Abstract
In the past few years, operators in Malaysia have intensified activities to restore idle wells. This was driven by the requirement to sustain existing production, high oil price and availability of resources. However, the success rate of each activity and efficiency of the operation was not encouraging as it was averaging at about 60%. This has become a huge concern to Malaysia Petroleum Management (MPM), the regulatory body of PETRONAS as 40% of investment spent to restore these idle wells did not yield the production gain that it was targeted. MPM sees this as value leakage that needs to be reduced significantly during current low oil price scenario.
A thorough analysis of the overall well intervention activities in Malaysia was carried out especially on the activities related to idle wells restoration. The focus was very specific to this area because idle wells percentage is as high as 50% from the total number of wells in Malaysia. This translates to a technical locked in potential of about 80,000 barrels of oil per day (BOPD). Most of the time, even though the planned cost of an activity is below the regulatory Unit Enhancement Cost (UEC) threshold to begin with, the actual cost surpasses the planned cost after the execution due to inefficiency and the small allowable error margin. With the low oil price scenario, coupled with low gain potential from idle wells, it was deemed necessary for MPM to put in a different strategy to manage this inefficiency and value leakages. After a series of engagement with the operators, root causes were established which includes inefficient resources utilization, poor technical solution, poor planning, weather limitation and lack of collaboration with industry key solution providers.
This paper outlines the process that MPM have implemented to provide the operators and service sectors a contractual platform at which all stake holders can share and formulate a win-win investment portfolio. The philosophy of the strategy is based on a risk sharing mechanism where operational efficiency and success rate of an activity are the main drivers to guide both the operators and service sectors. Specific Key Performance Indicators were defined to ensure the risk sharing mechanism is fair for stakeholders.
After the first implementation of this new strategy, MPM have seen the positive impact on the efficiency and success rate of both the operators and service sectors. Efficiency have raised to about 92% and success rate to about 85%. Efficiency which is defined as the percentage of work time of total time spent on the activity, played an important role in ensuring value leakage was reduced. This new mode of execution have now been further expanded to include production enhancement and well abandonment.
