TECHNICAL PROPOSAL TO
Research Partnership to Secure Energy for America
Small Producers Program
Solicitation Number: RFP2008SP001
Mini-Waterflood: A New Cost Effective Approach to Extend the Economic Life of Small, Mature Oil Reservoirs
Applicant Name:
New Mexico Institute of Mining and Technology
801 Leroy Place
Socorro, NM 87801 USA
Industry Participants:
Armstrong Energy Corporation
Technical Contact:Administrative Contact:
Dr. Thomas W. EnglerNorene Boykin
Telephone Number: (575) 835-5207Telephone Number: (575) 835-5545
Facsimile Number: (575) 835-5210
e-mail address: mail address:
Date of Application: January 12, 2009
TABLE OF CONTENTS
Table of Contents...... 2
List of Acronyms ...... 3
Public Executive Summary ...... 4
A. TECHNICAL MERIT AND VALUE TO PROGRAM
A.1 Proposed Technology/Methodology
A.1.1 Statement and Significance of the Problem...... 5
A.1.2 Background and existing technologies/methodologies...... 5
A.1.3 Relationship to the Program Goals/ObjectivesBackground...... 7
A.2 Industry Participation and Support
A.2.1 Description of Industry Participation ...... 7
A.2.2 Leverage of Project Funds ...... 8
A.2.3 Source and Nature of Proposed Cost share ...... 8
A.3 Expected Impacts and Benefits
A.3.1 Impact on Reserves and Production ...... 8
A.3.2 Environmental Impact ...... 9
A.3.3 Applicability...... 9
A.3.4 Risks ...... 9
B. TECHNICAL APPROACH
B.1 Detailed Work Plan (Statement of Work)...... 10
B.2 Project Schedule and Milestones...... 14
B.3 Proposed Travel ...... 15
B.4 Recommended Technology Transfer Approach ...... 16
C. TECHNICAL AND MANAGEMENT CAPABILITIES
C.1 Organizational Capabilities and Experience ...... 16
C.2 Qualifications of Key Personnel ...... 17
C.3 Quality and Suitability of Facilities, Equipment and Materials ...... 17
D. COST SUMMARY
D.1 Proposal cost/price summary...... 18
APPENDIX
References...... 19
Resumes ...... 20
Letters of support and/or other information regarding cost share ...... 26
List of Acronyms
AAPG- American Association of Petroleum Geologists
ABET- Accreditation Board of Engineering and Technology
BOPD- barrels of oil per day
GOR- Gas-oil ratio
MBO- thousands of barrels of oil
NMT- New Mexico Tech aka New Mexico Institute of Mining and Technology
OOIP- original oil in place
PRRC- Petroleum Recovery Research Center
RTA- rate transient analysis
SPE- Society of Petroleum Engineers
PUBLIC EXECUTIVE SUMMARY
The project “Mini-Waterflood: A New Cost Effective Approach to Extend the Economic Life of Small, Mature Oil Reservoirs” will be lead by the Petroleum Engineering Department of New Mexico Institute of Mining and Technology (aka New Mexico Tech), with the assistance of the Petroleum Recovery Research Center in acquiring core measurements. The Principal Investigator will be Dr. Thomas W. Engler. The project relies on a strong partnership between New Mexico Tech and Armstrong Energy Corporation, a small independent operator in Southeast New Mexico. Armstrong Energy has committed to providing significant resources to the success of the project; most noteworthy are the acquisition of core for analysis and the drilling of several wells to acquire additional data and verify the mini-waterflood concept.
The goal of this project is to demonstratethe feasibility of successfully waterflooding small oil reservoirs that are not conducive to a fully-developed, patterned waterflood. These marginal plays have frequently been ignored, i.e., they are not the highly visible plays that received previous attention to secondary and/or tertiary recovery by major producers. Typically these types of reservoirs are shallow discoveries after deeper targets proved non-productive. To address this shortfall, a “mini-waterflood” design is proposed, that is, a non-traditional, water injection program to provide pressure maintenance and improve sweep efficiency.
