Well Productivity Strategy to Maintain and Increase Production · Oil and gas well conditions at PEMEX E&P 15,875 Total of wells 6,201 39 % 9,469 60 % POZOS PRODUCTORES POZOS CERRADOS

Gustavo Hernández García

Operating Director E&P

Well Productivity Strategy to Maintain

and Increase Production

• Este documento es para uso interno por parte del personal autorizado de Pemex Exploración y Producción.

Ninguna parte del mismo puede circularse, citarse o reproducirse para su distribución externa, sin previa

autorización escrita de la Dirección General de Pemex Exploración y Producción

Content

2

▪ Background

▪ Well Productivity Strategy

▪ Opportunities and challenges

▪ Final Comments



autorización escrita de la Dirección General de Pemex Exploración y Producción 3

Oil and gas well conditions at PEMEX E&P

15,875Total of wells

6,20139 % 9,469

60 %

POZOS PRODUCTORES POZOS CERRADOS POZOS INYECTORES

6,20139 %

9,469

60 %

2051%

Producing wells Shut-in wells Injection wells

6,201

9,469

Shut-in wells

Producing wells

SISTEMAS ARTIFICIALES FLUYENTES NTERMITENTES

6,741 (71 %)

2,585(27% )

143(2%)

Artificial lift system Natural

flow

Intermittent flow

CON POSIBILIDADES SIN POSIBILIDADES

2,647(43 %)

3,554,(57 %)

Producing wells

• 9,469 (60% of the total), with

optimization potential.

Shut-in wells

• 6,201 (39% of the total).

• 2,647 with reactivation potential

(43% of the total).

• 3,554 without reactivation

potential (57% of the total).

Opportunity

• 12,116 (76% of the total)--

9,469 producing wells and

2,647 shut-in wells with

reactivation potential).

Source: February 2013 PEMEX E&P

With producer

potential

With no producer

potential





POZOS PRODUCTORES POZOS CERRADOS POZOS INYECTORES

15,875Total wells

6,20139 % 9,469

60 %

2051%

Producing wells Shut-in wells Injection wells

125342%

773%

58519%

107536%

Southern Region

Producing wells Injection wells

Closed wells with potential Closed wells without potential

767865%

861%

189016%

219818%

Northern Region

38454%

324%

8512%

21030%

Northeastern Marine Region

15448%

103%

8727%

7122%

Southwestern Marine Region

Shut-in Wells with potential Shut-in Wells with no potential






53443%

30%

71657%

Southern Region

Flowing Intermittent Artificial systems

185724%

1402%

568174%

Northern Region

28261%

00%

18239%

Northeastern Marine Region0

0%

13286%

2214%

Southwestern Offshore

9,469producing wells

SISTEMAS ARTIFICIALES FLUYENTES NTERMITENTES

6,741

(71 %)

2,585(27% )

143(2%)

Artificial lift system Flowing Intermittent

Artificial lift system






6,201closed wells

CON POSIBILIDADES SIN POSIBILIDADES

2,647

(43 %)3,554,

(57 %)

Without potentialWith potential

58535%1075

65%

Southern Region

Closed wells with potential Closed wells without potential

189046%2198

54%

Northern Region

8529%

21071%

Northeastern Marine Region

8755%

7145%

Southwestern Marine Region

Shut-in wells with potential Shut-in wells with no potential





Productores Cerrados

5,995

(55 %)4,845

(45 %)

Con posibilidades Sin posibilidades

2,969

(61 %)

1,876

(39 %)

Oil well status at PEMEX E&P

10,840Total of

wells

4,845Shut-in wells

Shut-in wells


Producers Shut-in

With no potentialWith potential





Con posibilidades Sin posibilidades

Shut-in wells

Productores Cerrados

1,356(28 %)

3,474

(72 %)

587

(43 %)769

(57 %)

4,830Total of wells

1,356Shut-in wells


Producers Shut-in

With potential With no potential

Gas well status at PEMEX E&P





Content

9

▪ Background



▪ Final Comments




• Support and guide the well productivity work teams.

• Train well productivity personnel.

• Establish guidelines and action plans for improvement.

• Notify achievements and results to the regional Production Vice

Presidents.

• Coordinate the regional productivity work teams.

• Monitor the Productivity Opportunity Portfolio.

