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As they've stated they're working on setting a stable production rate and will inform us in a week or so. Considering that news is imminent, there's not much else they can do at the moment except complete that work diligently and then share the results through an RNS.
Ok so they do care, what next? The market cap is getting lower by the day. Clock ticking...what today or tomorrow, needs to happen to shut down this decline?
"The board may well not care about sp, fair point, but when will they. Surely there's a line of interest and concern?"
Can't really see that's true when the chairman writes in the annual report:
"Our shareholders have contributed substantial risk capital to bring Hurricane to first oil. The Board is hugely disappointed with the current share price and recognises the obligation to strive to deliver a return for their patience and commitment.
Dated April 2020
But the SP hasn't moved, so next theory. Anything, I'll listen to it all. The board may well not care about sp, fair point, but when will they. Surely there's a line of interest and concern?
A week ago the production was 15000bpd.no reason to think it is not doing so still
So on that thought, production is not running as planned?
If production remains relatively constant the sp should NOT remain where it is today as the the cash earned will be increasing the bank balance
Hi AquaeSulis01,
"So two points, there is more than one area of perched water with estimates as to the length of the zones, and the word "may" eventually decline is used i.e. may mot drain away."
Technically speaking, let's say that water is drawn from the perched water reservoir by well 7z due to the pressure difference between the oil reservoir and the perched water reservoir - (i.e. due to oil extraction, pressure in the well decreases --> therefore water from the higher pressure perched water reservoir moves to the lower pressure oil reservoir).
Now, since water has entered the oil reservoir, it will most likely have a residence time (time taken for water from entering the oil reservoir to reach the pump) before it is pumped up by the ESP.
Water has more density than oil (i.e. oil floats). By Stokes' Law (engineering law), water will settle to the bottom of the reservoir given enough time to settle. It's very likely that not all the water that is drawn from the perched water reservoir is pumped up.
Best case scenario would be that MOST of the water settles, allowing the oil/water separation to take place - and thus, the ESPs will mostly be exposed to oil.
Having said all that, I honestly don't know how fractured basement would affect the above.
ALL IMO. Slift.
The next RNS in 7-10 days will tell us what the production rate going forward will be.
Currently optimising production by tweaking the pumps for best performance
Water cut will be taken into account
Up to 15k barrels a day within 4 days of the pumps running.
I expect more uplift to production once all parts of the system operating efficiently, thus maximising cash for hurricane
I think the mizu was at 70% fluid capacity previously. I’d expect that number to rise too.
In or out
In a conventional reservoir, perched water can be identified and understood - but my concern here is that in fractured reservoir, it is virtually impossible to identify all the fractures and how they behave. If there are many areas of perched water, then high water cuts could be an ongoing feature of the reservoir and would always limit oil production.
After so long, so many wells, so much seismic - we are still debating something so basic as where is the water coming from.....this shows just how uncertain this type of field is. As I have said a few times, if it was onshore you could keep drilling. West of Shetland with its short weather window and expensive wells - it has to work early on or you just keep putting good money after bad. The results could just keep showing there is oil and there is water and we really don't understand what comes from where
Planted, from the Apr Production RNS "After retrospectively analysing the drilling and petrophysical data with the benefit of the EPS data the following conclusions have been drawn:
· a 10m high permeability water bearing zone has been identified within an interpreted 40m producing interval in the 205/21a-7Z well;
· a 10m water zone has also been identified in the 205/21a-6 well, however this water zone is more distant from the interval currently producing;
· produced water from the 205/21a-6 well is therefore interpreted as being drawn from the perched water zone intersected by the 205/21a-7Z well; and
· current individual well water cuts of approximately 46% in 205/21a-7Z and 7% in 205/21a-6 during April are consistent with this revised interpretation, noting that the 205/21a-7Z figures were impacted by high water cuts immediately after a shut-in at the start of the month.
The behaviour of produced water combined with the drilling and petrophysical data has led to an interpretation that the water produced by the Lancaster EPS is being sourced from a zone of 'perched' water. Perched water is isolated from the underlying aquifer and therefore has a finite volume relative to the life of the field. The perched water model would imply that once a constant production trend has been set, water production levels should stabilise over time and may eventually decline"
So two points, there is more than one area of perched water with estimates as to the length of the zones, and the word "may" eventually decline is used i.e. may mot drain away. Until successive production reports indicate stability in the watercut, then many will remain on the sidelines and this sp will stagnate
Doctor trice knows fractured basement west of Shetland better than anyone - period
If you don’t understand that then you have a problem.