In general, the reservoirs of interest are small and thin in extent, shallow, at low pressure and temperature, and have unfavorable mobility ratios. Initial primary energy was not sufficient to produce the oil; however, significant mobile oil remains to be recovered. Adding energy, in this case by waterflooding, is anticipated to improve oil recovery and extend the reservoir life under these poor conditions.
The main components of the proposed work, experimental core displacement studies and field simulation, will provide critical information to the design and success of the mini-waterflood. Core displacement studies provide a quantitative measure of the mobile oil available for secondary recovery, in this case, subject to unusual reservoir conditions. The results will be coupled with improved reservoir characterization and subsequently scaled to field level using reservoir simulation. The objective of the reservoir simulation will be to investigate various development and injection plans and prioritize with regards to oil recovery. The impact of injection rates and pressures will be investigated. Understanding the effect of these controllable parameters is essential to the mini-waterflood design.
A. Technical Merit and Value to Program
A.1 Proposed Technology and Methodology
A.1.1 Statement and significance of the problem
In many cases small oil reservoirs (< 5 wells) exist that are not conducive to a traditional patterned waterflood both from economic and technical standpoints. Unfortunately, significant mobile oil remains in these reservoirs. Originally developed by independents and small producers, these marginal plays have frequently been ignored, either due to a lack of technical resources or lack of a cost effective means to implement secondary recovery. To address this shortfall, a “mini-waterflood” design is proposed, that is, a non-traditional, water injection program to provide pressure maintenance and improve sweep efficiency.
The selected study area is a classic example of a significant number of today’s mature oil fields in the United States. In general, the reservoirs are shallow in depth, subsequently at low temperature, depleted and thus at low pressure, and operated by small producers. Furthermore, these reservoirs were neglected; i.e., not the highly visible plays that received previous attention to secondary and/or tertiary recovery. Thus the problem to address is to provide economic (simple) methods to improve oil recovery and extend the reservoir life under these poor conditions. If successful, ample opportunity exists to extend the technologies or methods to other Queen plays in the local area and to other shallow oil reservoirs in the United States.
A.1.2 Background and existing technologies/methodologies
The selected target to apply this method is the Queen Sand in the Round Tank Field of Chaves County, New Mexico. The Round Tank is part of a trend of Queen sand reservoirs as shown in Figure 1. In this area, the Queen is composed of a series of interlayered porous sands oriented primarily in a northeast-southwest direction. Porosity terminates updip and downdip in each of the sands, creating stratigraphic traps with separate hydrocarbon and water contacts in each [Lampert, 1976].
Figure 1. Regional trend of Queen Sand Fields in Southeast New Mexico
Previous work on the nearby Sulimar Field investigated reservoir characterization methods [Chawathe, et al, 1997] and wettability [Buckley, et al, 1997] of the Queen sand. The goal of the Chawathe, et al. study was to develop a reservoir model based on limited and old data to explain the field’s waterflood performance. The primary focus was on integrating geologic and reservoir data from the micro- to mega-scale to characterize the Queen. Their work provides a good starting point for the proposed project. We will extend their work by including dynamic production data to determine reservoir and well properties. Buckley, et al. observed weakly mixed-wet conditions from spontaneous imbibition measurements on preserved samples and concluded the mixed-wet conditions are consistent with the successful waterflood in the Sulimar Field.
The Round Tank Field was selected because itprovides an opportunity to extend waterflood development to reservoirs of limited size and unique reservoir conditions. Figure 2 illustrates the thin oil column believed to be present along the eastern flank of the field. Gas was discovered in the shallow (~1600 ft) Queen in 1970 as a byproduct of the deeper San Andres play in the area. Eight wells have produced from the gas cap at one time or another, while a single oil well was completed in the thin oil column in 1978. Original pressure was approximately 750 psi; current reservoir pressure is speculated to be ~100 psi. As a result of the low pressure and temperature (75°F) and very low gas in solution and high nitrogen content of the gas, the oil viscosity is high; therefore the mobility ratio is unfavorable. All of these traits combined illustrate the complexity of successfully waterflooding a mature Queen Sand reservoir.