PEMEX E&P’s

new productivity

approach

PEMEX E&P

regional

production areas

Productivity work teams

in the Assets

Real time

monitoring

Training rooms

Execution of

opportunities

• Reservoir engineering

• Geophysics

• Geology

• Petrophysicist

• Artificial systems

• Stimulations and hydraulic

fracturing

• Drilling and well

completions.

Regional well productivity centers

FunctionsWell production

experts

Pemex Well Productivity Strategy (cont’d.)




Well

productivity

studies

Technical

talent

Knowledge

Well productivity teams

Leaders and

specialists in well

productivity

Knowledge gap

Create leaders and experts in the well

productivity process through the

introduction of a competencies model,

thereby decreasing knowledge gaps and

strengthening the well productivity teams.

• Create leaders and experts in the well productivity.

• Develop and introduce a training program suited to the needs of PEMEX E&P’s technical

personnel.

• Reduce knowledge gaps in well productivity.

• Increase personnel’s knowledge and skill levels.

• Develop a new technology assimilation model to improve production.

• Increase knowledge in sciences related to the well productivity process: geology, geophysics,

petrophysics, economy, risk and uncertainty, etc.

• Utilize the most up-to-date methodologies and theory-practice knowledge focusing on a

multidisciplinary approach.

Structuring of training models

Objectives: Specific objectives:





ABC Document of the Integral Well Productivity Process

1. Prologue

2. General Objective

3. Scope

4. General Framework

5. Fundamental Concepts of Well Productivity

6. Integral Well Productivity Process

7. Glossary

8. Bibliography

Contents





Benefits:

• It collects all results by work team

and region.

• Monitors all progress and behavior

graphs.

• Uploads all best practices and

lessons learned.

• Links to related sites.

• It allows online consulting regarding

the well productivity process and the

guiding document.

• Online publication and consultation

of technical documents.

• It allows to post organizational

charts for productivity work teams.

Well productivity website





Identify the technologies needed to solve specific

problems (water and gas control, intelligent completions,

multiple and selective fracturing, heavy oil, organic and

inorganic deposits, liquids loading within gas wells,

stimulation of high-pressure gas wells, etc.), that allow

substituting, improving and extending the exploitation of

mature fields, as well as the incorporation of shut-in wells

with producer potential.

Select the best national and international technologies

needed to solve specific problems by defining their

status, impact, application to equivalent cases, area of

application and opportunity, competitors and suppliers,

and actions to be implemented in order to mitigate risk

and uncertainty.

Designing evaluation projects from the technologies

selected with the support of the research centers, service

companies, institutions, etc. Evaluate the effectiveness of

the solutions found for specific problems and apply them

to fields and/or equivalent wells, in order to improve well

productivity, the EUR, and to extend the well productivity

life.

Benchmarking

Technology

portfolio

Technology

tests

Update technological maps





Large-scale

execution

• Project leader

• Reservoir engineer

• Geophysicist

• Geologist

• Petrophysicist

• Artificial production systems

• Fracturing and stimulations

• Drilling and well completion

Closing of gapsGovernability

Specialties Technology

Optimization

Reactivation

Evaluation, action plans,

validation, and

classification of closed

wells.

Knowledge management

• Instrumentation, control and integrated

automation.

• Production surface facilities.

• Operational reliability of wells.

• Costs and economic and risk analysis.

• Information technologies (databases).

• Risk analysis.

• External matters.

• Health, safety and environment.

• Operations.

Supporting specialties





New process

in well

productivity

Measurement

and evaluation

Well

productivity

project

implementation

Well

productivity

design

Well

productivity

portfolio

Selection of

scenarios

Strategic

analysis

+ Barrels

+ Income

+ Efficiency

-Time

- Cost

203 MBOPD

Regional Well Productivity Centers

to offer technical support

Synergistic well

Productivity

Teams

Well productivity guidelines and

standards

5-year execution strategy

Well

reactivationOil 1,111

Productivity (reactivation and

optimization of wells)

Wells

optimizationOil 984





Content

17

▪ Background



▪ Final Comments




Premises:• 5-year economic time limit.

• Reactivation of 983 oil wells:• Northern Region: 609

• Southern Region: 287

• Northeastern Marine Region: 44

• Southwestern Maine Region: 44

(56% of the total of wells with potential)

• The expenses and production declinations

used for the business case were

established according to each Region’s

statistics*, and by building probabilistic

values (the minimum, the most probable, and

the maximum).

