New Route to Bypassed Pay Rejuvenates Old Fields

Contents
Key MRI Features
The Risk-Rated Wells
Selling/Acquiring Properties
Conclusions

Throughout the world's basins and fields, finding bypassed pay has had a decidedly secondary role to exploration and production for both economic and technological reasons. However, as increasingly more fields decline, the value of pay behind pipe has become more important, but technology has just begun to address the challenge realistically.

Recently, Santa Fe Snyder Corporation became aware of significant technological progress by NuTech Energy Alliance in finding bypassed pay using proprietary software.

In initial discussions, NuTech put the technology issues into the context of how Santa Fe Snyder's old fields could be rejuvenated, suggesting the integration of conventional logs with magnetic resonance imaging technology—only within the 1990s did magnetic resonance imaging (MRI) move into the oil and gas industry, to measure fluid type and an array of fluid volumes in a formation, independent of the formation type or matrix. By measuring only fluids, this technology identifies hydrocarbons in intervals not obvious by the triple combination of dual induction, compensated neutron, and formation density.

Key MRI Features (back to top)
Among its key features, MRI technology measures the free fluid and non-movable water in a formation (capillary and clay-bound water), it derives permeability which links to producibility (identifying hydrocarbon-bearing [gas/oil], commercially productive zones), and yields significant data on hydrocarbon types and viscosity relationships. When integrated with conventional logs, through NuTech's proprietary system, commercially productive zones can be located that did not originally meet a company's criteria for pay.

This new perspective on bypassed pay convinced Santa Fe Snyder Corp. of its revenue-enhancement potential. With the technology just emerging from the testing stages with various companies, and Santa Fe taking a closer look at some of its older fields, the timing was right to deploy these systems on some of its wells.

Santa Fe Snyder Corp. was the 1999 result of a merger between Santa Fe Energy Resources and Snyder Corporation. One of the leading independents engaged in exploration, development, and production of oil and natural gas, its domestic focus is in the Rocky Mountains, Permian Basin, and Gulf of Mexico. The company's 1998 year-end reserves are 315 million boe.

Santa Fe Snyder provided several projects to NuTech, involving generally deep wells and focused on carbonates and clastics, in different parts of the Permian Basin. The task was to analyze these fields on the production downside to see if any pay had been overlooked due to calculating higher water saturations or not meeting standard field cutoffs, and if any of the zones could be recompleted in different formations containing bypassed pay.

Initial meetings provided Santa Fe Snyder with an understanding of how NuTech's proprietary software packages NuLook and NuPro could clarify petrophysical evaluations and more clearly define Santa Fe's decision-making process on mature fields, and encouraged them to move ahead with tests on selected wells.

NuTech evaluated each of the well packages to learn key factors including hydrocarbon volumes, water cut problems, and permeability issues. In the evaluation, the wells were risk-rated using standard digital data or re-digitized data from existing well logs. Through these sophisticated algorithms and crossplots that evaluate potential pay quality, the system evaluates up to seven flags for each high probability zone. The more flags the better, with zones risk-rated from 1 (best) to 3 (third best).

For an old well application, NMR knowledge is applied to conventional logs, with the proprietary software synthetically generating what a new open hole NMR log provides. Two major results are that bypassed pay zones and zones considered only water-productive are identified. Also identified are zones bypassed as being too close to water, which operators are typically reluctant to complete.

The Risk-Rated Wells (back to top)
In the Morrow formation, some No. 1 zones were found that were previously thought to be off the radar screen. And on not just one well, but on several, potential bypassed pay was found. One of the wells was particularly interesting because it had not met Santa Fe's criteria for pay, but a deep, potential pay zone (approximately 12,000 ft) was located using this technological system. Presently, although the zone has not been produced it has been clearly identified as one that merits testing.

In the Atoka formation, primarily a permeability play, the results from a series of well tests indicated which zones should have better productivity relationships than others. The goal was to help Santa Fe identify reservoir quality, from permeability, volumetric and producibility perspectives. Testing showed, for example, the fluid type and how accurately permeability predictions were matched since that is linked to core analysis and production rate. Both of these processes have been proven successful and are still being fine-tuned.

Additionally, since these wells produce mostly oil but also sizable quantities of natural gas, a mechanism was developed as part of the software package to trigger zones that would be gas productive versus oil productive. Further testing and well longevity are yet to determine the success quotient.

NuTech also identified several new zones of interest in the Delaware formation, which runs several thousand ft thick. In each instance, the company's technology has identified several sand intervals that may produce commercially after stimulation. Also, unlike typical Delaware formations that typically produce considerable water, clouding the viability of these completions, these sands are expected to have lower water cuts, making them more efficient to operate.

Selling/Acquiring Properties (back to top)
Santa Fe Snyder is a representative oil and gas company that sells and acquires properties. In the give and take of negotiations, parties may discount pay that is supposedly behind pipe if they are the buyer, and they may want to get maximum value, by not overlooking any pay, if they are the seller.

Along these lines, the NuTech system provides companies the leverage of knowing where to set the selling price or, for example, in a volatile natural gas price environment, how to hedge. Conversely, buyers can now better determine how actively to pursue the acquisition based on a clearer image of behind-pipe pay. Instead of investing substantial time and money in a bid the company may not win, NuTech gathers enough data sampling frequency so that companies can see the delta between what the seller is computing as opposed to what the software petrophysical output shows. That delivers the leverage for the company to proceed and what to offer.

Conclusions (back to top)
Santa Fe Snyder has an excellent position in many basins, with the Permian Basin one of the best. Overall, through its working relationship with Santa Fe, NuTech and its software system have:

• Identified numerous zones and formations that may have been bypassed and Santa Fe is testing those as quickly as possible
  
• Taken older, more conventional data and injected a completely new vision, providing previously unavailable NMR-enhanced input on such factors as hydrocarbon volumes and type of permeability relationships, using these new models and software
  
• Provided Santa Fe a viable way to enhance their fields, especially where the objectives are deep and there is a real need for enhancing these assets in existing fields.

Based on the preliminary success of NuTech's methods, Santa Fe Snyder may extend this testing program to locate bypassed pay elsewhere. That decision could be far-reaching, if more test wells determine that this reservoir evaluation system locates bypassed pay much more effectively than conventional methods – in new wells and mature fields.

About the Author
Allen Howard (ahoward@nutechenergy.com) is co-founder of Houston-based NuTech Energy Alliance, which provides proprietary petrophysical-driven technology to the oil and gas industry. With extensive senior management, sales and marketing, and operations management experience, Howard introduced MRIL technology to global markets. He holds a B.S. in electrical engineering from Texas Tech University. (back to top)