GLOBALWELL INTERVENTIONMARKET

Market Shares, Forecasts& Trends

2014 - 2019

mordorintelligence.com

1 INTRODUCTION

Technology is setting the scale for another boom in well intervention industry. Until the last few years, the sun

had slowly been setting on global oil and gas production except the North America, but the U.S is covering up for

the loss in production. Overall the oil production has increased from 77.64 million barrels per day in 2003 to 86.81

million barrels per day in 2013. But things are changing for the better, as increased implementation of long

horizontal wells and multi-stage fracturing in tight oil plays across the world-not t mention new constitutional

royalty incentives to encourage drilling,, has crude oil and natural gas drilling activity on the upswing. Although

natural gas activity is slowed down a bit due to prices, some regions particularly North America is poised to

benefit once a price correction occurs.

Horizontal drilling activity is increasing every year, opposite to vertical drilling which is decreasing, and by 2022

no. of vertical drilling wells will be reduced to 50% of the current number, which would be offset by increased no.

of horizontal wells. As a result of the increased horizontal activity, the world is experiencing an increase in the oil

and gas production with the introduction of multi-stage hydraulic fracturing technology.

Currently there are more than 5000 subsea wells operating in the world, and many are planned to come online in

the coming years. Most of the wells that are operating now are more than a decade old. This is the main reason

for the well intervention market to rise rapidly in the recent years. Technology advancement in well intervention

has become more necessary to keep up with the rising oil and gas demand.

Intervention in to a wellbore may be done for recompletion, work-over, and well control purposes. Some of the

new generation deep water facilities do not incorporate the ability to install a drilling rig on the deck, so

intervention must be completed with a mobile drilling rig (submersible or drillship) or a specialized intervention

vessel.

Currently, subsea intervention market is driven by increasing activity and rising subsea well counts. Maintenance

costs expected to increase as a result of increasing offshore activity and maturing fields.

Intervention to regain control of a well is more complex for subsea wells; there are also significant well control

challenges for deepwater in general.

2 RESEARCH METHODOLOGY

This research study involved the use of extensive secondary sources, directories, and databases to identify and

collect information useful for this extensive technical, market-oriented, and commercial study of the Global

Clinical Data Analytics market. The primary sources are mainly several industry experts from core and related

industries and preferred vendors, solution providers, technology developers, alliances, and organizations related

to all the segments of this industry’s value chain. All primary sources were interviewed to obtain and verify critical

qualitative and quantitative information as well as assess the future prospects.

In the primary research process done for this research study, the primary sources – industry experts such as

CEOs, Vice Presidents, Marketing Directors, Technology & Innovation Directors and related key executives from

various key companies, organizations in the global enterprise mobility and security market related industries –

have been interviewed to obtain and verify both qualitative and quantitative aspects of this research study.

In the secondary research process for this study, several hundreds of secondary sources such as certified

publications, articles from recognized authors, white papers, annual reports of companies, directories, and

databases were used to identify and collect information useful for this extensive technical and commercial study

of the global market. Secondary research was mainly used to obtain key information about the industry’s value

chain, market’s monetary chain, market classification & segmentation according to industry trends to the bottom-

most level, geographical markets, and key developments from both market and technology oriented perspectives.

Total market crackdown was completed and then top-down and bottom-up approaches were used extensively

along with several data triangulation methods to perform market estimation and market forecasting, for all the

segment and sub-segment markets listed in this report. Extensive qualitative and further quantitative analysis

was also done from all the numbers arrived at in the complete market engineering process, to list key information

throughout the report.

4 MARKET OVERVIEW

4.1 TYPES

4.1.3 Slickline

Often described as the 'workhorse' of well intervention, certainly the cheapest, is robust and relatively simple to

conduct and operate. The key factor in slickline is that it can be performed under 'live' well conditions.

Equipment required to conduct slickline operations normally consist of:

Alloy or Stainless Steel wireline (piano wire) normally sized 108" diameter or 0.125" diameter

Winch unit capable of holding 25000ft of wire

Diesel or Electric power pack

Well Control Panel

Pressure control Equipment comprising - Lubricator / Stuffing Box / BOPS / Riser

Tool house holding downhole tools & running equipment

Applications:

Slickline can be used to run, set and recover various tools, plugs, packers, valves to the well bore in order to

perform:

Repair work - change-out faulty safety valves / gas lift valves

Surveillance - conduct pressure / temperature surveys, downhole camera diagnostics

Isolation: Plug off water zones, hydrocarbon or gas zones, prepare well for workover

Manipulation work: Open sliding sleeve assemblies, clear blockages, cut and remove wax build up

4.1.4 Braided line

Adapted as a form of "heavy duty" wireline service , braided cable can be used to deploy heavy toolstrings and

particularly in well fishing operations where large impact forces can be applied to stuck toolstrings, plugs or flow

control devices.