Strategy:

• Reactivation:

• In the first two years, initiate the

reactivation of 589 wells with low levels of

geological and operational complexity.

• Beginning the third and fourth years,

reactivate 394 wells with higher

complexity, using State-of-the-Art

technology, best practices, and highly-

trained and knowledgeable technical

personnel.

Opportunities and challenges

Reactivation of oil wells – targets




Estimation premises

from the opportunity

value – reactivation Type I: wells with low complexity and

application of current technologies and

processes.

Type II: Wells with average complexity

and the application of processes,

technologies and best practices in function

of the first stage of execution (well Type I).

Type III: Medium complexity wells and the

application of processes, technologies,

best practices and lessons learned; with

work teams trained to reach the desired

performance level (level 3).

• The declination percentage was considered the

same for each type of defined well.

• 56% of the total number of wells is considered to

have reactivation potential

• For the Marine Regions (Northeastern and

Southwestern) the reactivation of wells has a

productive life of 2 years, or the productive life

cycle of reactivated wells is 2 years.

• For the Northern and Southern Regions the

reactivation of wells has a productive life of 5

years, or the productive life cycle of reactivated

wells is 5 years.

Region Operating

oil wells

Number of

wells to

improve

Well type

(I,II,III)

DQoi (BOPD)

% decline distribution per region Min

More

likelyMax

Northern 4354 653

365 14.7 16.8 19.0

122 19.1 21.9 24.6

122 23.5 26.9 30.3

Southern 1255 377

172 62.5 79.0 95.4

57 81.3 102.7 124.1

57 100.1 126.4 152.7

NE Marine 384 58

26 836.0 987.0 1108.0

9 1045.0 1258.8 1372.5

9 1170.4 1321.8 1573.2

SW Marine 154 23

26 356.0 445.0 534.0

9 445.0 556.3 667.5

9 498.4 623.0 747.6

Total 6147 1111

Total well type I 666

Total well type

II222

Total well type

III222

P10= 5% P90= 18%P50= 11%

P10= 26% P90= 47%P50= 37%

P10= 20% P90= 43%P50= 31%

P10= 12% P90= 18%P50= 15%


Reactivation of oil wells – committed targets




Premises:• 5-year economic time limit.

• Optimization of 1111 oil wells:• Northern Region: 653

• Southern Region 377


• Southwestern Marine Region: 23

16% of the total of wells with potential for

improvement.)

• The expenses and production declinations

used for the business case were established

according to each Region’s statistics, and by

building probabilistic values (the minimum, the

most probable, and the maximum).

Strategy:

• Optimization:

• In the first two years, initiate the optimization of

666 wells with low levels of complexity.

• Beginning the third and fourth years,

incorporate 445 wells with higher complexity,

using State-of-the-Art technology, best

practices, and highly-trained and

knowledgeable technical personnel.


Optimization of oil wells – targets




Opportunity value

estimation – optimization Region Opening

Oil wells

Number of

wells to

improve

Well type

(I,II,III)

DQoi (BOPD)% decline distribution per region

* Min

More

likelyMax

Northern 4354 653

365 14.7 16.8 19.0

122 19.1 21.9 24.6

122 23.5 26.9 30.3

Southern 1255 377

172 62.5 79.0 95.4

57 81.3 102.7 124.1

57 100.1 126.4 152.7

NE Marine 384 58

26 836.0 987.0 1108.0

9 1045.0 1258.8 1372.5

9 1170.4 1321.8 1573.2

SW Marine 154 23

26 356.0 445.0 534.0

9 445.0 556.3 667.5

9 498.4 623.0 747.6

Total 6147 1111

Total well type I 666

Total well type II 222

Total well type III 222

P10= 5% P90= 18%P50= 11%

P10= 26% P90= 47%P50= 37%

P10= 20% P90= 43%P50= 31%

P10= 12% P90= 18%P50= 15%

Type I: wells with low complexity and

application of current technologies and

processes.

Type II: Wells with average complexity

and the application of processes,

technologies and best practices in function

of the first stage of execution (well Type I).

Type III: Medium complexity wells and the

application of processes, technologies,

best practices and lessons learned; with

work teams trained to reach the desired

performance level (level 3).

