© 2010 Chevron

SWIMSSea Water Injection Mobile System

Sakon RungwichitsinRalph Oertel, Pavarit Trakulhoon, Siriporn Chokasut, Mauricio Villegas, Mark Zyweck, Udeni Hewawitharana, Mariano Vela, Kirk PurdyB8/32 Asset, Asia South Business Unit

Department of Mineral Fuels PresentationBangkok, Thailand, May 26-27, 2011

© 2010 Chevron

What is SWIMS?

SWIMS = Sea Water Injection Mobile System

Portable equipment to take seawater from the ocean, treat it with chemicals, and pump it into a well or wells (waterflood oil reservoir).

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© 2010 Chevron

Why do we need SWIMS?

Waterflooding is the most common and effective method for improved oil recovery

SWIMS: To unlock waterflood reserves in marginal offshore oil reservoirs distributed across several remote platforms

(They are not justified by economics as required significant CAPEX to installpipeline from CPP/ Hub for water supply to the remote platforms)

SWIMS cost: OPEX for daily equipment rental (No CAPEX required)

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© 2010 Chevron

SWIMS Concept

To develop a system which:

Enables waterflooding of oil reservoirs located in areas withoutproduced water re-injection facilities in place

Is mobile and flexible, to service multiple offshore platforms and optimize timing of injection into reservoirs

Is fit-for-purpose to inject at high rates for short periods without compromising safety and best practice operations

Leaves a small footprint to allow well service activities to work concurrently during SWIMS operation

Is cost efficient and economically attractive to waterflood marginal oil reservoirs

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© 2010 Chevron

SWIMS Unit in Operation (On-site)

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© 2010 Chevron

Operational Concerns & Mitigation

Tubing corrosion issue due to seawater injection

– Mitigation made with intensive corrosion control program (Chemical injection)

– Oxygen monitoring

– Installation of corrosion coupon to investigate corrosion rate periodically

– Down-hole caliper survey on all SWIMS injectors

Scale issue in tubing

– Monitoring Chloride content in all producers

– Using the SWIMS package to immediately pump scale inhibitor when sea water breakthrough the producers

Dealing with High Pressure

– Using MOC (Management of Change) process to enforce Safety in Design & Operation

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© 2010 Chevron

Production Result1st Pilot SWIMS at TAWK

Incremental oil recovery 215 Mstb (OOIP 1.6 MMstb)

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Strong WF responseStart INJ Stop INJ (water breakthrough producer)

© 2010 Chevron

Production Result2nd SWIMS at RJWA (M1B)

Incremental oil recovery 40.5 Mstb (OOIP 1.27 MMstb)

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Strong WF responseStart INJ Stop INJ (water breakthrough producers)

© 2010 Chevron

Production Result3rd SWIMS at RJWA (O2B)

Incremental oil recovery 113 Mstb (OOIP +/- 5 MMstb)

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Start INJ On-going

© 2010 Chevron

Production Result4th SWIMS at MAWC

Incremental oil recovery (n/a)

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Start INJStop INJ(no connectivity)

© 2010 Chevron

Forward Plan

CPDEP roadmap for SWIMS waterflood

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Phase 1 Phase 2 Phase 4 Phase 5Identify & Assess Opportunities Generate and Analyze Alternatives Detailed Planning Readiness Execute Evaluate and Look-back

Go FWD: Injecting:Refer to WF opportunity list… TAWL‐21, ‐09, ‐26 MAWD 59‐9 (D‐20) Jul‐11 RJWA‐O2B (A‐14) RJWA‐M1B (A‐15)

MAWB TAWK M15A (K‐25/24) Aug‐11 TAWK‐M6C (K‐37)BEWQ‐08, and others? BEWX 65‐9 (X‐01) Oct‐11 MAWC‐80‐3 (C‐13)LAWA

Contingent: Pending:MAWG 85‐7 (G‐28) RJWA‐M1B (A‐05)MAWC 80‐3 (C‐13/C‐12)

