GEE ces ECC mg D> Ro Using the NMR for do Decision’ in E & P Project Development considering various applications in Green or Brown Fields s RS S Pa af & WY s PRENOM NOM DATE ACTION Michel L Friedman 2019/10/22 CREATION Rev. 00,title Page cover indices Motivations for write this document Antecedents Oil peak Definitions Conventional and no conventional ERO! Les greens Fields ee synthesis < 5 NMR: the 21-century technology in earth science \> 7 Centon of ecco RS ? strategy or the ws of the NMR << 7 vuaatenaneoraanae, &S ; Pesto be hous s 5 NM Stage 1 known 25™Block cover" 8 Ser cma ore eh ; ce sSions, 10 nents involved (links) ge 4 https://www.reuters.com/article/us-usa-oil-shale-cutbacks/u-s-shale-producers-hit-the- rakes-on-2019-spending-idUSKCN10K26S Page §. httos://www.wsi.com/articles/oil-and-gas-bankruptcies-grow-as-investors-lose-appetite- for-shale-11567157401 Page 6 http://www butterflynetworkcom/fi/ Page 7 NMR Presentations: http://www.mediafire.com/?990ds\iweyaogen Page 7 Article in the Copernicus Gi Journal http://www geosci-instrum-method-data- syst.net/5/551/2016/ Page 7 EAGE: ttp://earthdoc.eage.org/publication/publicationdetalls/?publicatlo page 7 General idea of NMR technology ttp://bit.de/nmrdoc 14639a 1. Motivations for write this document. This reflection comes from the fact that as a consultant in drilling onshore, offshore and Shale Gas like Vaca Muerta (for Wintershall, for example}, | noted that after my last contract for "Ecopetrol MAR" (Molusco 1st their first offshore well in Barranquilla with ONGC) There is no more work. This free time makes me possible to reflect and meditate on a lot of subjects. 2. Antécédents Lucky to have worked with FEN (Fairfield Nodal, Houston USA on the P & European Support BN seismic made in Gabon, | became aware that we must change our eitria for explora time to digest the consequences ofthis mission which goes much further than a simple vee White working on the first perspectives ofthis seismic OBN | also perceived [rom the be Inno $y reflection tn the oil production in general and its perspectives Some key reasons: There isa clear downward trend in so-called "easy" oll and lke fist and évfdent corollary the clear increase in costs of production (ERO!) SS Itis especially important to see a solution inthe strategic onaraiog he £& P towards some corrects reexporation and preduction adjusted then an the Sealed. So, we have to find the rnssing to + Peak oi! Rs 3.1. Definitions ye ae Peak oilis the theorized point in time when themiaximum rate of extraction of petroleum is reached, after Which its expected to enter terminal decline: As of 2019 peak ol forecasts range from the early 2020s to the 2040s, depending on economics and how governments respond to global warming. It is often confused with oll depletion; however, whereas depletion refers to a period of falling reserves and supply, peak oil refers to the point of maximum prodiiction. The concept of peak oil s often credited to geologist M. King. Hubbert whose 1956 paper first presented a formal theory. Some observers, such ad petroleum industry experts Kenneth S, Deffeyes and Matthew Simmons, predicted there would be negative global economy effects after a post-peak production decline and subsequent oil price.increase because of the continued dependence af most modern industrial transport, agricultural, and industrial systems on the low cost and high availability of oil. Predictions vary greatly as to According to the International Energy Agency, conventional crude oll production peaked in 2006, A 2013 study concluded that peak oil "appears probable before 2030", and that there was a "significant risk" that it would occur before 2020 and assumed that major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oll-consuming nations, Predictions of future oil production made in the late 2000s stated either that the peak had already occurred, that oil production ‘was on the cusp of the peak, or that it would occur soon. These predictions proved false as world oll production rose and hit a new high in 2018. Hubbert's original prediction that US peak oil would occur in about 1970 appeared accurate for a time, as US average annual production peaked in 1970 at 9.6 millioniat DCL ey proved premature. Nevertheless, the rate of discovery of new petroleum deposits peaked worldwide It is believed that the oil peak is likely by 2025, according to the International Energy Agency. To prevent a decline in global oil production by 2025, the International Energy Agency (IEA) is announcing that shale oil Ce tant x 3.2, Conventional et no conventional a Global conventional oil production (nearly 3/4 of total oll production) “peaked in 2008 veo lion barrels per day (Mb / cl, and has declined since a litle over 2,5 Mb /d The IEA has estimated that this decline will not be interrupted (see World Energy Outlook 2018, p. et us point out that this fateful evolution was correctly predicted at the end ofthe 90s: only ere a confirmation ofa state eh fact The rk of tight supply is a strong option for the conventional & Overthe ast tree years, the average number of new approved convensfpal ol projets only half ofthe volume nesdadto balance the market unt 2025, gen emerging at demand prospect hal taker over alone Projection aeady predict a doubling of US shale ot suppl by 2025, but tis expected to more than tripe to compensate forthe continued lack of newer