Must you pay the technical debt of legacy floods?
Inherited a legacy flood? Along with asset retirement obligations, you also inherited a large technical debt. It won’t show up on the balance sheet of the seller, but it will show up on yours very quickly.
How do you deal with the technical debt of legacy floods?
This blog post is brought to you by Proven Reserves Exploitation, one of our information partners. Nein commercial use of der AppIntel content.
One operator optimized a disused flood hoping to inject the extra water being produced. She explains her efforts to get a flood working again after years of neglect.
See all the details in her application documents. Get them from our self-serve web portal.Buy these application docs now Subscribers get them for free
What is technical debt?
Technical debt is the amount of money that must be spent to correct an oil field from the way things were done before. Tech debt is incurred by using shortcuts in the past. It is also incurred by ignoring maintenance. It also comes from new and changing technology.
Floods left on autopilot
Decades ago keen engineers set up floods, converted injectors, and added water flowlines.
Those engineers moved on to other projects and left the floods in the hands of operations. The floods were left on autopilot.
Unlike self driving cars, floods on autopilot have no set destination. It is not surprising when the floods ended up in the scrap heap.
Only 50 of Alberta's two thousand active floods have been optimized in the last five years.
Flood maintenance is an important task that must not be procrastinated.
But neglected floods can be revived if they haven't yet been abandoned.
Premature flood abandonment
Over the last 10 years flood maintenance has been ignored. Floods that could have produced billions of dollars of cash flow have been abandoned prematurely.
Many flood operators were of the set it and forget it mindset. They set up a flood and never gave it a second thought.
They put up with rising water cut and disappointing results. They started to see a flood as a cost rather than as a way to increase production.
Flood operators laid off flood maintenance engineers and shut down water handling facilities. They came to accept 5% recovery as the norm.
Technical debt: pay up now or pay up later
"Pay me now, or pay me later," said the mechanic under the car in the 1972 television commercial for oil filters. A whole series of commercials were dedicated to getting you to use a cheap oil filter with oil changes to reduce later engine mechanical failures.
This mantra of pay up now or pay up later is exactly the technical debt issue. You must pay to optimize a flood or put up with its poor performance and early demise.
Flood maintenance and optimization is not expensive but few left in the industry know how.
Flood optimization can't be learned from a textbook or in a class. Experience in starting and reviewing floods is the only way to learn it. Proven has started 50 floods and reviewed two hundred.
Whence legacy flood technical debt?
Some legacy flood technical debt comes from installation shortcuts.
When installing floods, many operators cut corners on the installation to reduce capital costs. As a result, water was injected in the wrong places. Floods prematurely watered out. Some floods had no effect whatsoever.
Technical debt of ignoring directional permeability
Another source of technical debt is directional permeability -- this eliminated flood revenue by the billions.
Directional permeability strongly affects water flood response. Many floods have been destroyed because permeability direction was ignored.
Technical debt ignoring technology advances
Flood technology advances over the last 25 years have been ignored by most operators. They could have benefitted by huge production increases.
Flooding first generation horizontal wells is also another source of technical debt. 1G horizontal wells were drilled without regard to directional permeability.
Flooding 1G horizontal wells immediately watered out producers. No amount of polymer injection could fix this problem.
The benefit of overcoming technical debt: Improving production
Production increases and stabilization of decline are the reward for paying the technical debt incurred by years of neglect. Cash flow increase follows.
Some well run floods have recovered up to 75% of the oil in place. Why be satisfied with 5-10% recovery?
Granger Low 27 Sep 2022
Always choose the best return.
Are your horizontal wells old age or new age?
Whither all the flood engineers?
How much are you losing?
Is technical debt costing you production?
Maybe you too can sour-up your pipeline
Disposing into a producing formation
Fracking into a neighboring well causes a blowout
New reserves from tired old floods
Making the most of your new acquisition
Video demo on using the KiP box for acquisitions
Are you listening? Take the quiz.