Arresting Unexpected Oil Production Decline in a Joint-Venture Environment

Abstract

In North Africa like in any other region the share of the companies operating oil and gas fields as Join Venture Associations (JVs) is significant. Normally in a JV Set Up two or more companies agree to operate a field or a number of fields in a defined concession area. This implies that these corporate entities have to work in a collaborative environment towards achieving a common goal, under clear predetermined rules of interaction and organizational arrangement as per the JV Agreement. While the JV is a proven contractual and legal set up that delivers as per the set goals, under the condition of an unexpected production decline this collaborative environment is put to the test. Regardless of the nature of the Partners - whether state owned or private, the challenges are the same, especially when the decline is significant, sustained and way below the predicted yearly natural decline. Whether it is about a New Development or a Mature Asset, reversing the production decay trend becomes the number one priority for all the partners of the JV. Therefore they will tend to mobilize the best of their capabilities to overcome the unwanted situation as soon as possible as the "business as usual approach" no longer works. The response varies depending on the operational expertise of the incumbents. Unfortunately there is not a unique recipe that applies for all the cases. Even if there may exist sufficient skills to handle the situation, solutions applied in prior experiences may not necessarily work out, giving the unique nature and dynamics of each field. The flow of hydrocarbons in the reservoir is described by a diffusion-type equation. According to that rate changes do not occur abruptly or suddenly, rather are a function of the pressure and saturation distribution in porous media. Therefore an unexpected sustained production decline is more a result of the accumulation of several factors induced under inaccurate assumptions. This may hint to possible gaps either at the field development plan phase or at the execution level or both. If the applied solution attempts do not show signs of improvement, frustration and discouragement could further complicate finding an effective tailor suited solution. In extreme desperate cases a running like "headless chicken", or "punching in the air" situation sets in. Without doubt this is one of the most challenging cases for the management and staff of any JV. The required measures normally go beyond the pure technical aspects. While the JV Agreement may not automatically imply that partners may have unlimited access to the support of their Mother Companies skill pool to help reversing the trend, the key actors with the most knowledge about the wells and field features are right there, in the JV offices and fields. In the present paper the application of a solution approach is presented and it is illustrated on four Field Cases, from different well and reservoir conditions, development stage and geographical regions. Two examples involve JV Set Ups, and the other two involved single company operating the field, yet JV like features. In regards to the JV partners the goal on one side could be achieving the highest recovery factor over the field life cycle while on the side it could be the highest return of investment. Both goals do not necessarily go in opposite direction, and could be properly aligned.