projects. The shale Gass not defintely the solution to this ak of conventional ol because Ws rather its antithesis = ios priv cawunisaa sescvons py wi enfionansn ao depts ac we wip inte production wth very rapt decline snd expesialy that we cannot manage * In fact, it is exactly technically the opposite. ntional tank. A conventional deposit is managed, worked and improved for maximum recover iti the work ofthe reserve engineer with the Enhonced Oil Recovery (EOR) as a tool but with li 1S. = The is et rele ste edepoyment tel vstram of omentionl entrain bree we do not see much. CS x 4, EROI (Energy ReturggaeGavestect We can speak of another valte that is related to the Peak Oil phenomenon. This is ETR energy return rate: Itis summarized by a linear equation that abstracts from economic and temporal variations: A Product Reference Unit N is used to produce X (multiple or not) of N 1.N XN We obtain a result without having to take in consideration the interference of the economy. For oil Industry, our ind € the barrel of oil (159 liters) as a constant value of N. We will measure the crumbling of rel is invested to produce 100 barrels in 1900.1.N > 100.N barrels invested to produce 35 barrels in 19801.N > 35.N ‘¢ A barrel is invested to produce 20 barrels in20101.N > 20.N 5. Consequences for the E & P majors 5.1. Economic and strategic analyzes «Shale Gas versus conventional» The shale Gas is in fact a tool dedicated to financial speculation due to the temporal profile of the production of shale gas wells, which drops sharply in the second year and is exhausted in G years oniat DCL ey ‘average, while the production of a conventional deposit persists for several decades, The tax rules allow the investment to be amortized in full in the first year, which makes it possible to make it profitable very quickly, after which new wells are drilled, and so on, taking advantage of the geographical proximity to minimize the costs of drilling (cluster). In the United States, shale oil continues to lose money, Hence a risk of serious economic crisis wth the fall of systemic banks that have focused on the "Shale Gas" and a certain annoyance of financial circles who feel caught in the spiral "Shale Gas” There is this article from Reuters rs.com/article/us: suuolshcsbasafseable ait tistedraesenOLScoeaesQRCMOGEE ) a Itis for financial community like considering Shale Gas as a sort of new gambling in Las Vegas i, ith table, without being able to get out of the game, some banks continue to stay inside “Shale loans because it’s the sole solution, “you sink or you swim”. A scenario that could look as t 2008" but multiplicated by 1000. See the Wall Streets Journal bankruptcles-grow-as-investors-lose- appetit yale-11567157401 The risk to Europe's energy security becomes a key argument for a coherent energy transition, but neither coal, wind, nor solar will cover the needs. Only Nuclear Energy would be acceptable but as shale gas itis rejected by the people, the NGO and mainly the opinion without knowledge'about energy procurement. From now on, a change of strategy for the E & P majors in terms of, exieion oreven re-exploration is to be taken into consideration. The most important is an adjust ment ofthe exploration methodology to see re-exploration and adjustment of production in the Brown Fields alter these re-exploration studies. The level of investment in new regions to develop, new deposits (Green Field) is a mix of time, human. worktoset upa projet and intial costs in studies Moreover, f more expensive technologies are needed ERP company decides to develop new Greed proc, they must tke into consideration the s- called administrative difficulties and enc ee These phenomena that when they combine burst the costs, are time-consuming and block projects in the drawers. > we tenmens omen n ie ~ Auction on a new block, Négotiation and Payment of Rights and Extras EIA study, ses study to the ministry and several rounds of questions and answers ction), control, execution and interpretation Seismic (refractior - Drilling study, ro 1 then complexion and Installation of the production network ~6 to 8 years betuéen the idea and the frst barrel 23. oie He ee eee cae ~ An E & P that has a turnover with its production based on the exploitation of Brown Fields and without Greenfield project risk in the short term may disappear. It is mathematical because the production will decrease and it will not have the means to finance its new explorations and to put in production its new fields whose production costs increase at the same time.iat DCL ey The costs of the Green Field, considering the ERO! makes reflect the decision committees of the oil majors before embarking on a project. The state of reserves readily available is disturbing, The number of bankruptcies of shale producers has been very high since 2018, Wall Street has no appetite for debt issued by a sector that, taken as a whole, has never made any money. 