. Recommended Submission Outline The NTL requires a significant increase in documentation requirements. For the section of the hole that will be used for Worst Case Discharge Scenario reporting, it is necessary to estimate the well, reservoir and fluid properties as outlined below. According to the 10 August 2010 FAQ: BOEM recommends including a Summary Sheet with your data submittal that states the parameters you used to derive the worst case discharge scenario. A summary table and nodal output graphs to document the Uncontrolled Flow for the hole section considered as the source of the WCD should be included to clearly identify which hole section would result in the highest discharge rate. Detailed documentation of analogs and rate profiles is required only 6
for the hole section used for Worst Case Discharge Scenario reporting. Documentation for all other hole sections should be properly archived. 1) Introduction and Summary a. Introduction with summary of results and calculated rates and volumes 2) Discussion of Prospect/Field and Summary of Well Plan a. Prospect or Field Summary b. Well Objectives c. Well Plan Overview i. Discussion of each hole section, noting the presence or absence of hydrocarbon bearing zones in each section. 3) Description of Worst Case Discharge Scenario Rates and Volumes a. Clearly identify which hole section will be considered for the Worst Case Discharge Scenario reporting b. Discuss intervention and relief well plans and time required to kill the well c. Discuss the production rate projection d. Include a summary sheet documenting the calculation of the total potential spill volume over the time to kill the well. 4) Worst Case Discharge Scenario Documentation - as specified by the NTL, you must document all assumptions supporting the evaluation (see next section for discussion): a. Reservoir characteristics; b. Reservoir pressure data; c. Reservoir drive mechanisms; d. Reservoir drainage area and depletion rates; e. Wellbore completion configurations; f. Casing and open-hole sizes; g. Casing and open-hole roughness; h. Production history; i. Static and flowing pressures and temperatures; j. Skin damage; k. Water intrusion; l. Coning; m. Formation sloughing; n. Bridging; o. Pressure-volume-temperature characteristics of the fluid; p. Hydrostatic pressure 5) List of attached displays and input/output files a. Include a list of all displays referenced in the document. b. Include files for each software package used and a hard copy report. 6) Attach displays, cross sections and maps in digital and hardcopy format a. Include summary calculations describing flow potential of zones 7
b. Examples of typical maps, diagrams and tables are illustrated in the attached BOEMissued FAQ documents. Data and Documentation Requirements Specific data and documentation requirements are: (1) Hole sections not included in the WCD calculations Hole sections that will not contain hydrocarbon bearing sands or those sections not used in the WCD, a geological and offset well discussion to justify this conclusion must be included along with sufficient displays for support. (2) Hole section included in the WCD calculations For the hole section to be used in Worst Case Discharge Scenario reporting, provide support for the following: (a) reservoir characteristics; Include a description of each target sand as it relates to the general depositional environment for the field or prospect. Note offset wells, interpreted faults or channel boundaries and clearly show any reservoir limits that may reduce flow potential. Structure maps for each potentially producible sand to be encountered (tops and base, if available). Net sand isopach maps should be included or a statement should be made concerning the average net sand over the drainage area. Clearly indicate the measured depth thickness expected to be penetrated, as well as the net sand thickness used for the flow rate calculation. Include one or two seismic cross-sections showing the well site location with reference to any offset wells. Clearly show prospective oil-water and gas-oil contacts on cross-sections and maps. Identify the seismic survey permit number used in the submitted EP seismic snap shots and indicate whether the data had been reprocessed. Include log cross-section clearly depicting all anticipated hydrocarbons bearing zones. Give one deterministic estimate of net sand and cite support for this value. Include a table of rock properties used in the Uncontrolled Flow calculations for each zone. Give one deterministic estimate of average porosity and permeability for the expected penetration interval and cite support for these values. Clearly show the difference between relative vs. absolute permeability as these values may be easily confused. 8
