A study of 406 wells on the Norwegian Continental Shelf (NCS) conducted by Norwegian Petroleum Safety Authority (PSA) in 2006 showed that 7% of wells are shut in due to integrity (WI) issues . With NCS yearly production estimated at 1.5 billion barrels, that amounts to $112.5 billion in revenue (assuming $75/bbl) annually. A 7% loss in production translates to a potential loss in revenue of approximately US$8 billion.
This US$8 billion loss in financial revenue may be representing just the tip of the iceberg. With global oil production in 2010 projected at 66 billion barrels per year , a 7% loss in production represents US$344 billion annual regret cost due to integrity issues. Therefore, the economic consequences of neglecting well integrity is a key concern for all involved in the upstream Oil and Gas industry.
Well integrity has taken centre stage in light of recent disasters, the first of which is the blowout and oil spill event occurring in the Montara (Western Australia) oil field, leading to detrimental damage to the marine environment and the loss of a rig and oil platform. The second accident occurring off Louisiana coast in the Gulf of Mexico has been purported as the largest upstream disaster ever to occur to the United States of America that resulted in massive environmental damage, lost of a deepwater drill ship, and most importantly, eleven fatalities as a result of poor Well Integrity (WI) management. The impetus for embedding well integrity as an integral functional element within the upstream oil and gas industry has recently gathered much required momentum and one can only expect numerous changes to the status quo and how technical, operational and organizational adjustments will be made to cope with ever increasing risks associated with complex wells as the industry ventures into deeper water and more hostile environments.
To reduce the occurrence and consequences of major “loss of WI” events, there, has to be a genuine conviction for change within the upstream oil and gas industry. This will necessitate organisational conceive, implement and execute effective Well Integrity Management System that places Well Integrity at the heart of design, construction, operations, suspension and abandonment of wells. An effective Well Integrity Management System should not only have a comprehensive set of policies, guidelines and procedures in place to embed Well Integrity in an operating oil company; but also should unify the often misaligned objectives of functional departments. The foundation of an effective Well Integrity Management System is a holistic, centralized data and information management system with controls to ensure Well Integrity is fundamental across the life cycle. At the heart of recent disasters is either poor risk fundamental across the assessment. Consequently, a serious evaluation of conventional risk assessment methodologies is necessary to change the way potential well related loss of containment events are identified, assessed, prevented, or mitigated.
Excellence in Well Integrity is about having the necessary barriers in place, understanding and respecting those barriers, testing and verifying the barriers, and having contingencies in place should these barriers fail verification.
This paper will discuss the organisational barriers throughout the well’s lifecycle that typically impede creation of a proper WI system. The author also describes the methodology of how well threats can be identified, assessed, prevented and/or mitigated based on the Hazards present in the subsurface environment and the Condition of the barriers in place to control those hazards.