Dropped:BEWK‐05 (91‐7), K‐09 (83‐9, 86‐4, 86‐7, 87‐0), K‐07 (82‐6, 83‐5, 83‐9, 84‐5)

Phase 3

Study on Marginal Petroleum Field in Thailand

Kriangkrai Trisarn

School of School of GeotecnologyGeotecnology, Institute of , Institute of EngineeringEngineering

SuranareeSuranaree University of TechnologyUniversity of Technology

OUTLINES

1.INTRODUCTION2.OBJECTIVES3.MODEL DEVELOPMENT4.SIMULATION RESULTS5.ECONOMIC EVALUATION6.CONCLUSION & DISCUSSION7. Q & A

PETROLEUM CONSUMPTION IN THAILAND

• TRANSPORTATIONS• INDUSTRIES• AGRICULTURE• POWER GENERLATION• OTHERS

INCREASED 8.3%

1,825 MBOED

Month Natural Gas Condensate Crude oil Total

( MMscfd ) ( bcd ) ( bpd ) ( bpd )

January 2,665 96,914 93,864 647,592February 2,762 90,741 140,522 705,581

March 2,854 80,384 114,061 685,772

How to increase the indigenous petroleum supply

• The government;1. Open previously unavailable acreage.2. Improve the fiscal structure

• The producers;1. Apply for new concessions.2. Explore and invest more

Definition

• Marginal fields refer to petroleum fields that contain reserves that are not economical when produced by majors or using conventional methods

• But might be profitable if explored by indigenous entrepreneur or using innovative technologies.

Definition

• Marginal fields have nothing to do with their size—there are 100 million-barrel marginal fields, said Jeff Aldrich, chief geologist with Forest Oil International in Houston

• “ It’s all about economics.”

Definition of Indonesian PSC

• Marginal field is defined as an oil field located within a producing block that, under the current PSC terms and conditions, is not economics to be developed

• “ It’s all about economics.”

My Definition;• Marginal fields refer to

petroleum fields that earn IRR(Internal rate of Return) less than 10%.

• If so, I prefer to buy the government’s bonds rather than invest in the petroleum E&P.

4-5%

12%10%7%

12-22%

OBJECTIVES are to

• COMPILE FIELDS DEVELOPMENT INFORMATION

• MODEL RESERVOIR SIMULATIONS

• DO ECONOMIC EVALUATIONS• STUDY HOW TO DEVELOP

MARGINAL FIELDS

PETROLEUM FIELDS IN THAILAND

• NE; GAS FIELD; Nam Phong, and SinPhuhorm

• CT; OIL FIELDSUTHONG,WICHIANBURI ,

NASANUN, SIRIKIT and near by• N; FANG OIL FIELD• GT; ERAWAN, TANTAWAN AND

OTHERS

KhoratBasin Chronostratigraphy(After Sunton and Nared, DMF 2005)

Figure 2: Phitsanulok Basin Chronostratigraphy (After Nuchanart Garawek, PTTEP 2005)

Schematic of Songkhla Basin(After John Pringle, NuCoastal (Thailand) Limited, 2009)

Petroleum reserves, 2009

Proved reserves

Unproved reserves

Proved reserve

Probable reserve

Possible reserve

Natural Gas (bcf)

11,026 12,665 6,170

Condensate (MMbbl)

255 336 86

Crude oil (MMbbl)

180 471 170

RESERVOIR SIMULATIONS

ADVANTAGES OF RESERVOIR SIMULATION

•Compile all data pertinent to a reservoir into one compact data base

•We can predict what is going in the reservoir and a amount of production from alternative operations

SIMULATION MODELS

1. CT; SUTMC1, SUTMC2, SUTMC3, SUTMC4 , and SUTMC5

2. NE; SUTMNE1, and SUTMNE2

3. GOT; SUTMGT1, SUTMGT2, SUTMGT3, SUTMGT4, and SUTMGT5

• SUT MC1 Model

SUT MC3 Model

SUT MNE1 Model

Figure 7: SUT MGT1 Model

Reservoir Simulation Model Development

Four sizes oil reservoir models of 0.4, 1, 6 and 10 MMSTB oil in place and four sizes of gas reservoir model of 250, 375, 450, and 740 billion cubic feet gas in place simulations were developed by utilizing the software namely “Eclipse Office-100”. All eight models contain 8 layers, 625 cells/layer, up to a total of 5,000 cells (Grid Blocks). The layers are separated by different porosity and permeability ranging 19 – 26% and 9.2 – 586 md from the bottom to the top of the reservoir.