• The decline percentage was considered the

same for each type of defined well.

• 16% (6,147) of the total number of wells is

considered to have improvement potential

• For the Marine Regions (Northeastern and

Southwestern) the optimization of wells has a

productive life of 2 years, or the productive life

cycle of optimized wells is 2 years.

• For the Northern and Southern Regions the

optimization of wells has a productive life of 5

years, or the productive life cycle of optimized

wells is 5 years.


Optimization of oil wells – targets




Premises:•5-year economic time limit.

•27% of the total of wells with

potential: 2,095 oil wells

•Reactivation and optimization of oil

wells:• Northern Region: 1,262

• Southern Region: 664


• Southwestern Marine Region: 67

•The expenses and production

declinations used for the business

case were established according to

each Region’s statistics, and by

building probabilistic values (the

minimum, the most probable, and the

maximum).


Reactivation & optimization of oil wells – targets




1. Deal with reservoir maturity and high

geological complexity.

2. Data acquisition in real-time.

3. Acquisition of additional 3D seismic data.

4. Apply State-of-the-Art technology on well

productivity.

Economic challenges

1. Reduce costs.

2. Generate a data base of the number of

abandoned pipelines.

3. Allocate the required budget.

4. Increase the participation from Mexican

services companies.

Organizational challenges

1. Define work teams with a new approachon our comprehensive well productivityprocess.

2. Personnel with specialized training onspecific topics related to well productivity.

3. Encourage careers in well productivity.

4. Standardize and strengthen thefunctions, structure, governability, anddecision-making in the comprehensivewell productivity process.

Tactical challenges

1. Decrease the frequency of failure inartificial lift systems.

2. Control water & gas production in oilreservoirs.

3. Optimization of production surface facilities.

4. Decrease the number of facilities in urban zones.

5. Coordinate the incorporation of physicalassets.

6. Improve the measurement andoptimization of each well.

Investment Units

• create well productivity investment

units to increase production of low-

risk projects, to develop necessary

technology, and to ensure expertise.

Processes

• apply work processes, standardize,

and ensure resources for the Pemex

Well Productivity Strategy in order to

minimize risk.

Organization

• create work teams focused on well

productivity, in alignment with the

Pemex Well Productivity Strategy.

Skills

• acquire skills and knowledge through

external sources and internal

development.

It is relevant to:Technical challenges

Opportunities and challenges (cont’d.)




Content

24

▪ Background



▪ Final Comments




Final comments

• Over the recent years, the implementation of the Pemex Well Productivity Strategy and the

associated workovers executed in 179 wells, have allowed to increase oil & gas production in

67,635 BPD and 111.83 MMscfd, respectively.

• In a National context, the Strategy also includes the optimization of 1,111 oil wells currently in

operation in order to produce an additional 76 MBOPD, as well as the reactivation of 983 wells to

produce an additional 131 MBOPD.

• In order to ensure results, the implementation of the Pemex Well Productivity Strategy considers

the associated guidelines and standards, and the creation of multidisciplinary teams per Asset

and Regional Centers, which will be focused on improving the skills of the technical personnel

applying best practices and State-of-the-Art technology, among others tasks.

• Mature fields are important in Pemex Strategy since they can provide short term production and

they are close to existing infrastructure

• Therefore, once optimization of processes and cost structure has been optimized, reactivation of

wells is an option under the current price scenario




PEMEX does not stop. It is renewing and reinventing by itself,

in order to continue being one of the most efficient companies in the industry.

A last but not least comment…




RR




Objective

Standardize the Well Productivity Strategy of PEMEX E&P (the

system of reservoir-well-surface facilities), in order to increase

well productivity and to manage the reservoir production

decline.




Background

Unconventional

Southeastern

Tampico-Misantla

Burgos

Veracruz

Sabinas

Deepwater

Yucatán Shelf

Gulf of

Mexico

Hydrocarbon Basins in Mexico

Chicontepec CantarellTsimin

Variety of

reservoirs




• PEMEX has been reliable crude oil

producer mainly heavy and light

type, and its production has

stabilized over the recent years.

Background (cont'd.)

