Completing the first two wells had taken much longer than intended, partly because drilling crew were new and partly because unexpected problems had been encountered along the way. Plan A envisaged four wells on stream that day. The reality was one well in operation and a daily oil production of just over 10 000 barrels. Three months later, Amoco had succeeded in putting two wells into operation. But daily output remained at a modest 11 500 barrels of oil.[REMOVE]Fotnote: Stavanger Aftenblad , 4 January 1983, “Valhall produserer mindre enn planlagt”. Put another way, this shortfall represented about NOK 5 million per day at the prevailing dollar exchange rate. But that was not an actual loss, merely a deferment of revenues. [REMOVE]Fotnote: Stavanger Aftenblad , 26 May 1983, “Lav produksjon demper åpningsfesten på Valhall”.
Unconsolidated chalk in the reservoir created the biggest problems. Ordinary blackboard chalk is about 10 times stronger than the rock in the Valhall structure. The latter was porous and, as pressure declined, the load became so great that it collapsed and blocked the oil flow – or quite simply accompanied the wellstream up to the drill floor. Tonnes of a substance resembling discoloured toothpaste became deposited in separators and piping, and had to be dug out by hand.[REMOVE]Fotnote: Interview with Asbjørn Tansø. Valhall became known as the “problem child”.
Fracturing and marbles
A programme was initiated to create artificial fractures in the reservoir in order to boost flow. Known as fracking, this process was considered the most effective way of improving oil recovery in a “tight” formation. It involved a controlled increase in downhole pressure so that the rocks fractured. Sand then had to be pumped into the small cracks created in this way to prevent them from closing.
A production well is fitted with a liner containing small holes which the oil and gas can flow through. These were created on Valhall by a “perforating gun” which was run into the well. This did its work by firing shaped explosive charges, and similar devices were also fired some distance into the formation in order to create fractures in the chalk. Valhall’s oil lies in two separate zones. Known as the Tor formation (because the field of this name was found there), the uppermost of these contains about 70 per cent of reserves. But that was also where the biggest problems arose, because the chalk rocks in this zone are very thick. To get out its oil, Amoco tried a “back-door” route through the Hod-formation.
The idea was to generate small cracks linking the latter to the overlying Tor-reservoir through the hard rocks separating them, starting by fracturing Hod and then moving up. Intended to make it possible to tap the reserves in Tor via the underlying zone, this process required a solid plug in the lower strata while routes continued to be opened above them. Ordinary glass marbles would provide the bulk of this barrier.[REMOVE]Fotnote: Aftenposten , 21 November 1983, “Gradvis bedre oljeproduksjon på Valhall”.
Well A-5 was the first to be divided into zones and subject to fracturing on a zone-by-zone basis, with the marbles pumped down to function as a stopper. The glass orbs had been used in this way elsewhere in the world, but not on the NCS before. A total of 126 000 of the balls were emptied into A-5 in the space of three hours.
After “Operation Marbles” had been launched, the fifth well on the field created optimism both there and on land for a while. Marbles ceased to be used as new and better methods were developed to isolate perforated zones in the wells.
How much – and how to get it out
Just as Amoco was becoming satisfied with developments on Valhall, its leadership was growing less enthusiastic over Norwegian oil policy – and particularly the tax regime. Combined with low and uncertain oil prices, the latter made it unprofitable to invest in projects on the NCS – or so the US company alleged. Amoco considered that it could not afford to invest in Norwegian developments associated with high risk, given the state of the oil market. Alternative and more interesting prospects were available in other parts of the world, and the company refused to participate in Norway’s eighth licensing round in 1984.
At the same time, the production difficulties on Valhall were prompting the Norwegian Petroleum Directorate (NPD) to question the level of recoverable reserves in the field. In its 1983 annual report, the regulator reduced estimates for Valhall from just over 214 million barrels to 120 million of oil and from 26 billion cubic metres to 16 billion for gas.[REMOVE]Fotnote: NPD annual report, 1983, p 60. This meant that costs per barrel produced were significantly increased, and made it more difficult to persuade the partners to invest in necessarymeasures. The downgrading accordingly pushed the field into a vicious circle. But it should be noted that Valhall was not the only field to have its reserves cut. Troll also suffered a big reduction.
An eighth production well came on stream in February 1984, and output reached 50 000 barrels per day plus 50 million cubic metres of gas and 5 000 barrels of condensate. Production difficulties appeared to have been overcome through the fracking process, even though the amount of oil originally anticipated remained some way off.
Amoco spokesperson Øyvind Kvaal, who always took a positive view, stated: “We have unquestionably managed to improve the position.”[REMOVE]Fotnote: Norsk Olje Revy , 1983, p 38. The company regarded well A-8 as “a bit of an oil fountain”, thanks to the fracking programme and a favourable location. It had been drilled in recordtime – a mere 35 days from spudding.
Things were changing from negative to positive for the problem child, and operating regularity rose to over 99 per cent during the spring of 1985. The licensees began to make money, and Amoco even expected to start paying Norwegian tax from1986.
New technology – new approach
But the problems were not over, and the “up and under” fracturing method was abandoned in the face of massive chalk production and collapsing wells in the summer of 1985. Five of 18 wells were out of operation, and daily output slumped from 63 000 barrels in the spring to just over 40 000 by the autumn.
The many setbacks and poor earnings – Amoco Norway accounted for only about five per cent of the parent group’s overall output – also prompted a downgrading of the company. Uncertainty prevailed about what the top executives in Chicago and Houston would do with the Norwegian subsidiary. Its chief executive was offered a generous pension package and not replaced. Having only a resident manager incharge was a sign that Amoco Norway had lost status and was now to a greater extent under direct US administration. See the article on continuous improvement.
