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					                       Scuola Enrico Mattei
                   Master Medea year 2003-2004

               Expandable Technologies –
               Economic evaluation of the
                     installations
                                   Students:
         Alessandro Di Nisio                           Cristian Masini
         Marco Gazzola                                Marina Muratore
         Jeremias Guitarte                           Mariangela Perna
                                    Tutors:
                                Domenico Di Renzo
                                 Alberto Marsala
                                  Giorgio Vicini

                      San Donato Milanese, 28th June 2004

Eni Corporate University          Scuola Mattei
                           Agenda


   Technological introduction
 • Technological introduction
   Reference scenario
 • Reference scenario
   Case A Expandable Technologies: dual zone
 • Case A – Expandable Technologies: dual zone
   application
   application
   Case B Expandable Screen horizontal well
 • Case B – Expandable Screen in in horizontal well
   Case C – Expandable Casing
 • Case C – Expandable Casing
 • Conclusions




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
                            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
                            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
                  EXPANDABLE SCREENS TECHNOLOGY

                   Perforated                                          Expandable screens
                   base pipe                                           provide:
                                                                         Effective sand control
                                                                       • Effective sand control
                                                                         Formation support
                                                                       • Formation support
                                                                       (eliminate/reduce annulus)
                                                                       (eliminate/reduce annulus)
                                                                         Larger ID for easier well
                                                                       • LargerID for easier well
                                                                       intervention access
                                                                       intervention access
                                                                       • Enables accurate
                                                                       production logging
                       Courtesy: Weatherford
Courtesy: Baker




                                               Slotted base pipe


     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
              CASE A: ADDITIONAL HYPOTHESIS
  • Expandable Technologies as alternative to Gravel Pack
        Production (Sm3/g)                     670.000
         Productivity increase                   20%
          Workover cost (K$)                     1.250
    Probability of shorter longevity
                                                 20%
  (need for a workover on 10th year)
       Operating costs ($/boe)                    2,2




Eni Corporate University         Scuola Mattei
                                          Case A – Economic Evaluations
                                                                                                                   Normal case
                                                         Case A - Differential Cash Flows
                                                                                                           DNPV @ 10 anni   3.800.000 €

                                          1.400

                                          1.200
           Differential Cash Flows (K€)



                                          1.000

                                           800

                                           600

                                            400

                                            200

                                              0

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

                                                   Worst Case
                                                  Best Case            Normal case            Best Case

Eni Corporate University                                               Scuola Mattei
 Case B – Expandable Screen in horizontal well


             CASE B: ADDITIONAL HYPOTHESIS
     • Horizontal well with OHGP
                  swelling shales
     • Bad event: Production (bbl/g)        6.000
     • Side-tracking with expandable screen
                    Productivity increase                     10%
                    Workover costs (K$)                       1.250
               Probability of shorter longevity
                                                              20%
             (need for a workover on 10th year)
                  Operating costs ($/bbl)                      3,5

                  Intervention costs (K$)                     1.700
                                                         25
      Probability of swelling shales actually occuring        33% 50%
                                                         %




Eni Corporate University         Scuola Mattei
                                     Case B – Economic Evaluations
                                                                                                                     Normal case
                                                           Case B - Differential Cash Flows                   DNPV @ 10 anni   9.500.000 €

                                           3.000


                                           2.500
            Differential Cash Flows (K€)




                                           2.000


                                           1.500


                                           1.000

                                             500


                                               0
                                                    2004   2005   2006    2007   2008    2009   2010   2011   2012   2013

                                                   Worst Case             Normal Case             Best Case

Eni Corporate University                                                 Scuola Mattei
                 Case C – Solid Casing Expansion



      Need for insulating the upper interval (cladding)
    • Need for insulating the upper interval (cladding)
      No production increase
    • No production increase

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




Eni Corporate University    Scuola Mattei
Adoption of Expandable Technologies at 10 years

                                                                Development per year
                                                             Development E.T.E.T. total
                                           70
                                            8

               Development E.T. per year
                Development E.T. totali     7
                                           60
                                            6
                                           50
                                            5
                                           40
                                            4
                                           30
                                            3
                                           20
                                            2
                                           10
                                            1
                                           0
                                           0
                                                2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
                                                2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

                                                   Tipe A
                                                    Tipe A          Tipe B
                                                                     Tipe B       Tipe C
                                                                                   Tipe C   Tot ENI
                                                                                             Tot ENI




Eni Corporate University                                         Scuola Mattei
                   Synthesys within Eni group
          Normal case
                                                                   ENI tot - Differential Cash Flows
  DNPV 10 years   163.300.000 €
                                                  60.000


                   Differential Cash Flows (K€)   50.000


                                                  40.000

                                                  30.000


                                                  20.000


                                                  10.000

                                                       0
                                                            2004   2005    2006   2007   2008   2009   2010   2011   2012   2013


                                                           Worst Case             Normal Case            Best Case


Eni Corporate University                                                  Scuola Mattei
                 Synthesys within Eni group

                           Normal case:   DNPV 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 to larger ID downhole
         Increase in production duelarger ID downhole
     •   Cost savings comparison with alternative solutions
         Cost savings inin comparison with alternative solutions
     •   Though, need to confirm technology’s longevity
         Though,need to confirm technology’s longevity
     •   Anyway, Expandables are already considered a
         Anyway, Expandables are already considered a
         breakthrough technology
         breakthrough technology
     •   The most ambitious application – in drilling – is the
         development of the monodiameter well-bore




Eni Corporate University       Scuola Mattei
                           Thank you
                  for your attention




Eni Corporate University     Scuola Mattei

				
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