Release Date: April 25, 2001

TULSA, OK - America's best chance for slowing the decline of its domestic oil fields will likely be a combination of "best practices" - improved technologies, better data, streamlined regulations, etc. - applied by the thousands of small producers that now make up the core of the nation's oil industry.

The U.S. Department of Energy today took a key first step in a concentrated, 5-year effort to identify and disseminate these "best practices." The department's National Petroleum Technology Office in Tulsa, OK, selected the first six projects in its PUMP program - a new oil technology transfer initiative that stands for Preferred Upstream Management Practices.

Run as a national competition, PUMP will share the costs of industry-proposed projects that identify technologies that can be deployed rapidly and inexpensively to endangered U.S. oil fields. As the improved techniques are put to use, results will be widely reported to other domestic producers.

The goal is to show how an integrated set of solutions can improve oil field economics, prolong the productive life of many of the nation's marginal reservoirs, and slow the rate of well abandonments in the United States. The selected projects are:

• Gas Technology Institute (GTI), Chicago, IL, will develop computer-assisted practices for optimizing oil field operations based on neural networks, genetic algorithms, and "fuzzy" logic. Total project cost: $1.2 million; proposed DOE share: $577,110.

• The Texas Engineering Experiment Station, at Texas A&M, College Station, TX, will carry out two projects:

1. to apply preferred practices for improving the effectiveness of injecting water to increase crude oil production from the Texas Spraberry Trend, a giant half-million acre oil-bearing formation in Midland, Martin and surrounding counties in West Texas. Total project cost: $2.0 million; proposed DOE share: $362,073.

2. to develop and demonstrate a new practice for increasing oil production by deliberately producing sand from a reservoir, creating an underground cavity around the wellbore that allows oil to flow more easily from the surrounding formation. The technique will be demonstrated in the Wilmington Field in Long Beach, CA. Total project cost: $260,000; proposed DOE share: $130,000.

• The University of Kansas Center for Research, Inc., Lawrence, KS, will demonstrate several techniques for modeling an oil reservoir in a Central Kansas oil field. Using the information, the university and its partners will then drill horizontal wells (a technique called "horizontal infill drilling") to recover oil that traditional vertical wells may have missed. Total project cost: $813,378; proposed DOE share: $406,086.

• The Petroleum Technology Transfer Council, Houston, TX, will organize a team of mentors to work with regional producers in Oklahoma and California to identify and transfer preferred practices that can increase oil production, slow or reverse production declines, and extend the life of marginal wells through workshops, publications and an interactive Internet web site. Total project cost: $1.0 million; proposed DOE share: $500,000.

• West Virginia University Research Corporation, Morgantown, WV, will organize a regional council to identify and communicate to operators preferred practices currently in use or transferable to the region, through workshops, contacts with engineers and geologists, publications and an interactive Internet web site. Total project cost: $724,196; proposed DOE share: $362,073.

[Funding amounts for these projects are preliminary and subject to negotiation.]

The department plans further PUMP competitions, with the next call for proposals due to be issued in the next few weeks.

PROJECT DESCRIPTIONS

Area of Interest 1 -- PUMP Identification and Demonstration

Gas Technology Institute (GTI), Chicago, IL, Development of a Virtual Intelligence Technique for the Upstream Oil Industry -- GTI researchers, teaming with specialists from West Virginia University, Intelligent Solutions Inc., and TechnoMatrix Inc., will develop computer-assisted methods for identifying and optimizing preferred management practices in upstream oil production operations, based on "soft" computing technology -- neural networks, genetic algorithms, and fuzzy logic. GTI will develop a Virtual Intelligence Technique that will enable operators to optimize current practices.

The goal of the project is to increase oil production by an average of 15% over a period of five years at a cost that will be equal to or lower than that of common practices. The reduction in production cost will be achieved by producing oil that is not commercially producible under common practices.

The Virtual Intelligence Technique will be developed in Oklahoma, working in cooperation with Oklahoma producers, and will be demonstrated in two field projects. Results from the tests will be compared against common practice baselines prepared in cooperation with the participating industry members. Oklahoma is currently producing 181,000 barrels of oil per day. The projected increase in Oklahoma alone is more than 27,000 barrels per day.

Deliverables from the project will be two user-friendly software packages - a characterization tool that identifies the most economically influential parameters in the upstream operations, and an optimization tool that seeks optimization by changing a number of influential parameters and investigating the coupled effects of these variations.

The primary intended users of the "intelligence engine" are independent petroleum producers, and the software packages are designed so that the inner workings will be transparent to the user and will not require special training to apply them to the operations of the oil field. GTI will make project results publicly available on the Internet and in written and electronic reports, and will also provide extensive technology transfer through publications, workshops, and presentations at technical meetings.