If RT is the only expert in fractured basement -I would have more faith. There are plenty of people with expertise in other companies - interesting nobody in the industry believes Trice or the story here. Spirit is part of Centrica - not exactly the biggest and best player in the sector. You can always present this sort of thing in many ways and pick your own. We really need an truly independent expert opinion - but don't hold your breath
Dr Robert trice, the expert, explained his theory on this situation. I feel I’ll stick with his explanation rather than someone who is less believable with less knowledge.
Increased water came with increased production
They are optimising the system currently
According to trice ,means it’s draining quicker.
if you heard his answers to this question previously he said they couldn’t tell the volume of water they might be connected to.
7z still producing oil though, which is great in my view.
Means that the water is draining as we speak
Forsight you previously stated "Its a binary outcome - the SP will go to zero or be a multiple in the next 12 months". So your position is that cash plus all of Hurricanes assets less debt is zero. That is your position.
Would anyone care to offer an alternative view.
The acquirer has massive pressure and gives the pressure to the oil column. If a fracture taps into or close to the acquirer front, the acquirer will come streaming in and kill the well. You can't really get too scientific as we do not have the data over a long enough period of time. Fractured basement will also be highly heterogeneous and so really difficult (impossible) to map / predict. If the water was an isolated cell - perched - then it has no pressure support other than from the oil around it. Therefore it should decrease over time as it gets flushed out. So far we have been seeing increasing water cut. It would have been in the BoD interest to sell this is as perched becuase if the first well gets watered out its going to be really difficult to justify drilling another.
Sailplane 9/07/2020
Doing some catch up and read your interesting article.
Not up on reservoir engineering but I am interested.
Repeating part of the article for continuity.
oooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo
‘’Even when producing 15,000bopd it should only, for example, lift water some 55.6 metres for from 7Z well - (based on a 7Z well PI of 190 stb/d/psi and from the fact water lifts 0.705metres per 1psi pressure drop ), and since the OWC / aquifer is some 265metres metres lower than the 7Z well, it looks to be a big safety margin.’’
00000000000000000000000000000000000000000000000000000000000000000000000000000000
The lifting of water some 55.6 meters interest me.
What arrangement of fractures in the granite are used in these calculations to get that water lift of 55.6 meters?
Is a dedicated fracture assumed to exist from the well to the oil water contact?
I have given an opinion a few times that I just could not believe that the water produced was aquifer.
My take on what happens in the reservoir is,
The oil is exposed to atmospheric pressure in the storage vessel resulting in the oil at much higher reservoir pressure to be discharged [or sucked ] in to the well and up to the storage vessel.
Now the area where the oil enters the well is interesting.
To make my point assume there is no granite in this area then I believe the movement of oil would tend to be like an increasing sphere round the well opening i.e. entering the well from all directions and the speed of the oil movement decreasing as the sphere grows bigger. The oil taking the path of least resistance.
There will obviously be fractured granite in the area so the paths of least resistance will be determined by the fractures. The sphere concept will still apply but modified by the arrangement of the fractures.
Trapped water could be taken in from above, below and to the sides of the well
The granite is particularly well fractured here and we have a fine oil. How is the heavier aquifer water going to be lifted anything like 55.6 meters? No chance as far as I can see.
When the well gets much closer to the aquifer the more likely it will be that water is drawn in.
Ron
...Sailplane & Foresight, many thanks for your answers, and others for their contributions too. I can't say I understand it all but I will be a happy bunny once I hear that the water cuts stabilise or reduce, as opposed to increase. I am in here deeper than the wells so not going anywhere soon.
Foresight; I think Sailplane has a good handle on this; It would be a seriously major surprise if Dr Trice's work on the odt was significantly in error.
Water will only '....find its way up and into the wells...' if there is a pressure driver: This could either be aquifer at the large scale of liquid-flowing FB fractures or surface 'tension' effects for the very narrow fissures; as Sailplane indicates, neither are remotely likely to be a consideration if Dr T's work is vaguely correct - and so far I see no data to indicate it isn't. So the perch may be larger than expected, and - if the reservoir model is even vaguely approximating reality - then there is a high probability there will be many more 'perches'. But also a lot more oil. The hydrostatics don't lie: - water is even LESS likely to be coned from larger fractures than small ones. Imo the key thing to watch here are the PI changes with drawdown: the most recent plot of these showed the rate of change decreasing somewhat - a very good indicator (if it got asymptotic the oil reservoir would be infinite....) - maybe it would be worth a look at, say, ghawar's figures for early-time production, as a comparison.
Some folk here like to write choo-choo bedtime stories, I prefer tech data and stats. I still believe Dr T had it fairly right, but Hur's comms were pi**-poor, as has been some of their other 'management'. What remains to be seen is that ongoing PI data, and how oiler valuations/earnings generally progress through the green revolution era.
