Intelligent completions – an adoption issue

Not since horizontal drilling has such a valuable technology been so hard for so many to adopt. The reason, according to an industry source, primarily focuses on two issues: perceived reliability and high initial expenditure. Unless the adoption curve shifts dramatically in the next few years, it is possible that operators will see a reduction in the advancements of intelligent well completion (IWC) technology.

Operators may also be faced with limited service suppliers for the technology, as sales diminish and cash flow constraints choke providers. The situation could also inhibit resolving issues such as reliability, the single biggest issue perceived in the eyes of the operator with the technology as it stands today.

Since the inception of IWC technology in 1997, service companies developing the technology have released more than $500 million in R&D monies. IWC systems have still to be accepted fully as a viable means of reservoir control that permits an accelerated return on oil and gas field developments.

Since the first installation for Saga in the North Sea in 1997, 230+ wells have been deployed. Of these 230 wells, approximately 80% have been of the direct hydraulic design.

Operators have their reasons for shying away from the intelligent completion system. Reliability has always been a reason for being tech shy – unusual when the majority of systems operate on a simple hydraulic system that has been shown to be less prone to failure than most down-hole safety valves currently being deployed.

Reliability issues are relics from days when the technology was young and still in its proving ground. The mental anguish here is that the 'days of old' were only six years ago and are still fresh in people's minds. These days, however, six years in technology is immense, and advances made in the IWC arena have resulted in very efficient and highly reliable systems capable of operating throughout the life of the well.

Industry data backs this, and adopters are nodding approval that reliability is ascending the curve of no confidence to a very acceptable level and continues to improve year on year.

Still, the figures do not seem to be registering within the operating groups, and sales continue to falter. Globally, IWC systems are on the rise in certain regions, like the Gulf of Mexico, which initially had the highest adoption rate over a two-year period. Now numbers have fallen, partly because exploration slowed down and partly because operators are reluctant to perform stacked gravel packs because of the exponential risk associated with IWC systems.

A reluctance to produce more than two pay zones at a time within a single well bore through stacked pays reduces the need for IWC technology in a large number of GoM shelf and deepwater developments. Until a confident gravel pack stacking system can be established, intelligent well technology will be confined to a small number of applications in the GoM.

Ask nearly anyone in the production business what the cost is for an IWC system, and the response is normally, "a million bucks." The perception of cost is the same irrespective of reservoir structure, the needs of the reservoir, the completion design, or indeed the location.

In fact, the commercial answer isn't really in the price of the equipment but in the commercial success it brings to the operator's field development. All too often, the application of an IWC system is discounted long before any credible analysis has been projected because of this mindset.

IWC companies are not out to gouge the pocket books of any major corporation. They are in business to develop effective technical solutions to difficult problems and ultimately to enhance field development.

Today, the cost of an IWC solution can be as low as $300,000 or as high as $2 million, depending on system features, number of zones being controlled, and location.

Continued high cost perception evolved during the initial introduction of high-end IWC systems that could and still can offer true variable choking, embedded gauges, redundancy, and more.

Until around four years ago, the high-end IWC system market constituted 80% of all sales, partly because of the lack of simple direct hydraulic system offerings. Reliability issues of the high end were prevalent, and a step change to less sophisticated systems was required.

The direct hydraulic system evolved and now commands 80% of the market over that of the high-end, high-resolution systems. Cost efficiencies of the direct hydraulic system and perceived reliability of a simple approach system have resulted in the most successful IWC system completion application to date, regardless of service supplier.

Today, there are two main direct hydraulic offerings, high-end choking and low-end open/close hydraulic completions. There is a technology offering missing, however – a mid-level hydraulic system that incorporates high-end control with moderate resolution combined with low-end simplicity, operation, and cost.

New technology companies are attempting to fill the void with diffuser sleeve and trim line sleeve reservoir control systems.

Intelligent completion technology is no longer a new technology market. Benefits of IWC systems are far greater than once recognized. Have the number of years spent developing the technology, the number of wells installed, and the number of hours dedicated to ensuring the systems are user friendly, reliable, robust, and fit for purpose been recouped by the service companies? Not even close.

With 230+ systems installed globally, over 400 individual pay zones controlled, and reservoir management tools proving their worth, reliability has risen to 90%, and system cost has come down as the design is becoming off-the-shelf.

Will the adoption rate for this valuable contribution to asset enhancement be far behind? So far, there is still a significant gap.

Stuart McLaughlin
Sr. Vice President
RC Technology