No guidance has been given on preferred scale of maps and presentation materials only that they be large enough to be legible. Documentation should follow the guidelines commonly used in EP, DPP and DOCD submittals. Note that a FAQ for the NTL contains example displays showing what level of detail the BOEM expects. (b) reservoir pressure and temperature data; Provide an estimate of initial reservoir pressure and temperature at the subject well location and cite support for this value. Initial pressure and hydrocarbon saturation conditions are assumed unless depletion can be documented in the same reservoir. (c) reservoir drive mechanisms; State expected reservoir drive mechanism and cite support for this assumption. (d) reservoir drainage area and depletion rates; If using a limited or bounded reservoir model, clearly indicate the maximum drainage area and show how it conforms to structure maps. Include sufficient reservoir performance or history match data to substantiate the expected pressure decline with rate and cumulative production. (e) wellbore completion configurations; Give a general description of the drilling plan in the Worst Case Discharge Scenario hole section. Include directional survey plan clearly showing planned well location and deviation. BOEM requires that the Worst Case Discharge Scenario assumes open-hole conditions, regardless of actual well plans. (f) casing and open-hole sizes; Worst Case Discharge Scenario calculations will assume open-hole conditions over each hole section to be separately drilled and cased. Guidance from BOEM is that the Worst Case Discharge Scenario should not include tubing or completion equipment in the wellbore and be modeled with no restriction to flow at the wellhead. Include a wellbore diagram clearly showing casing points, pipe characteristics and hydrocarbon bearing zones expected in each hole section. Clearly indicate which hole section is used for Worst Case Discharge Scenario calculations. For deepwater wells, it will be useful to clearly indicate the depth below mudline of each hole section. (g) casing and open-hole roughness; State expected roughness for the well design and cite support for these values. Make sure friction factors are appropriate for pipe and open hole. Industry guidance is to hold these values constant. (h) production history; 9
If using a material balance or simulation model to predict performance, include sufficient production history data and show a history match to substantiate pressure decline predictions with rate and cumulative. (i) static and flowing pressures and temperatures; Include an output table from the software package(s) showing Worst Case Discharge Scenario rate and flowing pressures. BOEM requests that the flowing pressures at the reservoir, wellhead and each change in the internal wellbore diameter be clearly marked. Include graphs of the nodal analysis. (j) skin damage; BOEM guidance is to set skin to zero. (k) water intrusion; In an open-hole Uncontrolled Flow scenario, any hydrocarbon zones with gas/oil or oil/water contacts should be modeled to flow all phases. Water inflow will tend to reduce the total oil rate while gas inflow may impact the total liquid rate. If an initial water or gas saturation is expected in hydrocarbon bearing zones at the planned penetration point, clearly show cross-sections, production history and reservoir performance predictions that substantiate this model. Note that in each hole section open to flow, all the oil, gas and water sands expected to exist should be included in the commingled Worst Case Discharge Scenario calculation. In general, flow assurance issues such as asphaltene deposition and gas hydrate blockage will be assumed not to occur. (l) coning; In general, no increase in water or gas saturation in the wellbore due to coning will be assumed to occur within the calculation period. However, if a nearby oil/water or gas/oil contact can be documented near the expected penetration point, reservoir modeling can be used to estimate inflow of different fluid phases. If water or gas coning is expected in hydrocarbon bearing zones, clearly show cross-sections showing contacts, production history and reservoir performance predictions that substantiate this model. Guidance from the BOEM is that this prediction should be illustrated with nearby and appropriate analogs if this argument will be invoked. (m) formation sloughing; BOEM guidance is to assume no formation sloughing or hole collapse within the calculation period. Although there is a high likelihood of formation solids production at high rates, the effect of solids production on hole conditions cannot be reliably estimated for most wells. Hole size will be assumed to be constant at the drilled radius. (n) bridging; 10
