Browsing by Subject "Oil and gas"
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Item An “inescapable obligation” : the treatment of well decommissioning liability in recent oil and gas bankruptcies(2019-12-04) Cook, Kristin Alexandra; Spence, David B.Oil prices fell by fifty percent during the latter half of 2014, tumbling from a high of $105 per barrel in June to a mere $53 per barrel by year’s end. As a result of sustained depressed commodities prices, more than 350 North American oil and gas operators and service companies filed for bankruptcy between January 2015 and September 2019, representing more than $162 billion of debt. Despite the existence of federal and state statutes ensuring that operators decommission wells at the end of economic life, these environmental laws frequently lose efficacy in bankruptcy proceedings. This unresolved conflict, among other contributing factors, has led to the existence of tens of thousands of “orphaned wells” in the United States. This thesis paper examines the bankruptcies of American oil and gas operators after the precipitous decline in oil prices to determine whether operators successfully discharged decommissioning liability during bankruptcy. A survey of 2015 bankruptcies shows that 33% of oil and gas operating companies abandoned properties with unmet decommissioning liability and created 285 new orphan wells in eight states. This paper also estimates the cost to plug and abandon wells orphaned from bankruptcies between 2015 and 2019 at more than $200 million. The paper concludes with a discussion of the advantages and disadvantages of several possible solutions to the orphan well problem.Item Analysis of wastewater injection and prospect regions for induced seismicity in the Texas Panhandle, USA(2020-05-06) Acevedo, Juan Pablo; Young, Michael H.; Scanlon, Bridget R.Subsurface injection of wastewater co-produced alongside oil and gas (O&G) has been linked to an increasing number of earthquake events throughout the southern mid-continent of the United States. In Texas, the average count of seismic events per year have risen over the past decade. This study aims to compare injection of produced water into the subsurface and increased number of earthquakes in the Panhandle Region of Texas. For this study, saltwater disposal and enhanced oil recovery through underground injection control (UIC) wells in the Texas Panhandle were analyzed from 1983-2018. During this same period, a total of 64 earthquakes of M ≥ 2.5 were recorded. The average earthquake rates increased from 1.21 events per year (1983-2007) to 3.50 events per year (2008-2018). A total of 1,926 active UIC wells in the Texas Panhandle were identified from the Railroad Commission of Texas database during the study period. This research identified 54 geologic stratigraphic formations present in the region and focused on the 34 target formations into which wastewater was injected. Cumulative UIC volumes were found to be localized by geographic regions and geologic formations, where a total of 2.26 billion barrels (Bbbls, where 1 barrel = 159 liters) of wastewater were injected. Approximately 87% of the total disposal volume (1.96 Bbbls) was injected into seven geologic formations, including the igneous Precambrian basement; another 27 formations received less than 100 million barrels (MMbbls) each. Monthly UIC rates in the Panhandle fluctuated in time, similar to overall O&G industry activity. From this analysis, 61% of earthquake events are considered to be possibly or probably induced by a combination of UIC and O&G practices. Additionally, this research identified regions at risk of potentially hosting future earthquakes induced by current UIC and O&G operations. Understanding how and where UIC practices and O&G operations are affecting seismicity rates in the State of Texas can allow researchers and regulators propose strategies to reduce or mitigate negative externalities such as induced seismicity.Item Arctic resource development : a public affairs approach(2014-05) Shalin, Ariel Samantha; Dorn, Edwin; Spence, David B.The Alaskan Arctic region is estimated to hold the largest undiscovered Arctic oil deposits---about 30 billion barrels. Realizing this immense potential, however, will not be easy, as firms face technical, political and regulatory barriers in their quest to explore and develop this frontier. To overcome these challenges, energy companies should adopt a comprehensive education and engagement strategy. This document formulates key elements of a strategy to help alleviate concerns of the stakeholders who have the power to thwart development. At a time of uncertainty over offshore oil and gas development in the U.S. Arctic, a combined education and engagement campaign promises to help interested parties protect and expand their license to operate in the region.Item Challenges and strategies of shale gas development(2012-05) Lee, Sunje; Groat, Charles G.The objective of this paper is to help new investors and project developers identify the challenges of shale gas E&P and to enlighten them of the currently available strategies so that they can develop the best project plan and execute it without suffering unexpected challenges. This paper categorizes the challenges into five groups and concentrates on shale-gas-specific challenges. It excludes conventional oil and gas development challenges because by and large these five major challenge groups seem to decide the success and failure of most shale gas projects. The five groups are the identification of shale gas potentials, the technical challenges in well