6. Obsolescence of seismic studies compared to new technologies. Most old fields or Brown Fields are based on 2D seismic. Clearly, we drilled and established a system of pumping and crude production based on 2 D images and that was the top technology in the 70s. But what, can we expect from these images and their technical resolution and that they reflect exactly on the tank now? Since this seismic, there are no more images of the deposit, itis the reservoir engineer who manages by heaps of systems of information collection. ye oN Redoing a traditional seismic (reflection, refraction) is impossible but there are other intermediate technologies such as offshore OBN but which require a high acquisition cost considering own operational costs , a Let's start with an example that may concern you or a loved one because now we can do an ultrasound of the heart with a smart phone and a Butterfly... n the office or in the living room! Go to https://www.butterflynetwark.com/ It’s mobile phone, cheap, simple. In fact we change the size of the tool, and the operational costs, the invest ments (no more need of imaging clinic for the doctor) but without changing or improve its usefulness and especially its speed of diagnosis is the main advantage because it can be made in the moment, without an appointment and on site in case of serious accidents requiring immediate action. This is what we are now offering with the NMR for seismic studies. at 7. Evolution of seismic technology w Refractive Seismic, Reflection Seismic, OBN now, well seismic, in general i iz expensive, itis a heavy proces fometine i ay not work. On te i woud be necessary to deaeembl, nd stop he production its impossible to do and no gnehhas ever done. A beginning of solution was evident thanks to the seismic at sea with an OBN technique made in Gabon. We can redo a picture ofthe tank at sea in not too deep waters without stopping production, The decisions had to be then to rework the technical means an this old tank which was highlighted with a20 seismic then the OBN allowed to correct the shooting and torasethe levels of production. nally ths what think ths that Operator developing thi OBN must tink of doing ores dene a ceo ating ee science in the former Soviet Union of the Cold War. develops sources (see Russian reserve levels), there was more research in geophysics but for belli ications. After the end of the Soviet Union, each new republic will recover its researchers and di its own institute of geophysics with its specialty or rather the specialty of its investigation heads. Thiere js the magneto telluric seismic which is a geophysical exploration technique based on the subsurface resistivity variations, using the magnetic field induced by the telluric currents itis the Muscovite geophysics marketed by Norwest, This technique requires a great effort in the field with a mobilization of large teams 45 in a traditional seismic. Bolpegas is develo ping here in Bolivia this technology with JV Norwest / Bolpegas, Few ete this, but it was a top priority in the five-year plans to develop Geophysical techniques toae: aL LL 9. NMR: the 21 century technology in earth science There js the same evolution of technology for the exploration of oil reservoirs as well as those of water. | am talking about the Nuclear Magnetic Resonance (NMR). It s the advanced technology of another republic of the former Soviet Union. This application has many advantages and Is revolutionary both for the technique but also on the strategic scope of this technology for a major E & P. 9.1, Explanation of NMR technology It's the easiest thing to see these documents NMI Presentations: wurw mediafire com/?98odsiiweyaoacn Article inthe Copernicus Gl Journal www geosc\instrum-method-data-syst net/5/551/2016, FAGE: http://earthdoc eage org/publication/publicationdetails/?publication=84639 General idea of NMR technology www.mediafire.com/?ok2zqe17883esbe & 9.2. Strategy for the use of the NMR XS In the current context, the NMR represents a productive, large-scale and sraggt }olfor a major E & P, because its infinite possibilities allow to take back the hand in the war bet ajors E & P which Is in progress. s 10. NMR and the Refurbish Brown Field (RBF) we 10.1. Old fields in full ownership of the E & P w s seismic but by an NMR system of the reservoir ir iction. Thanks to the NMR (NMR stage 1 and stage 2), even if it is in production one can make th photo of the deposit without stopping it. This deposit produces what it produces but after a refu work on the tank and the asset in general (see redoing new x 102, Fieldstobe bought. s Instead of relying on new projects, t would be rer tnleresting to rework Brown Fields by doing anew A major €& P may ve ide la wore elcepany eonocners ute fllvwmngenoenon Sale of Nan proven reserves, but we can check for cheap (stage 1 NMR) before signing and fact the field is not bi ger with other additional reserves without saying anything to the of Brown Fields for cessation of activities or fallbacks, Stage 1 and then Stage 2 NMR for urbish, CD * nedeeming dead wells and relaunching them, there are technologies ofthe former Soviet block that come from military applications diverted to resurrect the dead. 10.3. New blocks or Green Field Development (GFD) = Ifthe trend is to go to develop a new block, you can make a seismic stage 1 to know roughly where are the tanks on the block auctioned. This is a quick and inexpensive method because we quickly know if Itis a viable project or not,iat DCL ey We ean check all the blocks that are in a round of bidding to choose the best and easiest to do in terms of technical difficulties for production. We will avoid the "Kachagan" effect or the "EPR syndrome". - For example, after 4 drilling campaigns in Namibia in which I took part (Sintezneftgas, Chariot, HRT and Repsol} nothing was found, the tectonic theory