Chiapas-Tabasco MesozoicKu-Maloob-Zaap

Tampico-Misantla Basin

Thousands of barrels per day

0

500

1,000

1,500

2,000

2,500

3,000

3,500

60 62 64 66 69 71 73 75 78 80 82 84 87 89 91 93 96 98 00 02 05 07 09 11 14

Chiapas-Tabasco Mesozoic

Cantarell

Ku-Maloob-Zaap

Others marine fields

Tampico-Misantla Basin

Year

Production

plateau

Composition of crude

oil production




BasinCumm. Prod.

Reserves*MMBOE

1P 2P 3P

Southeastern 47.8 10.8 14.2 18.2

TampicoMisantla

6.3 0.7 4.0 7.5

Burgos 2.5 0.2 0.4 0.5

Veracruz 0.8 0.2 0.2 0.2

Sabinas 0.1 0.0 0.0 0.1

Deepwater

0.0 0.1 0.4 1.8

Total 57.5 12.0 19.2 28.3

Development and

production projects

* Reserves at January 1st, 2015

Includes areas related to Assignment titles only

The optimal exploitation of the

reserves volumes requires the

implantation of State-of-the-Art

technologies, best practices, and

improved technical skills

throughout the E&P value chain.

Background (cont'd.)




2005-2007 2008-2009 2009-2010

• For the first time, the

Southern Region

implemented an Integral

Optimization Well

Productivity Project in 372

wells within 5 Assets with

the following results:

136 MBOPD oil

257 MMscfd gas

(370 BPOD – well)

• The strategy was focused on

well optimization, performing

workovers in 328 wells with

the following results:

162 MBOPD oil

274 MMscfd gas

(494 BOPD – well)

• The strategy was focused on

reactivation of shut-in wells,

so that a production

improvement in 400 wells was

achieved:

142 MBOPD oil

120 MMscfd gas

(355 BPOD – well)

2011-2012

• The strategy was aligned with the

PEMEX E&P Strategy Execution

Program.

• Guidelines were created.

• Two pilot projects were

implemented in the Northern

Region. Workovers were

performed in 103 wells in

Veracruz. (36 oil wells and 67 gas

wells):

1751 BOPD oil

50 MMscfd gas

(49 BOPD – well)

SOURCE: Work team analysis PEMEX E&P

Relevant facts




SOURCE: Work team analysis PEMEX E&P

• 81% of the issues were

found in data,

information, people,

processes and

technology.

Analysiswithin the 12

production

Assets:

• 521 issues were

classified into seven

taxonomic categories.

Production Region- 2011

38%

22%

21%

8% 7%

2% 2%

Data and information Peope and processes IOR tecnologies

Drilling and Workovers Surface fluid management Regulatory framework

Social

521 Issues

Categories

81 %

Results of the Well Productivity

Process Analysis

Data and information People and process IOR technologies





Process Analysis (cont’d.)

Main

conceptIssues Solutions

Technical

talent

Low availability of specialists working

on the well productivity process.

Low level of competence along the

well productivity process.

Development of key skills within the well

productivity process.

Incorporate new functions for personnel

working on well productivity.

Knowledge

management

There was no a standardized well

productivity process in the

organization; each Asset had its own

guidelines.

Implementation of best practices.

Definition of a governability model and levels

of authority within the context of the well

productivity process.

Networks of specialists.




35


Process Analysis (cont’d.)

Main

conceptIssues Solutions

Technology

The well productivity process has not

been aligned to the technology

management process.

There were diverse technologies

being used for similar purposes.

The well databases were developed

under different designs.

Implementation of new technologies in well

revitalization and stimulation jobs.

Incorporation of State-of-the-Art technology

into the well productivity process.

Increase of well automation.

Development of a standardized well

productivity database.

Resource

management

in the Assets

There were many shut-in wells with

production potential.

There were some obsolete surface

production facilities.

Most of the PEMEX E&P’s

investments were focused on

maintaining heavy oil production and

to developing light oil projects in the

Southern and Southwestern Marine

Regions.

• Well revitalization to increase production.

• Replacement of surface production facilities.

• Increase production from heavy and extra-

heavy oil reservoirs, develop unconventional

reservoirs (HPHT, gas condensate

reservoirs, tight gas, oil and gas shale), and

developing of deepwater reservoirs.

Documents

Well Productivity Strategy to Maintain and Increase Production · Oil and gas well conditions at PEMEX E&P 15,875 Total of wells 6,201 39 % 9,469 60 % POZOS PRODUCTORES POZOS CERRADOS