Region

SUTMCCentralThailand

SUTMNENORTHEASTERN THAILND

SUTMGTGulf ofTHAILAND

Model RESERVE NUMBER PRODUCTION WELLS

PERCENTRECOVERY

SUTMC1 45,000 STB 1 15

SUTMC2 80,000STB 1 20SUTMC3 160,000STB 2 16SUTMC4 1,500,000STB 4 15SUTMNE1 200MMMSCF 8 80SUTMNE2 320MMMSCF 8 71SUTMGT1 1.4 MMSTB 3 14SUTMGT2 2 MMMSTB 4 20

SUTMGT3 300MMMSCF 8 80

SUTMGT4 570MMMSCF 16 77SUTMGT5

SIMULATION DATA INPUT

•Explorations and wells data•Reservoirs data•Productions data•Fluid properties data

• (1) The reserves and recoveries of SUTMNE1, and SUTMNE2 models are 200, 320 MMMSCF(billion cubic feet), and 80%, 71% respectively.

• (2) The reserves and recoveries of SUTMC1, SUTMC2, SUTMC3 and SUTMC4 models are 45,000, 80,000, 160,000, and 1,500,000 STB(stock tank barrel) and 15, 16, 20 , and 15% respectively.

3.1 SIMULATION RESULTS

• (3) The reserves and recoveries of , SUTMGT1, SUTMGT2, SUTMGT3, SUTMGT4 and SUTMGT5 models are 1,400,000STB, 2,000,000STB, 2,000,000STB, 300 MMMSCF, and 570 MMMSCF and 14, 20, 20 , 80 and 77% respectively.

3.1 SIMULATION RESULTS

Model SUTMC1 Oil and Gas Production Rate vs. Timefrom Eclipse office 100

65 STB/D

RESERVE 45,000 STB

50MMSCF/D

RESERVE 200MMMSCF

Model SUTMNE1 Gas Production Rate vs. Time

SUTMGT1 Oil Inplace, Reserve, Production Rate and Pressure vs. Time

2000 STB/D

RESERVE 2,000,000STB

Modeldel Region Petroleum inplace

Numberof

producingwells

InitialProduction

rate

NumberOf years

Onproductio

n

CumulativePetroleumProduction(Reserve)

Recovery(%)

SUTMC1 Central 300,000STB 1 60 STB/D 3 45,000STB 15

SUTMC2 Thailand 400,000STB 1 60 STB/D 5 80,000STB 20

SUTMC3 1,000,000STB 2 200 STB/D 5 160,000STB 16SUTMC4 10,000,000STB 4 600 STB/D 5 1,500,000STB 15SUTMNE1 Northeastern 250 MMMSCF

(Billion scf)8 50 MMSCF/D

(Million scf/d)20 200 MMMSCF

(billion cu.ft.)80

SUTMNE2 Thailand 450MMMSCF 8 65MMMSCF/D

20 320MMMSCF

71

SUTMGT1 Gulf of 10 MMSTB 3 1600STB/D 5 1,400,000 STB

14

SUTMGT2 Thailand 10 MMSTB 4 1600STB/D 5 2,000,000 STB

20

SUTMGT3 375 MMMSCF 8 50MMSCF/D 20 300MMMSCF 80

SUTMGT4 740 MMMSCF 8 50MMSCF/D 20 570MMMSCF 77

Simulation Result Summary 1

Model Region Petroleum inplace

Numberof

producingwells

InitialProduction

rate

NumberOf years

Onproductio

n

CumulativePetroleumProduction(Reserve)

Recovery(%)

SUTMC1 Central 300,000STB 1 60 STB/D 3 45,000STB 15

SUTMC2 Central 400,000STB 1 60 STB/D 5 80,000STB 20

SUTMC3 1,000,000STB 2 200 STB/D 5 160,000STB 16SUTMC4 10,000,000STB 4 600 STB/D 5 1,500,000STB 15

SUTMNE1 Northeastern

250 MMMSCF(Billion cubic ft.)

8 50 MMSCF/D

(Million cu.ftper day)

20 200 MMMSCF

(billion cu.ft.)