Mechanical earth models or flux calculations may be used to estimate when an open hole section would collapse and bridge off, however the guidance from the BOEM is that this prediction should be illustrated with nearby and appropriate analogs if this argument will be invoked. If appropriate, include a detailed history of the analog event along with core photos and descriptions of the failed intervals, if available. (o) Pressure-volume-temperature characteristics of the fluid; Include a table of fluid properties used in the Worst Case Discharge Scenario calculations for each zone. Show oil properties at reservoir condition including bubble point pressure, B oi, R soi, viscosity of oil and oil compressibility, API gravity and specific gas gravity. Cite support for these values. For gas reservoirs, show gas properties at reservoir conditions including B gi, API gravity of condensate, specific gas gravity, gas compressibility (z) factor and yield (BBL/MMCF). Cite support for these values. In lieu of measured PVT data, industry accepted correlations can be used to estimate fluid PVT properties. Clearly indicate which correlations are being used. Note that available oil viscosity correlations are considered relatively coarse. Since oil viscosity can be a key component of the Worst Case Discharge Scenario flow rate calculation, viscosity correlations matched with analog fluids are preferred. (p) hydrostatic pressure; Hydrostatic pressure of seawater can be assumed to be water depth times a seawater gradient of 0.445 psi/ft. (3) Summary Documentation A summary sheet documenting the parameters listed above, and stating the Worst Case Discharge Scenario rate, maximum duration of potential uncontrolled flow and the total potential spill volume is recommended by BOEM. Oil production volumes should be reported in stock tank barrels of oil. A representative structure map identifying the surface and bottom-hole location of the well also should be provided. 11
Appendix A: Useful definitions and Clarifications Absolute Open Flow : The maximum flow rate a well could theoretically deliver in 24 hours with zero pressure at the middle of the flowing interval and no friction or fluid column weight holding the well back. The term is commonly abbreviated as AOFP. Uncontrolled Flow: The maximum flow rate a well could deliver in 24 hours at the minimum possible surface or mud line pressure considering all practical aspects of the well design, reservoir and fluid properties but with no choke. Worst Case Discharge: Discharge of the hole section with the highest estimates based on Uncontrolled Flow calculations. Absolute Open Flow estimates are useful to compare the flow capacity of wells without physical constraints, but have little meaning otherwise. These two values are easily confused by people who do not routinely work with the concepts. NTL: Notice to Lessees and Operators WCD: Worst Case Discharge BOEM: Bureau of Ocean Energy Management MMS: Minerals Management Service EP - Exploration Plan DOCD - Development Operations Coordination Documents DPP: Development and Production Plan APD: Application for Permit to Drill CFR: Code of Federal Regulations OSRP: Oil Spill Response Plan PVT: Pressure-volume-temperature FAQ: Frequently Asked Questions SPE: Society of Petroleum Engineers 12
Appendix B: Useful References 1. Notices to Lessees and Operators (Chronological Order) http://www.gomr.mms.gov/homepg/regulate/regs/ntls/ntl_lst2.html FAQ NTL 2010-N06 August 10, 2010 NTL 2010-N06 June 18, 2010 2. Electronic Code of Federal Regulations www.gpoaccess.gov/ecfr/ References to Federal Code of Regulations cited in the NTL s and FAQ s to NTL s. 3. Well Permits Subject to Increased Safety Measures and Updated Blowout and Worst Case Discharge Scenarios http://www.boemre.gov/homepg/offshore/safety/well_permits.html 4. Increased Safety Measures for Energy Development on the Outer Continental Shelf and other documents from BOEMRE Forums on Offshore Drilling. http://www.boemre.gov/forums/library_resource_material.htm 13
This document contains general guidance for calculating the worst-case discharge and providing the information requested by the Bureau of Ocean Energy Management in its NTL No. 2010-N06. The Society of Petroleum Engineers, its members, and the drafters of this document are not, and are not engaged in, rendering legal, technical, or other professional services or advice to any person or entity that references this document. If such advice or assistance is necessary, the services of an appropriate qualified professional should be retained. Neither SPE, its members, nor any drafter of this document makes any claim, representation or warranty, express or implied, as to the completeness, correctness or usefulness of the information in this document or that the information contained in the document will produce any particular results with regard to the subject matter contained therein, or that the contents of the document satisfy requirements of NTL No. 2010-N06, or any federal, state, or local laws. Participation in the drafting of this document or use or reference to this document by any person or entity is not intended to imply endorsement of the requirements of NTL No. 2010-N06 or agreement that any of those requirements are in accordance with any federal, state or local laws. 14