Page 32 - Handbook Of Multiphase Flow Assurance

26 1. Introduction

As of 2017, offshore shelf production is among the most economic sources of petroleum.
While it costs US$54 to produce one barrel on average in the world, both offshore shelf and
deepwater are below the average as shown in Fig. 1.17.
To become profitable, the wells have to produce roughly three times their cost. Average
onshore well may cost $3–4 million. Average shale well may cost $6–7 million including drill-
ing, completion and fracturing. A deepwater wells cost significantly more, with a range of
$75–175 million depending on depth and time it takes to drill. This means that an average
deepwater well must produce, on average, 7 million barrels of oil to bring profit. Deepwater
reservoirs are usually prolific, with annual decline rate of around 10%, and last for at least 20,
sometimes 30+ years, with typical host facility design life of 25–40 years. If a deepwater well
produces for 10 years, it has to flow at least 2000 barrels per day to bring profit. Such rates are
on the low side for deepwater, with most wells flowing 10–20 thousand barrels per day (Riazi,
2016, p. 636). Payback time for the best producing wells in deepwater is less than a year.
Conversely, shale wells decline rapidly, with first year decline rate of around 60% as shown
in Fig. 1.18 and Table 1.4 (meaning production in year 2 is just 40% of production in year 1).
However, there is a large resource to tap with shale production, in both oil and gas.
If a shale well produces for 10 years, it has to flow at least 628 barrels every day in the first
year to bring profit. Such rates do exist in shale production as shown in Table 1.5, but are on
the high side, with average new Bakken well producing 476 bo/d in 2016, Wolfcamp in Texas
producing 463 bo/d and US-average new 2016 shale well flowing 241 barrels of oil per day in
the first year (Shaleprofile, 2017).
While comparatively more productive, fields in deepwater present more risk due to its
remoteness and cold, deep environment, and require a more thorough engineering design.
Flow assurance is applicable both to shale onshore and to deepwater, but the much higher
cost of fixing a problem makes flow assurance analysis mandatory if not central in the devel-
opment of deepwater projects. Of course, flow assurance analysis can only be performed after
the oil is found, which leaves the seismic data processing as the most important technology
for the deepwater petroleum industry.

Average cost to produce 1 barrel of oil, USD

80
70
60
50
40
30
20
10
0
Middle Shelf Russia Other Deepwater Shale Oil sands Arctic
East offshore
Fig. 1.17 Cost of oil production, based on Rystad Energy, Morgan Stanley Commodities Research.