Murphy Contracts

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					Kikeh
Murphy sets new records
for Malaysia’s first deepwater project


                                         supplement to:
            Company Profiles

                —•—


     Aker Kvaerner . . . . . . . . . . . . . . . . . . . . 34-35

     BJ Services Company. . . . . . . . . . . . . . . . . . 40

     Diamond Offshore Drilling. . . . . . . . . . . . . . 33

     Frank’s . . . . . . . . . . . . . . . . . . . . . . . . . 36–37

     Fugro. . . . . . . . . . . . . . . . . . . . . . . . . . . 38–39

     Germanischer Lloyd . . . . . . . . . . . . . . . . . . . 41

     INTEC Engineering . . . . . . . . . . . . . . . . . . . 42

     InterMoor, Inc.. . . . . . . . . . . . . . . . . . . . . . . 43

     SBM Offshore. . . . . . . . . . . . . . . . . . . . . . . 44

     Schlumberger . . . . . . . . . . . . . . . . . . . . . 29–32

     Technip . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45




28                                                   www.murphyoilcorp.com
                                                                                                                          Profile: Schlumberger


Schlumberger delivers innovative technologies and
collaborative support to the Kikeh development
Drilling and completing deepwater wells is a major challenge, but            Expansion of Labuan facility for advanced
to be the first to undertake a deepwater development in an area              drilling and completions support
with no prior infrastructure takes courageous leadership. Murphy             Schlumberger built an infrastructure within Malaysia to deliver a
took on the challenge to move Malaysia into the realm of deepwa-             complete range of drilling and completions services with a focus
ter producing countries. That leadership demanded Murphy select              on deepwater operations. This investment included construc-
partners with the experience, expertise and innovation to operate            tion of extensive maintenance facilities; the addition of resources
and deliver on this important project.                                       capable of handling and storing huge quantities of cement and
     Well construction and service contracts for Murphy’s Kikeh              chemicals; enhancements to quality control processes and proce-
field development were awarded in late 2004 and early 2005. Sch-             dures with a focus on equipment assembly; and the addition of
lumberger received multiple related contracts including providing            computerized pressure testing and equipment make up.
electric wireline and perforating services; well testing and tubing              The outcome is the Schlumberger Deepwater Center of Excel-
conveyed perforating; measurement- and logging-while-drilling                lence in South East Asia, which is dedicated to expanding the
(MWD and LWD) equipment and services; cementing services;                    deepwater industry inside Malaysia, and is operated with a grow-
downhole completion equipment and services; and rig network-                 ing Malaysian and regional workforce.
ing and communication services.
     Working closely together, Schlumberger and Murphy have                  The Schlumberger-Murphy collaboration
been able to achieve record batch drilling times, with completions           The impact and value of the collaboration between Murphy and
being delivered in less than 14 days—half of the industry average            Schlumberger has been recognized in both organizations. To pro-
and half of Murphy’s forecast.                                               duce first oil within five years of the initial Kikeh discovery, it was
     To deliver first oil in five years after initial discovery is an out-   important for multiple disciplines to provide and apply a range of
standing result for Murphy and its partners. Multiple benchmarks             technologies for optimal drilling and completion solutions.
testify to the success of the project, including the speed at which              The initial drilling phase was performed within budget, with
the various phases are being completed, the cost against budget,             the completions phase on track to be below budget. Major col-
and first oil within five years of discovery.                                laboration benefit comes from less obvious deliverables, such as
     Schlumberger deepwater technologies and support have                    a reduction in the number of wells required to deliver anticipated
been integral in delivering these results. This deepwater expertise          production levels. Additionally, lessons learned from the Kikeh de-
extends to a multitude of services including wireline evaluation,            velopment can be transferred to other deepwater projects within
LWD/MWD, cementing, communications, subsea, completions,                     Malaysia and the region, and Murphy will be able to apply the les-
testing, perforating, and interpretation.                                    sons to its deepwater projects in the Gulf of Mexico and Congo.




The Schlumberger Completions team has been working on Murphy’s Kikeh Project at Labuan.

www.murphyoilcorp.com                                                                                                                             29
Profile: Schlumberger


                                                                                                             reduce costs and increase produc-
                                                                                                             tivity as part of this project. Many
                                                                                                             of these innovative solutions have
                                                                                                             been, or will be, presented in tech-
                                                                                                             nical papers at industry conferenc-
                                                                                                             es around the world. A full session
                                                                                                             at the 2008 Offshore Technology
                                                                                                             Conference (OTC) will be dedicated
                                                                                                             to Murphy and the Kikeh project,
                                                                                                             with multiple papers focused on
                                                                                                             the successful application of vari-
                                                                                                             ous Schlumberger technologies.
                                                                                                                  Murphy and Schlumberger jointly
                                                                                                             focused on moving routine activities
                                                                                                             offline, out of the critical path of drill-
                                                                                                             ing and completion operations. A ma-
                                                                                                             jor reduction in critical path activities
                                                                                                             was possible after thorough review.
                                                                                                             The impact is clear: completion times
                                                                                                             have been reduced by half, to less
                                                                                                             than 14 days per well, with massive
                                                                                                             saving on rig day rate and increased
                                                                                                             cash flow by bringing production on
                                                                                                             stream earlier.

