UPES SPE FEST 2018

CASE STUDY CONTEST

PROBLEM STATEMENT
Elf Energy Ltd is an established global Exploration & Production Company. With its presence in
the upstream and downstream segments in the regions of Mordor, Rivendell, Gondor, and
Eriador, Elf is highly successful in its operations. The company has recently been awarded a Coal
Bed Methane block in the region of Wilderland by the government of Hobbiton.

Figure 1: Map of Hobbiton with Block Location

Hobbiton is a pristine country with rich biodiversity and natural resources. Spread across an area
of 1 million square miles, Hobbiton is surrounded by water on all sides. The underlying geology
of the area is that of the Permian age comprising of a group of coal seams. It is a fertile agricultural
land that is also an animal breeding area. The main sources of income are farming, meat and
wool. The government of Hobbiton acquired the services of an external agency from the
neighboring country of Gondor, for conducting geological surveys in the region of Wilderland.
The survey identified the presence of coal over an area of 500 sq. kms. Hobbiton government
later directed its Ministry of Hydrocarbons to undertake initial exploration in the area to identify
the gas reserve in the coal seams for prospective field development. Based on core hole drilling,
core studies, laboratory sampling, and pilot well production carried out over a period on nearly
3 years, the area of Wilderland was confirmed as a potential field for CBM gas

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extraction. The Ministry of Hydrocarbons then conducted a Bidding & Licensing Round for the
Wilderland field where Elf Energy Ltd was awarded the contract for a period of 15 years.

Figure 2: Block Map with Sectors, Faults & Core Wells

Reservoir Data:
The block has been divided into 6 sectors, S-1 to S-6. Based on the core holes drilled in sectors S-
1 to S-4, it was estimated that two normal faults (E-W) run across the block and there is one cross
fault (N-S). No core holes were drilled in sectors S-5 & S-6 and there is uncertainty about that
region. The reservoir has 3 Coal Seams – W1, W2 and W3.

Figure 3: Cross Sectional View

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Block Area – 500 Sq. Kms. (25 X 20 Km) Langmuir Volume – 18 scf/ft3
Coal Rank – Sub Bituminous Cleat Spacing – 0.1-1 cm
Age – Permian Avg. Initial Reservoir Pressure – 765 psi

Number of Seams – 3 Young’s Modulus – 3 GPa

Dip – Gentle (4 Deg Northerly) Poisson Ratio – 0.2
Net Recovery Rate – 50% Density Cut off – 2 g/cc
Langmuir Pressure – 800 psi

Coal Seam Name

Sector Data
W1 W2 W3
Top (m) 450 490 532
Bottom (m) 453 494 534
S-1
Gas Content (m3/ton) 4.1 3.7 3.6
Gas Saturation (%) 88 85 83
Top (m) 551 592 635
Bottom (m) 555 594 638
S-2
Gas Content (m3/ton) 4.0 3.8 3.4
Gas Saturation (%) 89 86 84
Top (m) 702 725 784
Bottom (m) 706 727 788
S-3
Gas Content (m3/ton) 3.9 3.3 3.2
Gas Saturation (%) 85 84 80
Top (m) 505 543 578
Bottom (m) 509 546 581
S-4
Gas Content (m3/ton) 4.2 3.8 3.3
Gas Saturation (%) 90 87 85
Table 1: Coal Seam Properties across Various Sectors

Gas Composition (Mole %)

Methane 94
Ethane 0.2
Carbon Dioxide 0.7
Nitrogen 1.2
Water 3.9
Table 2: Gas Composition

Drilling & Completion Data:

Rig Count – 3 Well Drainage Area – 550 Acres
Drilling Time per well – 4 days (Air Drilling) or 7 Days (Mud Drilling)

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 Casing Prices (INR per m) Drilling Cost (INR per m)
13-5/8” 1000 17-1/2" 12-1/4" 8-1/2" 7"
10-3/4” 1070 0-100m 3000 2400 2000 1500
9-5/8” 1200 100-200m 3440 2770 2300 1700
8-5/8” 1400 200-300m 3880 3140 2600 1900
7” 2000 300-400m 4320 3510 2900 2100
5-1/2” 1800 400-500m 4760 3880 3200 2300
Table 3: Casing Cost
500-600m 5200 4250 3500 2500
600-700m 5640 4620 3800 2700
Drilling Cost (INR per 200 m)
700-800m 6080 4990 4100 2900
17-1/2" 12-1/4" 8-1/2" 7"
800-900m 6520 5360 4400 3100
600000 560000 390000 350000
900-1000m 6960 5730 4700 3300
Table 4: Drilling Cost quoted by Gandalf for 0 to
200m Table 5: Drilling Cost quoted by Bilbo

