Scuola Enrico Mattei Master Medea year 2003-2004

Expandable Technologies Economic evaluation of the installations

Alessandro Di Nisio Marco Gazzola Jeremias Guitarte

Students:

Cristian Masini Marina Muratore Mariangela Perna

Tutors:
Domenico Di Renzo Alberto Marsala Giorgio Vicini

San Donato Milanese, 28th June 2004 Eni Corporate University

Scuola Mattei

Agenda
Technological introduction Technological introduction Reference scenario Reference scenario Case A Expandable Technologies: dual zone Case A Expandable Technologies: dual zone application application Case B Expandable Screen in in horizontal well Case B Expandable Screen horizontal well Case C Expandable Casing Case C Expandable Casing Conclusions

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SOLID CASING EXPANSION

Cased hole remediation system for casing repair, perforation shut-off, corroded casing, ... Blank pipes coupled with expandable screens

Eni Corporate University

Scuola Mattei

SOLID CASING EXPANSION

Cased hole remediation system for casing repair, perforation shut-off, corroded casing, ... Blank pipes coupled with expandable screens

Eni Corporate University

Scuola Mattei

SOLID CASING EXPANSION

Cased hole remediation system for casing repair, perforation shut-off, corroded casing, ... Blank pipes coupled with expandable screens

Eni Corporate University

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EXPANDABLE SCREENS TECHNOLOGY

Perforated base pipe

Expandable screens provide:

Effective sand control Effective sand control Formation support Formation support (eliminate/reduce annulus) (eliminate/reduce annulus) Larger ID for easier well LargerID for easier well intervention access intervention access

Courtesy: Weatherford

Courtesy: Baker

Enables accurate production logging

Slotted base pipe Scuola Mattei

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SCENARIOS HYPOTHESIS
Inflation rate WACC Income Tax 2,5% 8,1% 36%

Royalties
R&D Investments (K) Depletion rate Gas price ($/MMBTU) Oil price ($/bbl) Exchange rate /$ 10% 1,5

8%
570 12% 1,25 12%(+1%/a) 1

24
1,05

21
1,17

18
1,25

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Case A Expandable Technologies in dual zone application

Insufficient gravel quantity Abandonment of main well and side-tracking

Expandable Technologies as alternative to Gravel Pack Production (Sm3/g) 670.000

Productivity increase Workover cost (K$) Probability of shorter longevity (need for a workover on 10th year) Operating costs ($/boe) 20% 1.250 20% 2,2

CASE A: ADDITIONAL HYPOTHESIS

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Case A Economic Evaluations

Case A - Differential Cash Flows
1.400
Normal case
DNPV @ 10 anni 3.800.000

Differential Cash Flows (K)

1.200 1.000 800 600 400 200 0 -200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Worst Case Best Case

Normal case
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Best Case

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Case B Expandable Screen in horizontal well

Horizontal well with OHGP CASE B: ADDITIONAL HYPOTHESIS Bad event: Production (bbl/g) swelling shales 6.000 Side-tracking with expandable screen
Productivity increase Workover costs (K$) 10% 1.250 20% 3,5 1.700 25 % 33% 50%

Probability of shorter longevity (need for a workover on 10th year)

Operating costs ($/bbl) Intervention costs (K$) Probability of swelling shales actually occuring

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Case B Economic Evaluations

Normal case

Case B - Differential Cash Flows

3.000 2.500 2.000 1.500 1.000 500 0
2004 2005 2006 2007 2008 2009 2010 2011

DNPV @ 10 anni

9.500.000

Differential Cash Flows (K)

2012

2013

Worst Case

Normal Case
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Case C Solid Casing Expansion

Need for insulating the upper interval (cladding) Need for insulating the upper interval (cladding) No production increase No production increase

Unique differential Cash flow is cost saving of 850,000$

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Adoption of Expandable Technologies at 10 years

70 8
Development E.T. totali Development E.T. per year

Development E.T.E.T. total Development per year

7 60 6 50 5 40 4 30 3 20 2 10 1 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tipe A Tipe A Tipe B Tipe B Tipe C Tipe C Tot ENI Tot ENI

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Synthesys within Eni group

Normal case DNPV 10 years 163.300.000

ENI tot - Differential Cash Flows

60.000 50.000 40.000 30.000 20.000 10.000 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Differential Cash Flows (K)

Worst Case

Normal Case

Best Case

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Synthesys within Eni group

Normal case: After taxes

DNPV 10 years
163.300.000

No taxes

277.000.000

This conclusion might be conservative.

A major E&P company announced a double value creation (320 M) with almost the same number of installations

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Conclusions
Main features of Expandable Technologies: Increase in production due to to larger ID downhole Increase in production duelarger ID downhole Cost savings comparison with alternative solutions Cost savings inin comparison with alternative solutions Though, need to confirm technologys longevity Though,need to confirm technologys longevity Anyway, Expandables are already considered a Anyway, Expandables are already considered a breakthrough technology breakthrough technology The most ambitious application in drilling is the development of the monodiameter well-bore

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Thank you

for your attention

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