                                                                                                             Well construction and
                                                                                                             evaluation solutions
                                                                                                             The Schlumberger DeepCEM* and
                                                                                                             DeepCRETE* cementing systems
                                                                                                             support deepwater operations with
                                                                                                             increased cement strength and stabil-
                                                                                                             ity, reduced time to deliver and set, all
                                                                                                             without requiring special equipment
                                                                                                             or personnel. These attributes were
                                                                                                             key as the Kikeh development wells’
                                                                                                             surface casing was batch set and
                                                                                                             required fast, reliable and quality ce-
    Formation Isolation Valve (FIV) systems provide “no kill” perforating.                                   ment supporting those casings.
                                                                                                                  Shallow water flows challenge
        Schlumberger provided a support team to manage the work              drilling operations and have been observed in a number of the
    scope under the Murphy contracts, in most cases working as               Kikeh wells. DeepCRETE technology is able to isolate the formation
    a team from within Murphy’s offices. Additional support was              with a lighter fluid, and reduces waiting on cement time without
    available from the Schlumberger regional office based in Kuala           complicating the deepwater operations. The DeepCRETE system
    Lumpur, including a Drilling Engineering Center, a host of geosci-       enhances both early gel and compressive strength developments,
    ence, engineering, data processing and data handling expertise,          thus combating shallow water flows. Its low densities minimize the
    plus extensive lab capabilities. Specific to the completion work,        risk of losses associated with low fracture gradient in deepwater.
    Schlumberger provided a project manager and a focused team of                 The DeepCEM slurry systems focus on the long-term
    experts. This team accessed engineering support from a range of          durability of the set cement, not just the effective slurry place-
    global resources, including multiple engineering and manufactur-         ment and short-term isolation. Such systems enable cemented
    ing centers and the Schlumberger InTouch Lessons Learned data-           annular sheaths to withstand a wide range of downhole stresses
    base—bringing experiences and best practices from deepwater              without failure.
    operations throughout the world.                                              Kikeh’s cementing operations were monitored in real time
                                                                             using the Schlumberger InterACT* monitoring and data delivery
    Innovative technologies and solutions                                    system, allowing Schlumberger and Murphy engineers to make
    A range of innovative solutions were applied to mitigate risks,          quick decisions, mitigating operational delays.

    30                                                                                                                          www.murphyoilcorp.com
                                                                                                                              Profile: Schlumberger




SenTREE 7 provides safety and control at the ocean floor during completions and testing operations, using a 4,300 ft umbilical back to surface.

    When Murphy engineers needed to compute the oil reserves                      As the network and communications provider, Schlumberger
in thinly bedded turbidite sections of the Kikeh reservoir, Schlum-           combined wireless Local Area Networks (LAN) and satellite
berger geoscientists worked with Murphy to develop a methodol-                technology to enable Murphy to deliver and monitor its well data
ogy to compute the cumulative sand thickness. Three high-reso-                in real time, permitting key personnel to stay connected and to
lution log measurements were used to separately identify the                  collaborate effectively.
thin beds, using thresholds to identify the reservoir quality sands.
Schlumberger geoscientists and Murphy engineers were able to                  Well completion solutions
quickly deliver cumulative and consolidated sand counts from the              In completing the subsea production wells, a full SenTREE* 7
three methods. Correlations and sensitivity analysis were used to             completion and test tree is used to provide operations safety and
verify the results culminating in quantification of the reserves in           full downhole control of the well during completions and testing
the thin sand laminations.                                                    operations. Unique to Kikeh is the modified SenTREE 7 for water
    During the deepwater exploration operations, Schlumberger                 and gas injector wells. For these wells, select features are used,
and Murphy jointly developed an Imploding Sphere technology,                  permitting the use of the rig’s BOP system while the subsea test
a solution enhancing seismic signals during wellbore seismic                  valves are removed. Both systems were custom designed to inte-
surveys. This improved the quality of information and resulted in             grate flawlessly with Murphy’s subsea tree and the Schlumberger-
better decision making in an area where signal quality and data               installed completions. Without utilizing SenTREE 7, a completely
have been historically weak.                                                  different subsea tree design would be required, adding cost and
    An ultrasonic imager tool is traditionally used to evaluate               complexity to the development and potentially delaying cleanup
cement and casing. On Kikeh this measurement was adapted to                   and production testing.
measure the wear on the deepwater drilling riser, helping to evalu-                A solution specific to the Kikeh development was a one-trip
ate exposure to risk and to mitigate the need to invest in expen-             tubing conveyed perforating (TCP) system. To provide reservoir
sive backup drilling risers.                                                  protection and well control, the Schlumberger QUANTUM maX*

www.murphyoilcorp.com                                                                                                                             31
Profile: Schlumberger