Equipment:

The equipment used is the same as electric line operations.

Applications:

The main application for braided line operations include:

Fishing - Where large impact forces are required to free stuck equipment

Heavy Duty Operations - Deployment of large & heavy toolstrings or downhole equipment

4.2 CRUDE OIL PRICES:

4.2.1 Short Term Crude Oil Prices

There are number of factors which affect crude oil prices. Refining capacity will play a major role in deciding

crude oil prices. If a major refinery develops problems and has to shut down, then the amount of gasoline that

can be produced falls. The price of gasoline rises because of shortages, but the price of crude oil will fall because

of gluts.

In 2014, Israel’s decision to send its military forces to Gaza lent support to oil prices, which bolstered flare ups in

the Middle-East, the world’s biggest oil producing region. Investors were also keeping an eye in developments in

the Middle East after Israel launched an attack in Gaza, fuelling worries about the oil-rich region.

Most recently, in July 2014, oil prices jumped upon hearing the news that a Malaysia Airlines passenger plane

went down in Ukraine. Russia is the world’s second biggest crude producer, and there are concerns its standoff

with the West over Ukraine could affect supplies. Ukraine is also a major conduit for Russian gas exports to

Europe. This could be simply because the investors worried that the crash could become another potential threat

to global crude supplies.

Year Crude Oil Price ($ per barrel)

2000 28.5

2001 XX

2002 25.02

2003 XX

2004 38.27

2005 XX

2006 XX

2007 72.39

2008 97.26

2009 XX

2010 79.5

2011 XX

2012 111.67

2013 XX

4.2.2 Long Term Oil Prices Forecast

Oil prices are represented by spot prices for North Sea Brent crude. Prices decline in the Reference case from

$112/barrel in 2012 to about $109/barrel in 2025 and then rise slowly to $130/barrel in 2035 and $141/barrel in

2040. The North Sea Brent crude oil price is tracked as the main benchmark for world oil prices, because it

reflects the marginal price paid by refineries for imported light, sweet crude oil (used to produce petroleum

products for consumers) better than does the West Texas Intermediate (WTI) crude oil price.

The WTI price continued to trade at a discount relative to other world oil prices in 2013. The discount narrowed

through the end of the summer, as a result of new U.S. oil transportation infrastructure out of the market center

for WTI prices in Cushing, Oklahoma, and refineries running at record levels. In 2012, the WTI and North Sea Brent

prices differed by $18/barrel. In the EIA’s annual energy outlook 2014 Reference case, the gap closes to $2/barrel

in 2020 and remains at that level throughout the projection period, following resolution of most of the

transportation system constraints in the United States. In each of the other outlooks in the comparison, oil spot

prices are based on either North Sea Brent or WTI prices, with the exception of IEA spot prices, which are based

on the international average of crude oil import prices within the member countries of the Organization for

Economic Cooperation and Development (OECD).

Long Term Oil Prices Trend

WTI Brent WTI Brent WTI Brent WTI Brent

2012 2025 2035 2040

$

EIA-AEO 2014 (Reference Case)

5. GLOBAL CRUDE OIL MARKET SCENARIO

The global oil consumption in 2013 has been increased by 1.4% or 1.4 million barrels per day to 91.33 million

barrels per day, compared to 89.93 million barrels in per day in 2012. Majority of the consumption is from the

countries outside the OPEC and they accounted for 51% of total world consumption. Also these countries are

majorly responsible for the growth in consumption. The US accounted for largest rise in consumption overtaking

Chinese consumption. The US’ oil consumption rose to 18.8 million barrels per day in 2013 from 18.49 million

barrel per day in 2012.

Global Oil Production Share by Region - 2013

Global oil production, after decreasing in 2009, rose to a new all time high of 86.8 million barrels per day,

a rise of 0.6% compared to 86.25 million barrels per day in 2012. Production did not grow in line with the

demand. The US recorded the highest growth in production in 2013, by achieving 13.5% rise in

production levels. Production volume from the Europe, Middle East and APAC decreased significantly in

2013, but the overall production levels rose as a result of a high rise in US oil production. The main

reason behind the US’ rapid growth in oil production could be shale development. Libya experienced a

huge dip in the oil production compared to 2012, mainly because of military actions happening in the

South & Central America

country. Libya produced only 0.9 million barrels per day in 2013 down from 1.5 million barrels per day in

2012.

