TX 75083-3836, U.S.A., fax 01-972-952-9435. AbstractThe primary advantage of horizontal wells is the long penetration and small pressure drawdown. Thus, horizontal wells have been used for developing reservoirs experiencing severe water coning problems.However, several field experiences indicate that horizontal wells are also not free from the problem of water coning (otherwise known as water cresting). In some field reports, water breakthrough into horizontal wells could be quite dramatic and tend to erode the merit of high deliverability. Field experiences also indicate that the horizontal well fluid inflow profile is not uniform along the well but rather asymmetrically skewed toward the heel of the well. Thus water tends to breakthrough first at the heel (downstream end) and spread toward the toe-end (upstream end) of the well.In this paper, the authors present the result of a tool developed to effectively evaluate the problem of pressure loss in the wellbore and its effect on water cresting in horizontal wells. The tool incorporates the effects of several factors such as in-situ pipe roughness, perforation size and perforation density, axial fluid influx and two-phase oil-water flow. The results could be extended to three-phase flow by adequate gasliquid correlations.The paper also presents a study of two innovative concepts of "smart" completions for controlling water cresting in horizontal wells: "tail pipe water sink" and "bi-lateral water sink". The technologies involve the segregated production of oil and water in a dual completion with zonal isolation. The results of this research using commercial numerical reservoir simulators indicate that dual completions are capable of reducing the incidence of by-passed oil at the toe of horizontal wells and improve oil recovery by over 7 percent.

Industry operators using downhole water separation technology in bottom water drive reservoirs with water coning problem have employed two major approaches. One approach uses downhole hydrocyclone and pumps to separate water from oil in one co-mingled production stream. This approach involves elaborate completion design and high cost equipment. The second approach, termed "gravity segregation" uses dual completion technology with zonal isolation packer to separately produce the water and the oil and so counter the cone development at the wellbore. Both methods, currently, do not completely eliminate the problem of contaminated water production but reduces it to, perhaps, some manageable level. The growing emphasis on environmental-friendly oil production operation and increasing cost of water handling requires the production of oil-free disposable water in a simple completion design. This paper presents case studies of the pre-installation design of gravity segregation method for three fields (West Africa, Gulf Canada and Louisiana) with strong water coning problems. The study confirms that old oil fields that have suffered severe water coning exhibit a transitional saturation profile and dispersed oil-water contact. In addition, the imbibition/drainage process of water cone development and reversal induced by gravity segregation creates relative permeability hysteresis effect. The effects should be included in the pre-installation modeling. The results using numerical simulator, indicate that the combined effects of capillary transition pressures and relative permeability hysteresis are responsible for the production of contaminated water experienced with application of the gravity segregation approach in old oil fields. It also shows how to add an envelope to the well's inflow performance window to accommodate the transition zone. Inside the envelope production of oil-free water from the bottom completion is possible with production of minimal water cut oil at the top. This uncontaminated water could be disposed while operators maximize the use of their pipeline and water separation facilities as well as improve oil recovery.