80

SUTMNE2 450MMMSCF 8 65MMMSCF/D

20 320MMMSCF 71

SUTMGT1 Gulf of 10,000,000 STB 3 1600STB/D 5 1,400,000 STB

14

SUTMGT2 Gulf of 10,000,000 STB 4 1600STB/D 5 2,000,000 STB

20

SUTMGT3 10,000,000 STB 4 600STB/D 20 2,000,000STB 20SUTMGT4 375 MMMSCF 8 50MMSCF/D 20 300

MMMSCF80

SUTMGT5 740MMMSCF 16 50MMSCF/D 20 570MMMSCF 77

• Cash flow in-out• IRR , DIRR(after 10%discount)

NPV, NPIR (10%DC), • Return on investment

period(Pay out period)• Royalty, Net profit, Taxes• SENSITIVITY ANALYSIS

3.2 ECONOMIC ANALYSIS

• The Excel program was developed to do economic analysis based on the following regulations and assumption.

•Oil price 80 US$/STB•Gas price 6 US$/1000SCF•Capital Investment depends on size and location

•Sliding Scale Royalty

• 1. Concession applicationMedium size reservoir 1 MM$Small size 0.1-0.2 MM$

• 2. Geological & Geophysical Exploration• Medium size 2-5 MM$• Small size 0.2-1 MM$

• 3. Exploratory and Appraisal wells• Northeast 20 MM$

Central and Gulf of Thailand 1 MM$

• 4. Production wellsNortheast 22-25 MM$

Central and Gulf of Thailand 1.2-1.5MM$

• 5. Production FacilitiesOil field; Medium size 20 MM$

Small size 1-2 MM Gas field ; 100-200MM$

• 6. Production Cost (Lifting Cost)Oil field; Medium size 20 $/STB

Small size 10-15$/STB Gas field; 1.5-2 $/1000SCF

7. Discounted Rate (Interest Rate) 10%Escalation 2%8. Sliding Scale Royalty(Production Level) (Rate)(%)0-2000 BPD 5.002000-5000 BPD 6.255000-10000 BPD 10.0010000-20000 BPD 12.50> 20000 BPD 15.009 . Income Tax 50%

• The IRR (Internal Rate of Return) of the SUTMC1, SUTMC2, SUTMC3, SUTMC4, SUTMNE1, SUTMNE4, SUTMGT1, SUTMGT2, SUTMGT3, and SUTMGT4 are -0.1, 8.7, 20, 23, 9.4, 15, 8, 8.4, 9, and 22.5% respectively. The small reserve-size models have IRR less than 10%. These cases are shown in Table 2.

Economic Result Summary

Model CumulativePetroleumProduction(Reserve)

CAPEXInvestme

ntCost

(MM$)

OPEXOperation

Cost(MM$)

Revenue(MM$)

ROYALTY

(MM$)

INCOMETAX

(MM$)

NPV(Net presentValue10%Discount

MM$)

IRRInternalRate of

Return(%)

SUTMC1 45,000STB 2.64 0.51 3.63 0.18 0.36 -0.39 -0.1

SUTMC2 80,000STB 2.90 1.8 6.8 0.3 0.8 -0.06 8.7

SUTMC3 160,000STB 4.71 2.77 13.12 0.66 2.6 0.86 20.0

SUTMC4 1,500,000STB 34 30 120 6 25 10 23.0

SUTMNE1 200MMMSCF 347 344 1200 89 220 32 9.4

SUTMNE2 320MMMSCF 376 449 1950 170 490 50 15.0

SUTMGT1 1,400,000STB 46 40 113 6 12 -2 8.0

SUTMGT2 2,000,000STB 50 42 165 8 35 8 8.4SUTMGT3 300MMMSCF 432 808 1860 167 236 28 9.0SUTMGT4 570MMMSCF 520 1120 3440 380 720 180 22.5

