Eni Corporate University Scuola Mattei

Scuola Enrico MatteiMaster Medea year 2003-2004

San Donato Milanese, 28th June 2004

Alessandro Di Nisio

Marco Gazzola

Jeremias Guitarte

Cristian Masini

Marina Muratore

Mariangela PernaTutors:

Domenico Di Renzo

Alberto Marsala

Giorgio Vicini

Expandable Technologies –Economic evaluation of the

installations

Students:

Eni Corporate University Scuola Mattei

Agenda

• Technological introduction• Reference scenario• Case A – Expandable Technologies: dual zone

application• Case B – Expandable Screen in horizontal well• Case C – Expandable Casing• Conclusions

• Technological introduction• Reference scenario• Case A – Expandable Technologies: dual zone

application• Case B – Expandable Screen in horizontal well• Case C – Expandable Casing

Eni Corporate University Scuola Mattei

SOLID CASING EXPANSION

• Cased hole remediation system for casing repair, perforation shut-off, corroded casing, …...

• Blank pipes coupled with expandable screens

Eni Corporate University Scuola Mattei

• Cased hole remediation system for casing repair, perforation shut-off, corroded casing, …...

• Blank pipes coupled with expandable screens

SOLID CASING EXPANSION

Eni Corporate University Scuola Mattei

• Cased hole remediation system for casing repair, perforation shut-off, corroded casing, …...

• Blank pipes coupled with expandable screens

SOLID CASING EXPANSION

Eni Corporate University Scuola Mattei

Cou

rtesy

: W

eath

erf

ord

Slotted base pipeCou

rtesy

: B

ake

r

Perforatedbase pipe

Expandable screens provide:

• Effective sand control

• Formation support (eliminate/reduce annulus)

• Larger ID for easier well intervention access

• Enables accurate production logging

EXPANDABLE SCREENS TECHNOLOGY

• Effective sand control

• Formation support (eliminate/reduce annulus)

• Larger ID for easier well intervention access

Eni Corporate University Scuola Mattei

SCENARIOS’ HYPOTHESIS

Inflation rate 2,5%

WACC 8,1%

Income Tax 36%

Royalties 8%

R&D Investments (K€) 570

Depletion rate 10% 12% 12%(+1%/a)

Gas price ($/MMBTU) 1,5 1,25 1

Oil price ($/bbl) 24 21 18

Exchange rate €/$ 1,05 1,17 1,25

Eni Corporate University Scuola Mattei

Case A – Expandable Technologies in dual zone application

• Insufficient gravel quantity

• Abandonment of main well and side-tracking

• Expandable Technologies as alternative to Gravel PackCASE A: ADDITIONAL HYPOTHESIS

Production (Sm3/g) 670.000

Productivity increase 20%

Workover cost (K$) 1.250

Probability of shorter longevity(need for a workover on 10th year)

20%

Operating costs ($/boe) 2,2

Eni Corporate University Scuola Mattei

Case A – Economic Evaluations

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-200

0

200

400

600

800

1.000

1.200

1.400D

iffe

ren

tial

Cas

h F

low

s (K

€)

Case A - Differential Cash Flows

Best Case Normal case Best CaseWorst Case

Normal case

NPV @ 10 anni 3.800.000 €

Eni Corporate University Scuola Mattei

• Horizontal well with OHGP• Bad event: swelling shales• Side-tracking with expandable screen

CASE B: ADDITIONAL HYPOTHESIS Production (bbl/g) 6.000

Productivity increase 10%

Workover costs (K$) 1.250

Probability of shorter longevity(need for a workover on 10th year)

20%

Operating costs ($/bbl) 3,5

Case B – Expandable Screen in horizontal well

Intervention costs (K$) 1.700

Probability of swelling shales actually occuring 25% 33% 50%

Eni Corporate University Scuola Mattei

Case B – Economic Evaluations

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

500

1.000

1.500

2.000

2.500

3.000D

iffe

ren

tial

Cas

h F

low

s (K

€)

Case B - Differential Cash Flows

Worst Case Normal Case Best Case

Normal case

NPV @ 10 anni 9.500.000 €

Eni Corporate University Scuola Mattei

Case C – Solid Casing Expansion

• Need for insulating the upper interval (cladding)

• No production increase

• Unique differential Cash flow is cost saving of 850,000$

• Need for insulating the upper interval (cladding)

• No production increase

Eni Corporate University Scuola Mattei

Adoption of Expandable Technologies at 10 years

Development E.T. total

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Dev

elo

pm

ent

E.T

. to

tali

Tipe A Tipe B Tipe C Tot ENI

Development E.T. per year

0

1

2

3

4

5

6

7

8

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Dev

elo

pm

ent

E.T

. per

yea

r

Tipe A Tipe B Tipe C Tot ENI

Eni Corporate University Scuola Mattei

Synthesys within Eni group

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

10.000

20.000

30.000

40.000

50.000

60.000

Dif

fere

nti

al C

ash

Flo

ws

(K€)

ENI tot - Differential Cash Flows

Worst Case Normal Case Best Case

Normal case

NPV 10 years 163.300.000 €

Eni Corporate University Scuola Mattei

Synthesys within Eni group

Normal case: NPV 10 years

After taxes 163.300.000 €

No taxes 277.000.000 €

This conclusion might be conservative.

A major E&P company announced a double value creation (320 M€) with almost the same number of installations

Eni Corporate University Scuola Mattei

Conclusions

Main features of Expandable Technologies:• Increase in production due to larger ID downhole• Cost savings in comparison with alternative solutions• Though, need to confirm technology’s longevity• Anyway, Expandables are already considered a

breakthrough technology• The most ambitious application – in drilling – is the

development of the monodiameter well-bore

• Increase in production due to larger ID downhole• Cost savings in comparison with alternative solutions• Though, need to confirm technology’s longevity• Anyway, Expandables are already considered a

breakthrough technology

Eni Corporate University Scuola Mattei

Thank you

for your attention