                                                                           gravel-pac system for HPHT conditions was modified to function
                                                                           with a deepwater Full Bore Set Down (FBSD) service tool coupled
              Schlumberger Regional                                        with the company’s FIV* Formation Isolation Valve tool, and run
              Deepwater Technology                                         as an integral part of the 7-in TCP PURE* perforating system. The
               Hub in Kuala Lumpur                                         objective of this unique system is to achieve the field production
                                                                           plateau quicker, with a reduction in the number of wells required
                          —                                                to deliver that level of production.
         Southeast Asia is fast becoming a major deepwater E&P                  The need for an oriented 7-in TCP system was identified early
         region. Murphy’s Kikeh project is only the first, as additional   in the completion design analysis. The Schlumberger Reservoir
         exploration and field development plans are processed             Completions group developed the 7-in oriented perforating gun
                                                                           system utilizing much of the proven OrientXact* tubing-conveyed
         and evaluated. A large investment in people, facilities, and
                                                                           oriented perforating system, originally designed for high-perfor-
         a range of other resources is essential for deepwater field
                                                                           mance deepwater application. With some wells requiring sand
         developments to be viable.                                        control and the use of expandable screens, the 7-in oriented TCP
              In providing deepwater support to Murphy for the             system maximized the number of perforations open to flow, miti-
         Kikeh development, the expansion and upgrade of the               gating expandable screen erosion and ensuring maximum produc-
         Schlumberger Labuan operations facility was a major step.         tion with the screens in place. Use of this system saved Murphy up
         Meeting the stringent demands of deepwater operators,             to $15 million in alternate sand control options.
         the facility has become the first Schlumberger Deepwater               Downhole pressure monitoring is being provided by the Schlum-
         Operations Center of Excellence in Southeast Asia.                berger NPQG Permanent Quartz Gauge. The gauges were originally
                                                                           identified by the production team as a requirement for reservoir and
              With the anticipated growth in deepwater E&P activity
                                                                           well monitoring. The gauges allow pressure monitoring for the life of
         in the Middle East and Asia, early in 2007 Schlumberger
                                                                           the field and provide data and information for informed decision mak-
         formed a “Deepwater Technology Hub” based in Kuala
                                                                           ing. The gauges have proved invaluable as a completion operations
         Lumpur. The goal of the Technology Hub is to align the            tool, in addition to monitoring and documenting tool operations
         company’s research and technology efforts, with the               downhole. The monitoring capability increased confidence in tool
         deepwater goals and challenges of the various deepwater           operations and subsequently reduced rig time.
         operators. Through working with deepwater operators like               The downhole NPQG Permanent Quartz Gauge system has
         Murphy and Petronas, both in the Middle East and Asia,            been instrumental in understanding the dynamics and formation
         Schlumberger is able to focus and invest in the real deep-        of hydrate plugs. With access to pressure data, fit-for-purpose plan-
         water challenges, to apply lessons learned, to bring value to     ning and action can be taken, and in at least one case, inhibition
                                                                           chemicals were injected downhole. Key to providing flow assurance
         new deepwater projects as risks are mitigated, efficiencies
                                                                           for the deepwater wells is the capability to inject chemicals to in-
         are incorporated, productivities are enhanced, and new
                                                                           hibit hydrates, scale and wax. Schlumberger has provided chemical
         ways of doing business are developed.                             injection capability with its Dual-Check Chemical Injection (DCIN)
              The Schlumberger Middle East and Asia Deepwater              gauges, installed on all of Kikeh’s production and injection wells.
         Technology Hub has brought together a core team of                     Schlumberger has made a commitment to deepwater technolo-
         experts in deepwater well construction, completions and           gies and solutions. The experience, expertise and innovation have
         production. These experts will influence the direction of         established Schlumberger as the one service provider uniquely
         Schlumberger investments in future deepwater technolo-            positioned to deliver, whatever your deepwater challenge.
         gies. They are already engaged with regional operators                                                            *Mark of Schlumberger
         on a diverse array of challenges ranging from subsea
         interventions, to flow assurance and the ability to identify
         producible reserves in thin bed reservoirs, a solution that
         Schlumberger applied to help Murphy confirm a commer-
         cial reservoir in the thin bed laminations of the Kikeh field.
              The commitment from Schlumberger to deepwater                                        Schlumberger
         technologies and solutions, with regional and local experi-                      Attn: Deepwater Technology Hub
         ence and expertise, and an established deepwater center                      19th Floor Rohas Perkasa, No 8 Jalan Perak
         of excellence and deepwater technology hub, all point to                           50450 Kuala Lumpur, Malaysia
                                                                                               Phone: +60 3 2166 7788
         a service provider uniquely positioned to respond to any
                                                                                                Fax: +60 3 2163 2417
         deepwater challenge.
                                                                                                  dw-exp@slb.com
                                                                                                    www.slb.com

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