Model SUTMC2 Sensitivity Analysis

Reserve(STB) Oil Price($/STB) CAPEX (MMUS$)

80,000 96,000 80 96 2.3 2.9

Revenue MM$ 6.4 7.7 6.4 7.7 6.4 6.4

CAPEX, MM$ 2.9 2.9 2.9 2.9 2.3 2.9

OPEX, MM$ 1.8 2.2 1.8 1.8 1.8 1.8

ROYALTY MM$ 0.3 0.4 0.3 0.4 0.3 0.3

INC. TAX, MM$ 0.8 1.2 0.8 1.4 1.03 0.75

NPV10%DCMM$ -0.06 0.23 -0.06 0.35 0.24 -0.06IRR(%) 8.68 14.62 8.68 17.04 16.09 8.68

DIRR(10%DC)(%) -1.20 4.20 -1.20 6.40 5.53 -1.20DPIR -0.02 0.08 -0.02 0.12 0.10 -0.02

Model SUTMNE1 Sensitivity Analysis

Reserve (MMMSCF) Gas Price CAPEX (MMUS$)(US$/1,000 SCF)

200 240 6 7.2 278 347.4

Revenue, MM$ 1200 1440 1200 1440 1202 1202

CAPEX, MM$ 347 347 347 347 278 347.4

OPEX, MM$ 344 413 344 344 344 344.2

ROYALTY, MM$ 89 120 89 106 89 89.01INC.TAX, MM$ 220 290 220 331 253 220.1

NPV(10%DC)MM$ 32 76 32 100 73 32.11

IRR(%) 9.37 12.40 9.37 14.03 13.54 9.37

DIRR(10%DC) 1.87 4.30 1.87 5.70 5.25 1.87

DPIR(10%DC) 0.092 0.218 0.092 0.217 0.26 0.09

Reserve (MMSTB)2 2.4

Revenue, MM$ 165 198

CAPEX, MM$ 50 50

OPEX, MM$ 43 51

ROYALTY MM$ 8 10

INC. TAX, MM$ 35 47

NPV(10%D) MM$ 7.74 15.43

IRR(%) 8.37 11.30

DIRR(10%DC)(%) 2.43 4.77

DPIR(10%DC.) 0.160 0.310

Model SUTMGT2 Sensitivity Analysis

Reserve (MMSTB)Oil Price ($/STB)

CAPEX(MM$)

2 2.4 80 96 40 50

Revenue, MM$ 165 198 165 198 165 165

CAPEX, MM$ 50 50 50 50 40 50

OPEX, MM$ 43 51 43 43 43 43

ROYALTY MM$ 8 10 8 10 8 8

INC. TAX, MM$ 35 47 35 51 38 33

NPV(10%D) MM$ 7.74 15.43 7.74 18.34 14 8

IRR(%) 8.37 11.30 8.37 12.20 12 8

DIRR(10%DC)(%) 2.43 4.77 2.43 5.56 5.3 2.4

DPIR(10%DC.) 0.160 0.310 0.160 0.310 0.35 0.16

HOW TO DEVELOP Marginal Field

• INNOVATIVE METHODOLOGY and FACILITIES or NEW TECHNOLOGIES

• MARGINAL FIELD LEGISLATION AND INCENTIVES

INNOVATIVE METHODOLOGY and FACILITIES

• ROD (Rapid Oil Development)needs 2-3 million bbl of oil to

make it attractive.• DWA (Development while

Appraisal) NuCoastal in Thailand applies

DWA to develop Songkhla oil

INNOVATIVE METHODOLOGY and FACILITIES• INNOVATIVE FACILITIES SOLUTION

to reduce capital and operation costs include;

- Implementation of Innovative Multiphase Boosting and Production Technologies, Relocateable Topsides

- Seamless Fast Tracking of Engineering, Procurement, Installation, and Commissioning for Marginal Offshore Fields.