The Department of Energy will provide estimated federal funding of $577,000, and GTI will contribute $620,000 in cost sharing for the 24-month effort. The project technical contact is Brian Gahan at 773-399-5481.

PROJECT DESCRIPTIONS

Area of Interest 1 -- PUMP Identification and Demonstration

The Texas Engineering Experiment Station, at Texas A&M, College Station, TX, Preferred Waterflood Management Practices for the Spraberry Trend Area - The Texas A&M researchers will work with a team from Pioneer Natural Resources to significantly and quickly increase field-wide production in the Spraberry Trend by application of preferred practices for managing and optimizing water injection. The economic benefit of waterflooding in this naturally fractured unit has been the subject of speculation for nearly five decades, but the researchers seek to demonstrate that the benefits do exist. The project goal is to dispel negative attitudes and lack of confidence in water injection and document the methodology and results of the project for public dissemination to motivate waterflood expansion in the Spraberry Trend. A secondary objective is the purification and injection of produced waters to minimize downhole casing failure from the corrosive effect of the waters from the San Andres formation.

The project will begin with data gathering from the Shackleford Unit in order to perform simulation and forecasting of waterflood performance. Texas A&M will store and analyze old and newly acquired data and enter the collection into a database using software donated by Landmark Graphics. Tracer tests will be run on four injection patterns, two with new wells and two with conversion wells, and the water movement simulated to update and refine pattern alignment and help determine the well density required for maximum waterflood sweep efficiency.

After initiation of water injection, oil, water and gas production will be carefully monitored in wells along the perimeter of the area expected to respond in the Shackleford Unit. Areas of response will be defined and individual pattern injection rates adjusted based on the response of the perimeter wells. Preferred management practices will be developed based on all prior work and response measured during the project demonstration. All tracer and production data will used to modify the simulation for a more accurate representation of the fluid movement, and simulation techniques needed to manage water injection in the Spraberry Trend area will be assessed.

The results from the project will be transferred to industry at a workshop in Midland, TX, which is targeted for 150 operators of Spraberry wells. A web site containing the details of the preferred management practices will be available to the workshop attendees.

The Department of Energy will provide federal funding of $500,000 to the 24-month project, and Texas A&M will contribute $1.5 million in cost sharing. The project technical contact is David Schechter at 979-845-2275.

PROJECT DESCRIPTIONS

Area of Interest 1 -- PUMP Identification and Demonstration

The Texas Engineering Experiment Station, at Texas A&M, College Station, TX, Cavity-Like Completions in Weak Sands - Texas A&M researchers will work with the Global Petroleum Research Institute to demonstrate a new oil production technique for wells completed in weak sands - deliberate production of sand from a reservoir, forming a cavity-like completion zone. The technique will be demonstrated in the Long Beach Unit of the Wilmington Field in Long Beach, CA. The technology is incorporated into a unified model of cavity-like completion that can be used to design other advanced completions in the Wilmington Field, where the technology may recover an additional 4.7 million barrels of oil. Being applicable to both onshore and offshore areas, it is also applicable to additional reservoirs in California and in other regions of the U.S.

This project offers new reservoir operating practices for the exploitation of unconsolidated or poorly consolidated reservoirs, and has the potential to be a "new-generation" stimulation methodology. It also has relevance to other technically driven business issues, including mitigating/controlling/exploiting sand production, increasing injectivity for produced water reinjection, and underbalanced drilling/perforating applications.

The Wilmington Field, Long Beach Unit operator, THUMS Long Beach Company, and the program sponsors (BP, Phillips, Schlumberger, Texaco and TotalFina Elf) will contribute $130,000 (70% cash, 30% in kind services) to the 12-month project, and the Department of Energy will provide $130,000 in federal funding. The project technical contact is D. Burnett at 970-845-2274.

PROJECT DESCRIPTIONS

Area of Interest 1 -- PUMP Identification and Demonstration

The University of Kansas Center for Research, Inc., Lawrence, KS, Field Demonstrations of Horizontal Infill Drilling Using Cost-Effective Integrated Reservoir Modeling -- Mississippian Carbonates, Central Kansas -- The University of Kansas researchers, working with the University's Tertiary Oil Recovery Project, the Kansas Geological Survey, Mull Drilling Company, Inc., and Maurer Engineering, Inc., will combine integrated reservoir modeling with horizontal infill drilling to increase production efficiency in Central Kansas Mississippian carbonate reservoirs. These reservoirs currently provide nearly 43% of Kansas annual production, but they are generally operated by small independents with limited resources for research and development, and the low average recovery factors of 13 to 15% are resulting in high abandonment rates, threatening a potential five-billion barrel loss of reserves.