The expected progress had not been achieved and no recruitment with an eye to the future was being made. Departments were cut back – particularly the exploration team, which was reduced to just three people. There were no resources for active searching. Future visions of being one of the major operators on the NCS disappeared, and all energies and all attention was concentrated on getting Valhall back into profitability.
The field appeared to be once again on the mend in November 1985, and four of the problem wells were reopened. Output rose from a low point of 35 000 barrels per day to 46 000. Amoco worked hard to tailor production technology to the softchalk, constantly trying out new methods to prevent the “toothpaste” blocking the wells.
In addition to creating sand-filled artificial fractures intended to ease the flow of oil, filters were introduced outside the production liners. Acid was also injected into the formation to create a number of small channels for the oil to flow. This method was new for Valhall, but built on conventional technology.
Propped fracturing gravel pack was a new solution introduced in 1987. In gravel packing,the perforated section of the production liner was filled with suitably graded sand. Pumped in under full pressure, the latter supported the porous chalk formation which the oil had to flow through, preventing the rock from collapsing and thereby blocking the production wells. Gravel packing had been conducted repeatedly in sandstone reservoirs, but never before in a porous chalk formation. But it did the job, reducing movement in the rock and preventing its collapse. Amoco eventually succeeded in keeping all 20 production wells open simultaneously, and production increased to 70 000 barrels per day.
So Valhall had once again surprised people – this time positively. The NPD upgraded its reserve estimates for the field to reflect the improved output. More efficient production methods raised hopes that 50 per cent more oil could be recovered than when the field was brought on stream in 1982. With new information about the reservoir drive mechanism and packing in a number of wells, the NPD also raised reserve estimates for Valhall by 17 per cent from the 1987 figure.[REMOVE]Fotnote: NPD, annual report, 1988.
Good production results enhanced the field’s economics – but not enough.[REMOVE]Fotnote: NTB, 3 December 1987, “Oljedirektoratet oppgraderer Valhall med 50 prosent”. However, the management of Amoco Production company decided to maintain its commitment to Norway. A new managing director was appointed in 1987, and the outlook suddenly changed. With a bright future predicted for Valhall and Amoco Norway, a turnaround operation was launched. See the article on continuous improvement.
Back to exploration
Among Bob Erickson’s first acts as the new chief executive was rebuilding the exploration/drilling department, with more wells on Hod and development there as one outcome. See the article on Hod.
The change of strategy on Valhall was good news for drilling contractor Dolphin A/S. It had been told in the summer of 1986 that all work were to cease, and layoff warnings were issued for much of its workforce. However, the decision ona new future for Amoco Norway and Valhall meant a resumption of deviateddrilling on the field and a revival of the hunt for more discoveries. New production wells were also to be drilled by Dolphin, which had held the drilling contract on Valhall ever since it was initially developed.[REMOVE]Fotnote: Stavanger Aftenblad , 6 February 1988, “Funn drift for Dolphin på Valhall”.
Amoco set a drilling record in the field in 1988, with the longest deviated well on the NCS until then – and completed in 40 days. Well 23 was drilled to a total length of 5 472 metres with an average deviation of 72.9 degrees, which meant it ended no less than 4 092 metres from the platform in horizontal distance.[REMOVE]Fotnote: NTB, 4 July 1988, “Amoco setter ny borerekord på Valhall-feltet”.
Things began to move the right way for Valhall. Its reserves were upgraded once againin 1989, when Amoco expected to boost recovery by about 23 per cent – from 247 to 305 million barrels. The NPD also observed a positive trend, and increased its estimate of resources in the field by eight per cent from the year before.
In order to enhance production even further, Amoco decided to invest NOK 70 million in upgrading the drilling platform to expand the number of well slotsfrom 20 to 24. The company also hoped to recover another few tens of millions of barrels from Valhall by initiating a waterflood programme.[REMOVE]Fotnote: NTB, 1 September 1989, “23 prosent økning i oljereservene på Valhall”. A steady increase in estimates of the field’s resources by the NPD raised theseby 2001 to no less than 1 048.5 million barrels of oil, 4.1 million scm of natural gas liquids (NGL) and 25.6 billion scm of gas.
Estimated Valhall resources – NPD annual reports
|Year||Oil in mill scm||NGL||Gas in mill scm||Comments|
|1982||58||45||Valhall A + rest|
|1983||34||28||New assessment = downgrade|
|1984||19||Valhall A only|
|1986||38.1||5.2||14.2||Valhall A + rest|
|1988||48.7||3.5||12.7||New info on drive mechanism + infilling of several prodn wells = 17% increase from 1987|
|1990||62||3.3||12.5||Optimisation of recovery factor with more prodn wells = 17% upgrade|
|1991||68.8||4.1||17.7||Upgrade following plans for 5 new wells + higher drilling compressibility in reservoir model|
|1992||76||3.6||19||Upgrade because reservoir model updated|
|1993||94||4.8||23.3||Upgrade because reservoir model updated|
|1994||100.7||4.1||26.3||Upgrade after 3D survey|
|1995||130.9||5.1||32||Upgrade because waterflooding included|
|1996||115.4||4.8||32.1||Downgrade because of alternative prodn strategies, and because oil counted in 1995 as recoverable with these strategies was transferred in 1996 to resource class 3 (diff table)|
|1999||132.3||4.5||31.2||Upgrade because new reservoir showed increased resources in place on the basis of new well data from 1998-99|
|2000||149.3||3.8||24.8||Waterflood PDO approved = 20% increase in resources|
|2001||166.7||4.1||25.6||PDO for northern and southern flanks approved = reserves upgraded|
Inaugurating the Valhall fieldRows over royalties