The cost of drilling a well as quoted by Bilbo Drilling Company is mentioned in Table 5. A Service
Provider company Gandalf Rig Services is willing to drill the wells for a lump sum cost as given in
Table 4. The rate from 0m to 200 is quoted as in the Table 4 but the rates from 200m to target
depth will be same as Bilbo as per Table 5. The area being rich in ground water and main income
source being farming, government regulations include using a 2 or more casing policy to protect
ground water from contamination. Planned workover operation has to be performed every 90
days of Artificial Lift system installation time costing INR 250000 causing a production loss of
around 3 days. In case of a well breakdown, workover schedule may be altered accordingly.

Hydraulic fracturing is considered as best Stimulating technique and its cost will be INR 25 Lakhs
per well. It takes 2 days to Fracture seams for a particular well. Also the completion operation
takes around 3 days of time. The following are the Pump options to be chosen along with their
costs. Optimal pump size needs to be decided.

Pump Type Time taken to Pump Remarks

complete well Cost only
(INR)
Progressive 2.5 days 500000
Cavity
Pump
Electrical 3 Days 650000 Workover frequency reduces by
Submersible 10%.
Pump

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 Sucker Rod 4 days 800000 Workover frequency reduces by
Pump 15%.

Table 6: Artificial Lift Details

Production Data:
Estimated gas and water production rates from simulation studies have been tabulated below.

Avg. Gas Production Profile Avg. Water Production Profile

per well (SCMD) per well (CMD)
Year 1-2 15000 Year 1-2 100
Year 3-5 32000 Year 3-5 75
Year 6-11 18000 Year 6-11 40
Year 12-15 9000 Year 12-15 15
Avg. Well Head Flowing
Pressure (barg)
Year 1-2 2.5
Year 3-5 2.1
Year 6-11 1.7
Year 12-15 1.3
Table 7: Production Details

Sales Data:

The entire produced gas has to be sold within Hobbiton for a period of first 5 years. Post that, the
operator can at their discretion, decide whether to sell gas in Hobbiton or export.

Contract Gas Price

($/MMBTU)
Year 1-5 5
Year 6-12 5.5
Year 13-15 4.5
Table 8: Gas Sales Price

Gas Sales Specifications at Delivery Point: Pressure – 30 Barg, Max. Temperature – 55° C, Max.
Water Content – 8 lb/MMSCF.

Safety & Operational Risk:

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Given the reputation of Elf for high safety standards, the operator has to identify the risks
involved in the proposed block development activities with their mitigation procedures for safe
operations. It is required to propose an Emergency Response Plan.

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Deliverables
1. A full-scale field development plan covering at least the following:
a. Drilling & Completion Program
b. Production Strategy
c. Production & Surface Facility Design
2. Gas & Water Transportation Strategy
3. Gas Sales & Marketing Strategy
4. Location of Surface Facilities
5. Financial estimates (using industry averages wherever required)
6. Safety & Operational Risks with mitigation plan
7. Stakeholder involvement & Social responsibility initiatives
Rules

1. A Team can have a maximum of 3 members.

2. Contest is divided into two rounds
a. Round I – Prelims – Submission of Method Statement covering the team’s
proposed solution in a two-page document.
b. Round II – Finals – Presentation of detailed solution in front of jury panel and
questionnaire.
3. All submissions to be made by mail to upesspecase@gmail.com with the Subject “UPES
SPE Case – Team Name”.
4. Last date for submission of the preliminary two-page document is 11:59 PM, 18th January
2018.
5. Teams selected for the Finals will be notified on or before 26th January 2018.
6. Final Presentation is to be made on 9th February 2018, in the UPES SPE Fest & Conference.
7. For the final presentation, each team will be given 15 minutes for presentation and 5
minutes for questionnaire.
8. There is no limit on the number of slides provided the teams finish presentation within
stipulated time.
9. For any queries contact: Shivam Rastogi- +91-9634340312
Anindya Apoorva- +91-7248321328

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