7. DRIVERS & CONSTRAINTS

7.1 DRIVERS

7.1.1 Increasing Deep Water Activity

As traditional onshore reserves are depleted, offshore resources are playing a greater role in supplying the

growing demand. The growing interest in shelf resources is illustrated by the fact that over the last 20 years the

number of large shelf discoveries has been greater than the number of big onshore discoveries.

7.2 CONSTRAINTS

7.2.2 Environmental Issues

There are also concerns regarding environmental safety of well intervention. When hydraulic fracturing is

underway at a shallow depth, it is possible that companies may inject chemical reagents into the ground waters.

There may also be problems with the disposal of used chemical solutions. Sometimes well intervention is

associated with the emission of methane and other dangerous compounds in to the atmosphere. Some experts

express concern that the use of hydraulic fracturing may lead to rock movement and deformation and this in turn,

can provoke landslides and restrict construction. Shale oil production requires the use of large quantities of

water. Hydraulic fracturing requires 5-19 million liters of water. This may become impediment in certain

production regions.

8. CASES OF LOSS OF WELL INTEGRITY

Over the past century, the oil and gas industry has made great strides in developing drilling technologies and

techniques that make well construction a cost-effective and safe enterprise. However as new hydrocarbon

sources are found in increasingly remote and geologically complex reservoirs, the industry continues to develop

technologies to meet well bore integrity challenges that presents safety hazards and economic risks to the long

term viability of a well. Below are some common cases of loss of well integrity

8.2 Production casing hanger failure

Casing hanger is a portion of wellhead assembly which provides support for the casing string when it is lowered

into the well bore. The possible occurrences of casing failure can be pressure testing fail, slipping through the

well head, excessive plastic deformation.

Axial overload could be one of the root causes in casing hanger failure.

Tubing hanger may also fail during misalignment during installation, which leads to uneven loading of the lock

down bolts. There is also a possible risk of explosion if proper safety measurements have not been followed. This,

ultimately results in well explosion or permanent closure.

8.3 Loss of Well Bore

Lost circulation – the loss of whole drilling mud to the formation – raises significant costs and risks to drillers

around the world and threatens to pose greater challenges in the future. The industry is meeting this threat with

diverse well bore strengthening materials that work by different mechanisms but share a common goal: to stop

fracture growth and keep the drilling mud in the well bore.

9. GLOBAL WELL INTERVENTION MARKET OUTLOOK

Well intervention is carried out to extend the life of the producing wells by improving performance or providing

access to stranded additional hydrocarbon reserves. A great deal of engineering expertise is being applied these

days to well intervention. Keeping wells producing is an admirable and necessary goal. Often, despite the best

efforts and maximum use of technology, an intervention must be performed to restore a well to full production.

Pros and Cons of Riser-Less Well Intervention

Pros Cons

Lightest most cost effective and flexible

intervention setup for electric-line Limited number of SSL systems worldwide

Can be deployed from Vessel of Opportunity Cannot pump large volumes of fluid

Fast to mobilize, deploy & move between wells Cannot run Coil Tubing

Can achieve 90% of intervention requirements on

e-line with Welltec mechanic suite of tools Oil Companies not all locally aware of technology

Vessel can be used for additional activities (IMR,

Construction, Installation, SAT etc)

9.1 North America Well Intervention Demand

9.1.3 GULF OF MEXICO

The Gulf of Mexico has been left for dead more than once over the past half-century. It’s now roaring back to life

with at least 10 recent mega-discoveries that have renewed oil explorers’ enthusiasm for the region. Billions of

dollars are being poured into new wells in the ultra-deep waters off Texas and Louisiana, fueling a resurrection

that could set a production record this decade and complete a recovery from the worst offshore oil spill in U.S.

history.

The deep water of the Gulf of Mexico has emerged as a world class oil and gas frontier in the last few years.

Leasing, exploration and production activity is accelerated rapidly since the arrival of deep water of Gulf of

Mexico as America’s new frontier in 1997.