Figure 2. Round Tank Field map illustrating size of field and possible thin oil column in Queen.
A.1.3 Relationship to the program goals/objectives
The proposed project is strongly aligned with the program objectives of the RPSEA Small Producers program. The focus is to apply scientific methods and tools to efficiently improve oil recovery in a mature oil field. Specifically, the proposal will couple experimental lab work to determine displacement efficiency with numerical simulation to provide various alternative development schemes. Simultaneously, the schemes must be cost effective to the small producer who operates the asset. This is extremely important for two reasons; (1) current production is primarily maintaining the lease ownership and (2) implementation of a proposed development scheme is a one time deal, and thus must be initially successful.
A.2 Industry Participation and Support
A.2.1 Description of industry participation
The project relies on a strong partnership between New Mexico Tech and Armstrong Energy, a small independent operator in Southeast New Mexico. Armstrong Energy has committed to providing resources to the success of the project. First, they are willing to acquire and assume the cost for core, necessary for the success of the project. Second, they are proposing to drill two test wells targeting the Queen play using the knowledge acquired from the proposed work to assist in locating and estimating recovery for the wells. These wells will acquire modern day well logs, pressure measurements and possibly other reservoir information to further enhance the proposed work. And last, Armstrong is dedicating time and effort of their technical staff and thus we can take advantage of their professional experience in the area when evaluating data, modeling the reservoir and performing well operations. Also included in this effort is Keltic Well Services, a small wireline company which will provide static reservoir pressure buildup measurements, both on the old and new proposed wells.
A.2.2 Leverage of project funds
Total cost to execute the proposed project is $1,107,659. Requested funding from RPSEA is $318,943 or approximately 30% of the total project costs. The remaining 70% of the total project costs can be attributed to the in kind cost share of $788,716 as described in Section A.2.3 below.
A.2.3 Source and nature of proposed cost share
Armstrong Energy is providing significant resources to the cost share component. This contribution consists of personnel time dedicated to the project and collection of data; particularly the acquisition of core in the Queen Sand for analysis, as well as the costs associated with drilling the two wells mentioned above. Details are outlined in their accompanying letter of support. Keltic Wireline Services is providing field support and technical services with regards to pressure measurements.
A.3 Expected Project Impacts and Benefits
A.3.1 Impact of reserves and production
A single well produces approximately 1 BOPD from the Round Tank (Queen) Field with cumulative production of 15MBO. Quick, back of the envelope calculations estimate over five million barrels of oil-in-place. The typical recovery efficiency for waterflooding Queen sands ranges anywhere from 10 to 25% of OOIP. Based on this recovery we predictfrom our proposed work, 500 MBO to 1,250 MBO increase in the existing reserves. Furthermore, other Queen Sand fields in proximity to the Round Tank become targets for improving recovery; either by initiating secondary flood operations or improving existing ones.
A.3.2 Environmental impact
All oil field operations will be under the accordance of the state regulations enforced by NMOCD and surface use plans administered by the Bureau of Land Management. This includes environmental components from protecting fresh water aquifers to minimizing and/or avoiding spills and surface damage.
A.3.3 Applicability
The project targets small, mature oil fields where production is limited. These fields are frequently ignored for secondary development, primarily due to their size and near uneconomic status. Nearly every small producer in the U.S. has this type of asset in their portfolio. The Queen sand is a widespread producer in Southeast New Mexico. Typically the shallowest play, the Queen becomes a fallback if deeper development is not productive or becomes depleted. The result is a number of small; 1,2 or 5-well Queen fields with the potential for a mini-waterflood.
The appropriate path to application of the proposed work is to initially assess the potential and provide development scenarios for the Round Tank (Queen) Field. The results will provide the motivation to expand and develop the oil rim of the Round Tank Field, and to other Queen fields with similar traits in the area.
