Implementation success rates, reliability, and demonstrated learning curves for intelligent completion technology are on par with many other drilling technologies.

Statistics indicate that, while there is certain growth in the adoption of intelligent well technology, the increase does not correlate with either the documented experience of value realization or the predicted potential benefits.

A number of factors are affecting this misalignment of uptake of intelligent well technology and its value — even in an environment of high hydrocarbon prices and declining production.

Drivers for adoption

Early adoption of intelligent well completions arose chiefly from the need to avoid the high cost of intervention. This demand continues to be a primary business driver today, essentially in subsea and deepwater wells, where rig rates can exceed US $500,000 per day.

In regions such as the Norwegian North Sea, the West Coast of Africa, the Gulf of Mexico, Brunei, and Saudi Arabia, where the technology has been used to manage the reservoir recovery process, operators have realized the value of intelligent wells.

Today, companies at the forefront of the exploitation of intelligent well technology are international majors and national oil companies that are driven by reservoir management and stewardship and which have been successful in both predicting and demonstrating the added value of the technology. These companies often focus on asset management and have a visionary business champion who promotes the judicious application of new technologies.

Conspicuously absent from this pioneering club of intelligent well users, however, are a few major and national oil companies that pride themselves on leading the industry in the application of new technology. The reasons behind their reluctance include early failure experience, difficulty in quantifying the incremental value, skepticism of the reliability of the technology, unwillingness to be “the first,” lack of quick payback, and the “not-invented-here” syndrome.

Some of these organizations are driven not by asset management, but by strong and very competent drilling organizations. These groups, which have provided benefits to their companies with technical and economic success in their domain, remain skeptical of new technology outside their sphere of influence.

This healthy struggle between drilling and asset teams has been going on for decades. The driller sometimes cites these new technologies as factors that increase the cost, time, and complexity of delivering the well — and not without reason. Intelligent completions can add a half million to several million dollars to the cost of a completion, not including incremental rig time of several days to run the completion.

Despite implementation success rates, reliability, and demonstrated learning curves on par with many other drilling technologies, the perceived complexity of intelligent wells and the high cost of recovering from completion-running disasters are certainly enough to make many drillers play their veto card against smart completions.

This scenario is unfortunate because great gains have been made in improving infant mortality and long-term reliability of both intelligent well components and intelligent completion systems that include other completion components.

In fact, over the past decade, long-term reliability of intelligent completions has grown from 75% in 1997, to more than 95% today.

Industry experience, comprehensive planning, and focused execution are driving down non-productive time (NPT) on rigs in line with other drilling and completion operations. Yet, as is the case across the industry, a shortage of trained, experienced people stretching the capability of organizations to make significant gains in delivering quality, performance, reliability, and reduction of NPT. This situation is as true for intelligent completions as it is for all other drilling operations.

Beyond the additional cost of NPT and infant mortality of new technology, the potential for deferment or delay in delivering hydrocarbon production in a high-price/high-productivity environment can have even more sobering effects.

In organizations where drillers are calling the shots, reservoir engineers are hard pressed to make their case, particularly when dealing with uncertainties like reservoir performance and oil price.

Stochastic analysis of multiple geological and reservoir scenarios is further complicated by the degrees of control offered by intelligent well technology. Factoring in reasonable distributions of equipment reliability and time to failure can be a daunting task. Many asset teams have neither the resources nor the experience to do justice to the analysis of the incremental value of the application of intelligent well technology.

Pressed for time, reservoir engineers are forced to offer a deterministic evaluation of the intelligent well completion, discounted by a conservative evaluation of equipment reliability.

Reservoir engineers do themselves further injustice by undervaluing the potential reservoir recovery efficiency benefits of intelligent well technology in their full-field models as a result of simulation artifacts. Due to the “physics” of a waterflood or strong aquifer simulation, given enough time and enough water displacement, most simulators will converge on the same end-point in hydrocarbon recovery (dictated by the equations proposed by Buckley and Leverett). As a result, while production acceleration can be demonstrated, the big money item of improved recovery can be elusive to simulate.

These simulations do not usually take into account the real-world effects of misdiagnosed operational problems, delays, formation impairment from workovers and recompletions, and intervention failures when comparing conventional to intelligent completions.

Thankfully, real-world examples of the benefits of intelligent well technology are being published as multiwell projects establish a track record and statistically significant data to back the claims.

In the North Sea, the use of intelligent well technology has impacted production with sustained improvements of 800 to 1 Mcm/d of oil. In the Far East, intelligent wells have reduced unit development costs by $1 to $1.5/bbl and created an expected 2% to 3% increase in hydrocarbon recovery. In the Middle East, SmartWell technology, combined with maximum reservoir contact wells, is increasing average well production by a factor of three and reducing capital investment for field development by a similar ratio.

Many companies see the value of intelligent wells and have great expectations for the future. And in that future, the asset team will be calling the shots.