GLA
Sailplane,
"we could have a ‘dead-end down' pocket of trapped (perched) water sitting close below the 7Z well – close enough for that pocket to undergo, in effect, localized conning"
Possibly, but we won't know until well 7z is run on it's own for a long period of time. And trying to experiment with this would be a huge risk.
"The FPSO's Produced water handling is shown as an impressive 20,000bpd, even so, it would obviously be really nice for us all if the perched water pockets showed signs of emptying some time pretty soon."
I don't think the water pockets will empty soon. Water is only drawn through a differential in pressure, in equilibrium.
Am i right in saying - The "perched water pockets" will empty as the pressure drop between these pockets increases. Or in other words, a lot of barrels need to be produced, such that the pressure within the wells decrease to the point where all water is drawn from the specified "higher water pocket"?
SailP,
very technical post which I don't understand as I'm not an Oilie. Nevertheless in response to this line; '..... if the perched water pockets showed signs of emptying some time pretty soon'
i do recall DrT saying at the CMD that this should happen over time.
Looking forward to the technical review outcome to hear more on this.Just seems that this whole perched water issue is like a stopper on the share price propulsion.
Fractures can penetrate deeply into the aquifer in certain places and water will find its way up and into the wells. The only real risk here is the connection of fractures to aquifer and water management. The issue is that it can take some time to know and its really very difficult to predict whether there are issues or not. Its virtually impossible at this stage to really know what's going on. It is good that Trice has left as he was too personally involved in this to give an honest perspective. We really need a truly independent status report but I have warned before, developing a fractured basement in some of the harshest conditions in the world is massively risky. It has never been done - all fractured basement plays are onshore or shallow water where you can drill continuously and cheaply. If you have to handle a lot of water you need very large platforms with huge pumps, seperators etc. The fact that there is a lot of oil in place is meaningless unless you can produce an amount commercially and for that you need the fractures to be working in your favour and not tapping the acquifer and be connected over a large area drained by a very expensive well. There is still a long way to go in proving this up as commercial. The well productivity index is going to be very high in a fracture - but only for a short period of time whilst you drain the fracture. All the production data is meaningless unless you know how connected the fracture system is. You could have 30k bold today and nothing tomorrow - these are not your normal conventional sandstone reservoirs that comply to normal petroleum reserves analysis. Its a totally different ballgame and the increase in water cut we are seeing is alarming. This is all exploration and speculative on the basis that the wells are tapping a sufficient connected volume to be commercial. Its a binary outcome - the SP will go to zero or be a multiple in the next 12 months
The vertical well results have considerable data to show we have oil down to a depth way below the horizontal producing wells and due to the incredibly high productive index as a result of the high connectivity of the reservoir fracture system, even when producing 15,000bopd it should only, for example, lift water some 55.6 metres for from 7Z well - (based on a 7Z well PI of 190 stb/d/psi and from the fact water lifts 0.705metres per 1psi pressure drop ), and since the OWC / aquifer is some 265metres metres lower than the 7Z well, it looks to be a big safety margin. [And the 6 well has a similarly high PI (productivity index) of 205stb/d/psi - that's barrels per day, per 1 pound down hole pressure drop. These are apparently among the highest oil well Productivity Indexes in the world].
So, my thought is, we could have a ‘dead-end down' pocket of trapped (perched) water sitting close below the 7Z well – close enough for that pocket to undergo, in effect, localized conning. So, not from the aquafer, but from another nearby, much higher, water pocket. And that could be what we're seeing.
And, of course, as there is now a nicely cleaned up fissure connection between the heels of wells 6 and 7Z – when the 6 is producing ( especially when producing on its own) it can see the same water source(s) as the 7Z can - they’re just a bit further away than they are for the 7Z well, so water gets to the 6, but at a lower rate.
The FPSO's Produced water handling is shown as an impressive 20,000bpd, even so, it would obviously be really nice for us all if the perched water pockets showed signs of emptying some time pretty soon.
Just my thoughts, as always DYOR. Any other possible reservoir models out there?
I didn't mean to imply anything specific, obviously Hur know far better than anyone else what the source of the water is and as others here have mentioned, the amount of water we are talking about is basically, minimal & apparently is not problematic. I just wonder how they know that water isn't seeping into the 'perch' from elsewhere & if this has anything to do with the recent departure of a certain Dr. Trice?
Personally, there's lack of evidence that it's an aquifer.
There has been enough tests and results, as well as continuous operational performance data which is available to the management.
Hurricane will confirmed it by now if it was.
It shouldn't be speculated that the wells are drawing from the aquifer.
1. Not really, at 8% from well 6.
2. Well 7z was concerning, but 21% water cut in Q2 as per last RNS is manageable.
3. No, Esp would not make a difference, unless the ESP is commissioned such that to minimise water production.
All IMO.