with interlocking continents does not work. A good NMR ‘would have been useful nat to spend what was spent in terms of 4 projects. We started a NMR study started in Namibia but to look for very deep water reservoirs, Namibia is a desert with perhaps Offshore ou! 10.4. Information about colleagues E & P > currently but with a vision on the future of its tanks. It is Eni Congo who bought waureed ‘rom in 2010 for example. ee 11, NMR Stage 1 and NMR Stage 2 s§ The most important is to have a strategy to develop the NMR technique separate each step. In Latin America but all over the world, there are ‘where only NMR technology can work, such as jungles, mountain others, in the E & P, and we need to inaccessible seismic areas aus, rainforests, wetlands and 11.1. NMRR Stage 1 known as "block cover" + scott cnet reve man XS = Ground contours identified ol and gas elds an individual epost deposited on maps = Zones of maximum response of signals, ds “The number of horizons, é Approximate depth horizons, & - Approximate thickness of the hora < Indications for price @ 100 km? at § 80,06 peri km?) 1,000 km? at $230j000 ($ 230 per 1 km?) 10,000 km? at $300,600 ($ 30 per 1 km’) 112; ans aan 5 SS tine contours of i gas and ol & gos reservoirs “tint eect Ae rtoraf hrdonal eater TaeasuCoL ania Thc peice go a i ao Inte of ge presture nthe gar cap (eserves, The pesenesafwster under thea horuon, Vertes san data colurn ~ Vere sectlns of hydrocarbon resets, Roof structural maps for individual layers, Calculated volume of layers, filed with gas and oil,iat DCL ey Preliminary calculation of forecasted oil and gas resources in all deposits, Mapping the maximum signal response in each reservoir Identification of the optimum drilling points. Indications de prix 5 km? at $ 35,000-$40,000 10 km? at § 50,000 '50 km? at $ 90,000 / $100,000 12, Strategies for amajor E&P costs and saving times and energy. Without to spend money, time in of one of these famous feld projects you can for example Ite ng on een el ras ng expr ret th he Morini — vasa anuj tn woman tn gE en sop the pecuctn fom testa echnes departments ean redo prosugesonby medting cuipnn ncn oem ra if ere ome precio (on nanogemen) Make an observation of new bouldering blocks by making whe of the block to see if we can put onthe bidding ofthe best and most promising determine aint of the purchase value anda budget accordingly s In case of association / redemption with another EP ‘one verifies the assets (BPD) and the reserves to xpi ws 13, Search for other commodities oxneat technology Infact, an € & P should venture i 'w sector that it can dominate but above all that has the same imple concept” as its main business area For the oll business the simple concept comes down toa simple definition “witha tap to open / close and / or with a tank or canbe stored just in case’ rhe suche wn ee tt eo worl tn ands ngs org exe a the storage and its ease of transport that gives value to the source of energy not its energy qualities, ts so- called gree réutation ors cos of production water fehvérocectric power, uranium fr nuclear energy 2s and lla course are enerles that have a “brio wean stare homie neon hemor ramp ann cance hae tem we they are Apart from hydro energy, water is the real convenience to have a future and which must be developed by an E & P which has the knowledge and the technical means in geophysics and seismic, then in drilling then the sector Upstream then in transport with the midstream and downstream for its distribution and sale as. it will be worth more in 10 years than the oil actually. This is the subject of the Water War between Israelis and Palestinians since 1973 with the Golan Heights.iat DCL ey We are also developing a whole NMR program for highlighting deep-sea reservoirs that, wi change, will be the most important commodity for humankind, 14, Conclusions. NMR is anew, inexpensive tool compared to standard seismic costs, This NMR is fast in its different phases of use. NMR is safe and can redeploy old fields and explore new ones. NMR is a tool for decision making, that is not time-consuming and avoids putting huge resources in place to do exploration. NMR is discreet and allows to know more in these times when the economic war rages between Europe and the ve States, ny the engineering of wells, the study of old tanks and knowing how to work in ALARP) could make its market By extrapolating, a solid financial group, surrounded by a small team of pro oil (rather oriented towards ‘on the 5 continents by buying companies breathless or very mature fields ~ by making refurbish and then gong back to production, it could ell these assets shorn to majors of drecty to midstream operators or dec to big makers and brokers (Trtigut Senco, Vitl and Mercuna}. snot ne ut canbe redone easy There ae examples of adventures inthe Brown Fils: & + Jean Francs Henin with Maurel and Prom, whichis solo Pertitne + Hubert Perrodo with Perenco: The Group began operations nthe oll and gas industry in Singapore in 1575 as.amartime series company and sno a malor le. + The Bush family with Carlyle International Energ ner (CIEP) is continually seeking investment ‘opportunities in oil and gas outside of North America, including Europe, Africa, Latin America and Asia, The investments are mainly focused on oil and ploration and production, medium and downstream activities, refining and marketing (R & lifield services (FSO), 10