INNOVATIVE METHODOLOGY and FACILITIES• INNOVATIVE WELL DRILLING and

COMPLETION DESIGN and ISSUES - Fast Drilling(Under balanced, etc.)- Extend-reach wells; thin oil column- Directional wells, Horizontal wells- Multilateral wells- Swell Packers-when contact with

hydrocarbon. - Shut down water zone and gas cap

device or material

INNOVATIVE METHODOLOGY and FACILITIES

•NOVEL WELLS for

-- Increased Production Rates -- Improved Recovery, and-- Reduced Cost.

INNOVATIVE METHODOLOGY and FACILITIES

•Mobile Production Facility (MPF as in Fig 16) to develop marginal oil fields in the SIRIKIT FIELD.

•Facilities Sharing

Facilities Sharing

SOME MARGINAL FIELD LEGISLATIONS AND INCENTIVES

•Indonesian PSC•Texas Stripper Wells•NIGERIS’S INCENTIVE ROYALTY

•THAILAND III;SLIDING SCALE ROYALTY

1. the increasing contractor profit oil and

2.cost recovery uplift 20%

3. Allowing exploration investment tax credit on fields that would normally not qualify.

Indonesian PSC

THE CONTRACTOR COULD RECOVER THEIR COST 20%HIGHER

MARGINAL FIELDS INCENTIVE;Texas Railroad Commission’s stripper well tax credits.

• “Currently over 60 percent of Texas’revenue comes from stripper wells, which at 10 barrels of oil or less a day are definitely marginal producers. The state has given tax credits and lowered the tax regime as well as reduce the royalty on stripper wells–and those efforts have really paid off”

NIGERIS’S INCENTIVE ROYALTY

• 1. Land and Swamp concessions =20%• 2. <100m.waeter depth = 18.5%• 3. 100-200m. Water depth = 16.65%• 4. 201-500m. Water depth = 12%• 5. 501-800m. Water depth = 8%• 6. 801-1000m. Water depth = 4%.• 7. > 1000m. Water depth = 0%

MARGINAL FIELDS INCENTIVE;

• “Carefully crafted marginal fields legislation can create a win-win situation where both the royalty or tax to the government and the cash flow to the producer can both rise.

• When properly used (incentive program), marginal field legislation provides increased revenue and opportunities to both the government and the producer

THAILAND’?; OPTIONS

• Sliding Scale Royalty—Thailand III• Exploration Cost Tax Credit• Uplift Cost Recovery—Thailand I• Lower Tax Regime (Increasing

Contractor Profit)• May be on ON and OFF basis—

depending upon the IRR cumulative.( Accurate reserve and economic evaluation might be needed)

CONCUSSION• DMF is approaching to the 21st

petroleum concession-bidding round

• Marginal petroleum fields are the fields that earn IRR less than 10% or 15% in risk fields

• The oil and gas productions last from 3 to 20 years with the recovery ranging from 15-84%.

CONCUSSION• Either petroleum price or

reserve increases by 20% will make the marginal fields profitable.

• Lower CAPEX and operation cost down (by 20%)will make the marginal fields developments profitable.

CONCUSSION• Innovative Methodology and Facilities

will make the marginal fields developments profitable.

• Oil is 80 $/barrel and Gas is 6$/MSCF,The oil and gas marginal fields have reserve of 80,000STB, 200 MMMSCF, and 2 million barrel , 300 billion cu.ft.for onshore and Gulf of Thailand respectively.

• MARGINAL FIELD LEGISLATION AND INCENTIVES WILL MAKE THE PROFITABLE DEVELOPMENT.

• When properly used (incentive program) will create WIN-WIN situation and provide increased revenue and opportunities to both the government and the producer

CONCUSSION

• Sliding Scale Royalty• Cost Recovery Uplift

THAILAND III+ THAILAND I

THAILAND

THANKS TO; SUT, DMF, PTTEP, STUDENTS, and OTHERS