Milton, Alan, Progressive Production Technology

No operator will knowingly decide to develop a marginal field unless for research and development purposes.

Having said this, it is obvious, from the amount of publicity given to marginal discoveries, that there are such things as marginal fields.

This paper seeks to establish a definition of a marginal field, and the factors resulting in that definition. Methods of improving the financial viability of such fields are described, using the particular qualities of flexible flowlines, floating production and storage facilities, and subsea completion or tie-back" technology.

The concept outlined is called progressive for the simple reason that the equipment used, because it is designed on a modular basis, allows the development of the field to progress from the initial testing or early production phase through to the final system, without significant production phase through to the final system, without significant interruption, irrespective of what the final system is.


Although there will be as many definitions of marginal as there are operators, there are a number of basic elements to the concept of marginality that are common.

The first is nearly always one of relative uncertainty as to the quantity of oil in the reservoir. This can be the result of conflicting initial test information, inconclusive seismic results, or the known presence of faults or other geological anomalies likely to materially influence the recoverable reserves. The second is one of the cost of acquiring further reservoir information. Clearly, if the cost of drilling and abandoning further appraisal wells were negligible compared to the likely returns from the reservoir, there would be no hesitation in proceeding to drill further wells. It is only because this cost is high and sometimes very high, or because, having taken the decision to drill further wells, the appraisal wells yield discouraging results, that the field development becomes marginal.

The third aspect is where the minimum capital expenditure in fixed platforms and pipelines necessary to get the oil on stream, irrespective of the level of reservoir knowledge, is so high that the investment risk cannot be justified. This is particularly true in the light of typical production sharing agreements, when present value after tax, cash flow, is compared with maximum initial exposure. Figure 1 shows the influence of a typical production sharing agreement on a field costing $16 MM to bring on stream ($10 MM for previous exploration and development drilling, and $6 MM for previous exploration and development drilling, and $6 MM for capital expenditure), producing am average 3000 bopd. A selling price of $30/bbl, and royalty of 12.5% and tax at 70% have been price of $30/bbl, and royalty of 12.5% and tax at 70% have been used. For the operator, the ratio of PV cumulative cash surplus to CEX (maximum capital exposure) is a good profitability criterion. It is clear that the field economics are very sensitive to changes in CEX or recoverable reserves, even though the gross payout on the field is a matter of months.


In trying to improve the economics of marginal fields to the point of reaching viability, the operator can only seek to improve a certain number of the aspects of the field which have led to its being defined as marginal. He has to respect the principle variables such as well productivity, environmental conditions (water depth, average and productivity, environmental conditions (water depth, average and survival weather, sea bed conditions….), distance from existing facilities etc.


What is the operator trying to achieve? He would like to have more certain knowledge of the reserves in place, he would like to reduce the maximum capital expenditure exposure, and yet he does not want to be saddled with high operating costs, in the event of the reservoir turning out to be on the optimistic side of forecasts. It is in seeking to satisfy this objective that we have developed the Progressive Production Technology concept. Starting from the Progressive Production Technology concept. Starting from the above definition of marginal, the concept resulted first in the establishment of a number of rules, which must be applied if marginality is to be most effectively overcome:

  • drill exploration and appraisal wells with subsequent completion in mind;

  • be prepared to complete appraisal wells as soon as they are drilled, by having completion equipment ready;

  • be ready to turn a drill stem test into a long term, economically attractive, reservoir test, or early production phase:

  • think simple: do not try to cater for all possible outcomes, however - build flexibility into the system by installing production facilities on mobile barges or tankers and by developing a modular concept; - use flexible junctions between the modular components, so that hook-up cost and time is minimised;

  • avoid complex subsea hardware where practical.

Although the operator has to observe the constraints imposed upon him by the local conditions, it becomes apparent that a very large number of variables cam affect the choice of system. However, a large choice tends to lead to some or all of the rules outlined above being ignored. It was decided to examine what is really required, so as to try to define what could be the "modules" in question, and whether it is reasonable to expect them to be available at sufficiently short notice to be attractive to the operator, and yet provide a reasonable return to the supplier. provide a reasonable return to the supplier.

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