design and stimulation strategies, the economic challenges such as high cost of new technologies, the environmental challenges concerning the hydraulic fracturing water, and the international challenges of performing projects outside the US. The strategies are yet to be well established and are still evolving rapidly. Hence, before starting a shale gas project, shale gas developers need to perform extensive and intensive check-ups on the challenges and on current available strategies as well as to stay up to date thereafter on new strategies.Item Developing a Vaca Muerta shale play : an economic assessment approach(2016-05) Sierra, Diego Ernesto; Ikonnikova, Svetlana; Fisher, W. L. (William Lawrence), 1932-A total of 450 production wells are in operation in Argentina’s Vaca Muerta shale formation as of February 2016, of which 90% were drilled since 2013. In order to assess the economic value of the vertical, directional, and horizontal wells and understand the potential future shale play development, a data-driven approach is developed. First, historical production data are used to derive a 10-year production forecast, using decline curve analysis. Then, well profitability is assessed applying a discounted cash flow model for a sample of vertical, directional, and horizontal wells in the Loma Campana field. Initial oil and gas production rates reached 172.56 BBL/day and 309.42 Mcf/day for the median vertical well, 392.81 BBL/day and 587.76 Mcf/day for the median directional well, and 456.75 BBL/day and 571.46 Mcf/day for the median horizontal well. Based on the production histories, 10-year cumulative oil and gas production is expected to reach 76,389 BBL and 97,772 Mcf for the median vertical well, 174,701 BBL and 261,402 Mcf for the median directional well, and 203,134 BBL and 254,154 Mcf for the median horizontal well. The median vertical well is found to have a negative net present value (NPV) for any possible discount rate, while median directional and horizontal wells can be expected to give NPV (10%) values of $0.41 and $1.14 million, respectively, under the current fiscal and contractual conditions in the country. Internal rates of return for the median directional and horizontal wells were found to be 15.15% and 26%, respectively, while their break-even oil prices at a 10% discount rate were found to be $54.65 and $47.23 per BBL, respectively. Thus, the production profiles and well economics assessment allows to suggest that directional and horizontal wells could be economically viable under the country’s current economic environment, including oil and gas price subsidies.Item Implications of geothermal energy production via geopressured gas wells in Texas : merging conceptual understanding of hydrocarbon production and geothermal systems(2016-05) Jones, Michael Chase; Fisher, W. L. (William Lawrence), 1932-; Pierce, Suzanne A; Cutright, Bruce LThis thesis evaluates the overall geothermal energy development potential of the state of Texas by combining resource assessment studies from both the hydrocarbon and conventional geothermal sectors. Cooperation between these industries is often shown to result in a symbiotic relationship that will benefit not only the respective industries, but also the public and regulatory environments. By outlining resource characteristics, technological specifications, thermodynamic foundations, and the specific geologic environments of the state that are related to geothermal and hydrocarbon production, this report attempts to update previous geothermal feasibility studies performed by academic and government institutions. This report suggests the undertaking of preliminary implementation surveys exploring a novel geothermal energy production method known as the well bore heat exchanger. Several numerical modeling reports assessing the optimized system parameters, ideal work rates, and electrical generation capabilities of this theoretical method of production are summarized in this report. This power generation method is uniquely suited to areas of concentrated hydrocarbon production due to the potential application to retrofitted abandoned wells. By avoiding plugging and abandonment procedures, production companies are saved from a cost with no potential payback while saving the geothermal industry exploration and drilling costs, which commonly make up over half of an overall project development budget. Production history analysis of specific geopressured gas plays and the creation of a geospatial distribution model determined the ideal location for applying this innovative clean energy production method.Item Multistage stochastic programming models for the portfolio optimization of oil projects(2011-08) Chen, Wei, 1974-; Dyer, James S.; Lasdon, Leon S., 1939-; Balakrishnan, Anantaram; Lake, Larry W.; Jablonowski, Christopher J.Exploration and production (E&P) involves the upstream activities from looking for promising reservoirs to extracting oil and selling it to downstream companies. E&P is the most profitable business in the oil industry. However, it is also the most capital-intensive and risky. Hence, the proper assessment of E&P projects with effective management of uncertainties is crucial to the success of any upstream business. This dissertation is concentrated on developing portfolio optimization models to manage E&P projects. The idea is not new, but it has been mostly restricted to the conceptual level due to the inherent complications to capture interactions among projects. We disentangle the complications by modeling the project portfolio optimization problem as multistage