Gulf of Mexico federal offshore oil production accounts for 23 percent of total U.S. crude oil production and

federal offshore natural gas production in the Gulf accounts for 7 percent of total U.S. dry production. Over 40

percent of total U.S. petroleum refining capacity is located along the Gulf coast, as well as 30 percent of total U.S.

natural gas processing plant capacity.

Gulf of Mexico Well Intervention Market

2013 2014 2015 2016 2017 2018

9.6 ASIA PACIFIC

With an unparalleled range of geographies, economic conditions and political systems, the countries of the Asia-

Pacific region offer some of the most diverse markets to the world. The economic growth in the Asia/Pacific

region, particularly India and China, has made a dependable energy supply sufficient to meet the increasing

demand critical to maintaining the expansion. For international contractors serving the energy industry, Asia-

Pacific is a region that presents enormous opportunities, but the risks associated with these opportunities are

substantial. Success in the area often depends on reducing the risks to manageable levels by maintaining a local

presence and by drawing upon the technical and financial resources.

The region encompasses a few countries with well-developed industrialized economies – Japan, Australia and

New Zealand – and many countries with emerging economies. While there are considerable oil and natural gas

resources in the region, particularly in India, Indonesia, Malaysia, China and offshore Western Australia, long-term

energy demand growth is expected to surpass its own production capacity. The countries in the region are

expected to be dominant consumers of world energy supplies eventually.

Natural gas consumption is expected to increase throughout the region in the coming years. In the industrialized

countries such as Japan, Australia and New Zealand, natural gas consumption is expected to reach 6.0 tcf by

2025, with an annual average increase of 1.8 percent. While in developing Asia natural gas consumption is

expected to grow at a rate of 3.5 percent per year, with China and India will be setting the pace as the region’s

fastest growing energy consumers. Demand for petro chemicals is also growing rapidly in the developing

countries of Asia, since the petro chemical market tends to emulate GDP growth.

Responding to the growing demand for energy in the region, international and state-owned companies have

invested in the development of technically complex, world-scale facilities in the region. These actions are helping

the well intervention market gaining a strong foot hold in the Asia-Pacific region.

In the Asia-Pacific region, the largest change in proved reserves occurred in China, based on new information

from the country's land and resource ministry. Boosted by technological advancements, proved oil reserves in

China exceeded 24 billion bbl, up 659 million bbl from last year. Gas reserves climbed 10% to 155 tcf.

Asia Pacific Crude Oil Production Trend to 2020

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2020

Crude Oil Production (Million Barrels per day)

10. COMPANY PROFILES

10.2 ROYAL DUTCH SHELL PLC

Company Overview:

Royal Dutch Shell Plc, commonly known as Shell, is an Anglo-Dutch multi-national oil and gas company

headquartered in the Netherlands and incorporated in the United Kingdom. The company operates in three

segments upstream, corporate and downstream. The company is incorporated in 2002, as a merger of Royal

Dutch Petroleum and UK-based Shell Transport & Trading. It is the second largest company in the world in terms

of revenue and is one of the majors of the oil and gas industry.

Business Description:

The company operates in three business segments, upstream, downstream and corporate. Upstream

International manages the upstream businesses outside the Americas. It searches for and recovers crude oil and

natural gas, liquefies and transports gas, and operates the upstream and midstream infrastructure necessary to

deliver oil and gas to market. Upstream International also manages Shell’s entire liquefied petroleum gas (LNG)

business, gas to liquids (GTL) and the wind business in Europe. Its activities are organized primarily within

geographical units, although there are some activities that are managed across the businesses or provided

through support units.

Upstream Americas manages the upstream businesses in North and South America. It searches for and recovers

crude oil and natural gas, transports gas and operates the upstream and midstream infrastructure necessary to

deliver oil and gas to market. Upstream Americas also extracts bitumen from oil sands that is converted into

synthetic crude oil. Additionally, it manages the United States-based wind business. It comprises operations

organized into business-wide managed activities and supporting activities.

Projects and Technology manages the delivery of Shell’s major projects and drives the research and innovation to

create technology solutions. It provides technical services and technology capability covering both Upstream and

Downstream activities. It is also responsible for providing functional leadership across Shell in the areas of health,

safety and environment, and contracting and procurement.

Key Financials:

In 2013, the company gained total revenues of $451,235 million compared to $467,153 million in 2012. Whereas

the total earnings of the company has been reduced to $16,879 million in 2013 from $27,423 million in 2012.

Royal Dutch Shell Plc, Revenue by Geography ($ million)

Asia, Oceania, Africa

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