Investment in deepwater oil and gas exploration projects:a multi-factor analysis with a real options model

Deepwater oil and gas projects embody high risks from geology and engineering aspects, which exert substantial influence on project valuation. But the uncer- tainties may be converted to additional value to the projects in the case of flexible management. Given the flexibility of project management, this paper extends the classical real options model to a multi-factor model which contains oil price, geology, and engineering uncertainties. It then gives an application example of the new model to evaluate deepwater oil and gas projects with a numerical analytical method. Compared with other methods and models, this multi-factor real options model contains more project information. It reflects the potential value deriving not only from oil price variation but also from geology and engi- neering uncertainties, which provides more accurate and reliable valuation information for decision makers.

An Experimental Study on the Reinforcement of Weakly-Consolidated Shallow Formation in Deep Water Using an Epoxy Resin-Based Fluid

The mechanical properties of Portland cement differ from the weakly consolidated shallow formation in deep water.This results in undesired abrupt changes in the compressive strength and elastic modulus at the cement–formation interface.In this study,a water-borne epoxy resin was applied as a strengthening material to reinforce the weakly consolidated shallow formation and protect the cement sheath from potential failure.The mechanical properties of the unconsolidated clay were tested,including their changes with increases in the temperature and curing time.In addition,the effects of the seawater,cement slurry alkaline filtrate,and saltwater drilling fluid were evaluated.As confirmed by the results,the strengthening fluid was excellent at reinforcing the unconsolidated clay,with a compressive strength of 2.49 MPa(after curing for 7 days),even at a dosage of 5%.A cement slurry filtrate with a high pH was suitable to produce the required strengthening of the formation,especially its early age strength.It should also be pointed out that the used fluid exhibited good compatibility with the saltwater drilling fluid and seawater behaved well as a diluent for the strengthening fluid.

Reservoir forming conditions and key exploration technologies of Lingshui 17-2 giant gas field in deepwater area of Qiongdongnan Basin

On September 15,2014,China National Offshore Oil Co.,Ltd announced that a high production of oil and gas flow of 1.6
106 m3/d was obtained in Well LS17-2-1 in deepwater area in northern South China Sea,which is the first great oil and gas discovery for self-run deepwater exploration in China sea areas,and a strategic breakthrough was made in natural gas exploration in deepwater area of Lingshui sag in Qiongdongnan Basin.Under the combined action of climax of international deepwater exploration,high oil prices,national demands of China,practical needs of exploration,breakthroughs in seismic exploration and testing technologies,innovations in geological cognition and breakthroughs in deepwater operation equipment,Lingshui 17-2 gas field is discovered.Among these factors,the innovation in reservoir forming geological cognition directly promotes the discovery.The quality of seismic data in the early time is poor,so key reservoir forming conditions such as effective source rocks,high quality reservoirs and oil-gas migration pathways are unable to be ascertained;with support of new seismic acquisition and processing technology,some researches show that Lingshui sag is a successive large and deep sag with an area of 5000 km2 and the maximum thickness of Cenozoic stratum of 13 km.In the Early Oligocene,the Lingshui sag was a semi-closed delta-estuarine environment,where the coalmeasure and marine mudstones in Lower Oligocene Yacheng Formation were developed.The Lingshui sag is a sag with high temperature,and the bottom temperature of source rocks in Yacheng Formation can exceed 250C,but the simulation experiment of hydrocarbon generation at high temperature indicates that the main part of this set of source rock is still in the gas-generation window,with resources of nearly 1 trillion cubic meters,so the Lingshui sag is a hydrocarbon-rich generation sag.In the Neogene,the axial canyon channel from the Thu Bon River in Vietnam passed through the Lingshui sag,and five stages of secondary channels were developed in the axial canyon channel,where four types of reservoirs with excellent physical properties including the axial sand,lateral accretion sand,natural levee sand as well as erosion residual sand were developed,and lithologic traps or structural-lithologic traps were formed.The diapiric zone in the southern Lingshui sag connects deep source rocks in Yacheng Formation and shallow sandstones in the channels,and the migration pattern of natural gas is a T-type migration pattern,in other words,the natural gas generated from Yacheng Formation migrates vertically to the interior of the channel sandbody,and then migrates laterally in the channel reservoirs and forms the reservoirs.Innovations of geophysical exploration technologies for complicated geological conditions of deepwater areas are made,such as the detuning comprehensive quantitative amplitude hydrocarbon detection technology,which greatly improves the success rate of deepwater exploration;key technologies of deepwater safety exploratory well testing represented by the platform-dragged riser displacement technology are developed,which greatly reduces the drilling test cost.The above key exploration technologies provide a strong guarantee for the efficient exploration and development of Lingshui gas field.