stochastic programs with mixed integer programming (MIP) techniques. Due to the disparate nature of uncertainties, we separately consider explored and unexplored oil fields. We model portfolios of real options and portfolios of decision trees for the two cases, respectively. The resulting project portfolio models provide rigorous and consistent treatments to optimally balance the total rewards and the overall risk. For explored oil fields, oil price fluctuations dominate the geologic risk. The field development process hence can be modeled and assessed as sequentially compounded options with our optimization based option pricing models. We can further model the portfolio of real options to solve the dynamic capital budgeting problem for oil projects. For unexplored oil fields, the geologic risk plays the dominating role to determine how a field is optimally explored and developed. We can model the E&P process as a decision tree in the form of an optimization model with MIP techniques. By applying the inventory-style budget constraints, we can pool multiple project-specific decision trees to get the multistage E&P project portfolio optimization (MEPPO) model. The resulting large scale MILP is efficiently solved by a decomposition-based primal heuristic algorithm. The MEPPO model requires a scenario tree to approximate the stochastic process of the geologic parameters. We apply statistical learning, Monte Carlo simulation, and scenario reduction methods to generate the scenario tree, in which prior beliefs can be progressively refined with new information.Item Phase stability analysis for tight porous media with the Helmholtz free energy(2020-03-27) Achour, Sofiane Haythem; Okuno, Ryosuke, 1974-Phase stability analysis is commonly used to determine whether a mixture splits into two or more phases at equilibrium. Compositional reservoir simulators use it to initiate phase equilibrium calculations which are necessary to evaluate the amount of oil and gas present in a reservoir. However, conventional methods for stability analysis are not robust when applied to modeling phase behavior in tight reservoirs where equilibrium phase pressures can be different. Capillary forces in tight reservoirs are strong enough to alter the equilibrium phase compositions and pressures. Phase stability analysis in tight porous media is challenging because it involves predicting the appearance of an additional phase, the pressure of which is initially unknown. This causes common failures of conventional stability analysis algorithms based on the Gibbs free energy. Due to the lack of robust algorithms, the effects of capillary forces on phase behavior have not yet been included in any commercial software. This is a substantial problem that makes it difficult to accurately model and optimize the production of hydrocarbons from tight reservoirs. This report presents a new method of phase stability prediction for multicomponent mixtures in tight formation based on the minimization of the Helmholtz free energy. Case studies demonstrate why conventional methods based on the Gibbs free energy are not robust in the presence of capillary pressure. The new method can correctly identify the pressure-temperature region for a given mixture, outside of which the mixture is stable for any capillary pressureItem Water use by the oil and gas industry : an assessment of two Texas regions(2013-12) Eckhart, Jeanne Lynn; Fisher, W. L. (William Lawrence), 1932-; Nicot, Jean-Philippe, 1958-The oil and gas industry makes up approximately 1% of Texas’s overall water use (TWDB, 2012), but assessing water use on a regional and county level could show that the impacts from the oil and gas industry can be greater on a local level. Water planners within in Texas are becoming more concerned with how regional and local impacts from upstream development of oil and gas. These areas are under water-stressed conditions due to drought. To better understand potential local use impacts this study conducted qualitative and quantitative analyses. The qualitative analysis gathered input from stakeholders including representatives in the oil and gas industry, regulatory sector, and Texas water planning entities. This study utilized two public databases called FracFocus to assess average water use trends over time for the Eagle Ford region in south Texas and the Spraberry/Wolfcamp formations in west Texas. According to the qualitative analysis conducted trends toward increasing use of brackish groundwater and some recycling and reuse techniques by some operators are occurring in both regions. Also, there were slightly increasing trends of average water use per a well over time for both regions between January 2011 and April 2013. This analysis can be misrepresentative of the cause of the change in water use by the oil and gas industry, and therefore requires more data. The FracFocus database lacks the direction of the well, the lateral length of the well, and the mass of the proppant. These inputs would allow for a holistic analysis by water planners. vii The oil and gas industry can have local impacts on water use in particular regions. An increasing importance for regional water planners to have access to accurate oil and gas water use data is apparent. Collaboration between the oil and gas industry and Texas regional water planners will be a key component in areas with heavier mining water demands. Conclusively, the need for a more robust data set for regulators, industry professionals, and other stakeholders to access will benefit the strategic assessments oil and gas water use on local levels.