A.3.4 Risks
The project is believed to have a high chance of success in achieving the proposed impacts. Although the Queen Sand in the Round Tank is not analogous to other, more prominent Queen fields, overall the Queen has been known and documented as an excellent candidate for secondary recovery. Risk involves the displacement efficiency under such unfavorable mobility ratio conditions, and the presence or lack of a moveable hydrocarbon volume in the reservoir. Other producers in the area are likely to accept this concept and attempt to duplicate it after the successful results from the Round Tank Field are publicized. Also, another key factor or reason for market acceptance is the proposed work relies on existing data or easily acquired data and not the acquisition of high cost information such as seismic, specialized well logs or other expensive tests. It’s not that this data is not desired or would not be useful, but the value of information cannot be supported by the target areas or operators. In general, we are proposing an “off the shelf” method for a prevalent set of conditions.
B. Technical Approach
B.1 Detailed Work Plan (Statement of Work)
TITLE: “Mini-Waterflood: A New Cost Effective Approach to Extend the Economic Life of Small, Mature Oil Reservoirs”
I. OBJECTIVES
This research project intends to provide small producers the knowledge and tools to extend the economic life of shallow, depleted oil reservoirs. A majority of these types of reservoirs are owned and operated by small producers, with limited time and access to technology to appropriately improve recovery and/or extend the drainage volume of the reservoir. A cooperative effort with Armstrong Energy, will investigate the feasibility of various mini-waterflood options to maximize recovery and extend the field’s economic life. The main components of the proposed work, experimental core displacement studies and field simulation, will provide critical information to the design and success of the mini-waterflood. Core displacement studies provide a quantitative measure of the mobile oil available for secondary recovery,in this case, subject to unusual reservoir conditions. The results will be coupled with improved reservoir characterization and subsequently scaled to field level using reservoir simulation. The objective of the reservoir simulation will be to investigate various development and injection plans and optimize with regards to oil recovery. The impact of injection rates and pressures will be investigated. Understanding the effect of these controllable parameters is essential to the mini-waterflood design.
II. SCOPE OF WORK
The target area is the shallow, mature Queen Sand reservoir in the Round Tank Field located in Chaves County, Southeast New Mexico. The selected area exhibits the traits common to a majority of the Queen sands in Southeast New Mexico and therefore is a good candidate for investigation. With the acquisition of core, efforts directed towards experimental lab work will provide important information on water-oil displacement efficiencies and recoveries under the reservoir conditions described. Furthermore, the mobility ratio is anticipated to be unfavorable due to the high oil viscosity; therefore other means of improving sweep may be investigated in the lab.
Modern engineering tools will be used to extract information from the various vintages of well logs and the dynamic production data. The experimental core work will be integrated with the existing field information to develop a reservoir model. From the reservoir model, simulation can be employed to investigate various field development strategies in terms of secondary recovery. From history matching we can observe the impact of various parameters and select the least known to adjust; with the ultimate goal of validating the reservoir model. Once validation is achieved, reservoir performance can be predicted for various constraints and conditions.
III. TASKS TO BE PERFORMED
PHASE I
Task 1.0 - Project Management Plan
The Awardee shall develop a Project Management Plan consisting of a work breakdown structure and supporting narrative that concisely addresses the overall project as set forth in the agreement. The Awardee shall provide a concise summary of the objectives and approach for each task and, where appropriate, for each subtask. The Awardee shall provide schedules and planned expenditures for each Task including any necessary charts and tables, and all major milestones and decision points. The Awardee shall identify key milestones that need to be met prior project proceeding to the next phase. This report is to be submitted within 30 days of the Award. The RPSEA Contracts/Procurement Manager shall have 20 calendar days from receipt of the Project Management Plan to review and provide comments to the Awardee. Within 15 calendar days after receipt of the RPSEA's comments, the Awardee shall submit a final Project Management Plan to the RPSEA Contracts/Procurement Manager for review and approval.
Task 2.0 - Technology Status Assessment
The Awardee shall perform a Technology Status Assessment and submit a summary report describing the state-of-the-art of the proposed technology. The report should include both positive and negative aspects of each existing technology. The report should be no more than five typewritten pages in length. The report is not to contain any proprietary or confidential data, as the report will be posted on the RPSEA website for public viewing. The report is to be submitted within 30 days of the Award.