In bottom water drive oil reservoirs, the use of dual-completed wells with water drainage-dubbed: Downhole Water Sink (DWS) technology - has proved to control water coning, increase oil production rate and total recovery factor. Also, in field trials, the technology demonstrated sustainable production of oil-free drainage water. The ability to produce oil-free water makes DWS extremely attractive in offshore operations as no water processing is needed prior to overboard discharge. In land operations, oil-free water may be injected into the same well below the drainage completion or lifted to the surface and disposed into injection wells without processing. Field tests and our studies have also showed that sustainable drainage of oil-free water becomes somewhat difficult as the two completions (top and bottom) may receive co-mingled inflows of the two fluids. The phenomenon indicates the existence of transition zone (with mobile oil and water) much larger than that explained by the capillary pressure effect. This paper presents the results of a study - using numerical simulator and a pie-shaped physical model- aimed at understanding the change of transition zone around producing wells with and without DWS. The results show that, in conventional wells with water coning, the transition zone is small and constant away from the well but enlarges towards the wellbore. This transition zone enlargement effect occurs in conventional wells due to diffusion resulting from pressure distribution around the well. For DWS wells, however, the effect is not only more pronounced but it also alters the IPW plots - a basic tool for design. There is a commingled inflow envelope in addition to the envelope of segregated inflow. Based on the above understanding, the paper shows how to design operational limits for DWS wells to maximize oil production from the top completion and maintain oil-free water drainage from the bottom completion. Introduction Production of oil and gas from bottom water drive reservoirs involves aquifer encroachment resulting in production of water. The extent to which produced water is a problem has been estimated to cost the petroleum industry about $45 billion a year1. These costs include the expense to lift, dispose or re-inject produced waters, as well as the capital investment in surface facility construction and to address other environmental concerns1. In fact, Kimbrell2 asserted that, "Produced water is a fact of life in Louisiana. The largest volume of waste associated with oil and gas production operations in Louisiana, as well as nationally, is produced water". In 1993, over 1.2 billion barrels of produced water was generated compared to less than 200 million barrels of oil and condensate and a little over 200 million BOE (barrel oil equivalent) of gas produced in the same period. From 1990 to 1993, the statewide water-hydrocarbon ratio (WHR) averaged approximately 3.2"2. Various governments around the world have discharge limits for residual oil in produced water that range from 23–40 mg/l. Some have also imposed zero discharge limits, which in practice, demands re-injection of produced water. "Average oil content of produced water in Norway in 1998 was 23 mg/l, giving an oil discharge of about 2100 tonnes from about 100 million tonnes of total annual produced water. Aromatic compounds like Benzene and solubles such as Phenols made up additional 1200 tonnes. Polyaromatic Hydrocarbons (PAH) and Alkylphenols cause the most worry, aand mounted up to 49 tonnes in 1998"3. In the United States, the National Pollutant Discharge Elimination System (NPDES) regulates the requirements regarding maximum hydrocarbon contamination for offshore produced water disposal in the United States. This produced water disposal requirements depend solely on the level of hydrocarbon contaminants as in the OCS (Outer Continental Shelf) of the Gulf of Mexico and in the Niger Delta. Table 1 gives a brief overview of the requirements for maximum concentration of hydrocarbons.

Perhaps no industry has witnessed a more cyclical activity than the petroleum industry! Oil and natural gas account for a substantial part, over 70 percent, of world energy demand and utilization beside the worldwide application of its by-products. It is the main source of foreign exchange earnings for many developing economies. Crude oil price volatility, especially in the recent past, has made decision-making and strategic planning extremely difficult for oil companies. Oil companies have responded to the low oil prices by reducing research and development budget, capital spending, and employment pattern. The operators are even more cautious than ever before in capital spending and expansion despite the current rising trend in crude oil prices. This paper uses the basic laws of demand and supply and the concept of elasticity as well as user cost relations to evaluate the responsiveness of oil industry activity to changes in oil and natural gas price from 1960 to 2000. It relies on some E&P industry performance measures to evaluate the state of the oil and gas industry in response to crude oil price variability and instability. The results show that the profit margin of the major operators have been on the decline since the advent of OPEC and so is the demand for labor in the industry. The consequences of price instability have led to mergers and acquisitions and internal re-organization in order to attempt to maximize profit in the past few years. Finally, the paper attempts to forecast future oil and gas prices and evaluate their effects on oil industry activity over the next decade using economic impact analysis and the economic concept of price elasticity. Introduction The cyclical nature of the global oil and gas market has adversely affected several facets of the petroleum business. Petroleum is a major source of global energy supply to both developed and developing nations. It is also, a major source of income for several developing nations accounting for between 60 to 90 percent of the per capita income in some countries. The cyclical nature of petroleum activities has created caution among young entrants into the profession. The result is that young entrants would rather study allied engineering courses to give room for professional flexibility. Investment pattern in the industry has been equally cyclical. Every business venture requires a favorable and stable economic environment to encourage investors. The upward and downward swings in the petroleum industry have encouraged diversion of capital investment to the electronic and internet businesses. The last two decades have witnessed the lowest number of drilling rig construction in the history of the petroleum business. The number of cold-stacked rigs due to inactivity was also highest in the last decade. The corollary is the decrease in profit margin of operating companies leading to a significant reduction of workforce and mega mergers witnessed in the past few years. Ironically, the world is yet to find a suitable alternative source of energy to petroleum, which is economically viable. The increasing environmental concerns on global warming, however, may place some constraint on petroleum as the world major source of energy in the distant future. Environmental concerns on nuclear wastes and pollution by coal energy sources do not also help the evolution of an alternative source to petroleum. This paper applies the basic laws of demand and supply and elasticity as well as the user cost concepts and simple linear regression analysis to evaluate the responsiveness of oil industry activities to changes in oil and natural gas prices since 1960.