Fractured and compartmentalized reservoirs with limited drainage radius for vertical wells and high water cuts from an aquifer in contact with the wellbores through fractures sharply decrease the efficiency of waterflooding. However, studies have shown that the reservoirs are suitable for horizontal drilling. This project will demonstrate a number of preferred management practices with emphasis on the use of horizontal wells. Other practices to be investigated include inexpensive screening of recovery assets, integrated characterization of sites, fracture modeling from core and log data, PC-based modeling and simulation, and post-drilling monitoring to optimize well production.

The University anticipates that demonstrating these preferred management practices to select, characterize, model, design, and drill a successful horizontal infill well in the Mississippian reservoir will develop a learning curve and build confidence among independent operators of the mid-continent to use cost-effective horizontal infill applications and modeling techniques in these mature reservoirs. The technologies will be transferred to operators through Internet access, and through publications, seminars, workshops, presentations at technical meetings, and one-on-one meetings with operators.

The Department of Energy will provide estimated federal funding of $406,000 for the 24-month project, with cost sharing of $407,000 from the University of Kansas. The project technical contact is Saibal Bhattacharya at 785-84-2058.

PROJECT DESCRIPTIONS

Area of Interest 2 - Regional Groups or Councils

The Petroleum Technology Transfer Council (PTTC), Houston, TX, Mentor-Based Effort to Advance Implementation of Preferred Management Practices (PMPs) for Oil Producers -- The PTTC will organize a team of mentors working with two of the organization's Regional Lead Organizations to increase oil production, moderate or reverse production declines, and extend the life of marginal wells in the near term. The Regional Lead Organizations (RLO) -- the South Midcontinent RLO in Norman, OK, and the West Coast RLO in Los Angeles, CA -- encompass areas with significant oil resources where production is constrained.

To accomplish these goals the PTTC team will refine understanding of production constraints, search globally for integrated solutions that can serve as preferred management practices and guide small producers on cost-reduction measures to provide the economic margin for implementing the solutions. Well-known mentors, respected in their regions, will network with industry companies, associations and regulatory groups to identify and prioritize constraints. The mentors and topical working groups will review the solution options, with the producers determining the solutions that best fit their economic conditions, and will help producers develop the confidence to implement the new processes.

The resulting information will be packaged for aggressive technology transfer through personal contact, one-on-one or small group meetings, workshops, newsletters, and especially over the Internet, using an interactive information system at the two RLO websites. The system will allow producers to search not only the Petroleum Technology Transfer Council archives but also the global Internet.

The Petroleum Technology Transfer Council estimates that applying the identified preferred management practices could increase oil production by as much as 100,000 barrels of oil per day in the target areas.

The Energy Department will provide federal funding of $500,000 for the 24-month project, and the PTTC will contribute $504,000 in cost sharing. The project technical contact is Donald Duttlinger at 713-688-0900.

PROJECT DESCRIPTIONS

Area of Interest 2 - Regional Groups or Councils

West Virginia University Research Corporation, Morgantown, WV, Enhancing Reservoir Management in the Appalachian Basin by Identifying Technical Barriers and Preferred Practices -- Under the sponsorship of the Appalachian Oil and Natural Gas Research Consortium (AONGRC), the West Virginia Geological and Economic Survey and the Petroleum and Natural Gas Engineering Department at the West Virginia University will pursue three objectives:

(1) Preferred management practices currently in use in the region, or that can be transferred from other regions, will be identified through workshops, interviews with engineers and geologists, and a literature search.

(2) An Appalachian Region Preferred Management Practices Council will be created to provide information directly on problems faced by industry within the region. The Council will include members of the Petroleum Technology Transfer Council's Appalachian Regional Producer Advisory Group, other oil industry representatives, and state geologists on the AONGRC Advisory Board.

(3) An interactive web site listing preferred management practices for the region, as well as supporting data and relevant information on the oil reservoirs in the Appalachian region, will be an integral part of the Petroleum Technology Transfer Council web site to ensure continued existence beyond the period of the project, and will be accessible from the sites of the principal Geological Surveys of the region. The site will incorporate data from existing databases such as DOE's Total Oil Recovery Information System, and links to related data at other web sites.

Under this project, the degree to which application of identified best practices has enhanced production or reduced costs in specific fields will be documented. By extrapolating results to other fields in the region, it is possible to estimate the degree to which applying new technology can effect important advancement toward achieving the PUMP objectives.

The Department of Energy will provide estimated federal funding of $362,000 to the 24-month project, and the West Virginia University Research Corporation will contribute $362,000 in cost sharing. The project technical contact is Douglas G. Patchen at 304-293-2867 ext 5443.

- End of Project Descriptions -