APSG35_Wellbores_and_Vertical_Reference_Levels - Bert Kampes

Copyright 2016 Shell Exploration and Production Company

WELLBORES & VERTICAL REFERENCE LEVELS

Bert Kampes Team Lead Geodesy

APSG 35 Spring Meeting

Houston, April 29, 2016

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DEFINITIONS & CAUTIONARY NOTE

Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves.

Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

Organic: Our use of the term Organic includes SEC proved oil and gas reserves excluding changes resulting from acquisitions, divestments and year-average pricing impact.

Shales: Our use of the term ‘shales’ refers to tight, shale and coal bed methane oil and gas acreage.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this document refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2015 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, 4/29/2016. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation. There can be no assurance that dividend payments will match or exceed those set out in this presentation in the future, or that they will be made at all.

We use certain terms in this presentation, such as discovery potential, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

March 2016 2


PRESENTATION OUTLINE

Geodetic referencing of wellbore data

Horizontal

Vertical

Examples

Outlook

3 April 2016


WELLBORE SURVEYING PRINCIPLES

Geodetic principles:

Coordinate Reference System (CRS):

Structured metadata containing geodetic referencing information

No CRS: coordinates are ambiguous or uninterpretable

CRS types: Geographic (Lat, Lon), Projected (E, N), Engineering (local X, local Y)

Wellbore Survey Observables: How is position measured? Azimuth

Inclination

Measured depth

No CRS required: no coordinates, but measurements!

Observation reference is required (what constitutes zero)

4 April 2016

Relative to Magnetic, True, or Grid

Always relative to vertical

From ZMD (Zero Measured Depth), positive down


WELLBORE DIRECTIONAL SURVEY DEVIATION DATA

Azimuth Measured Depth

5 April 2016

Inclination

MD AZ INC

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OBSERVATIONS: MD, AZ, INC

Survey measurement are made at discrete “survey stations”

3D shape of well path is thus determined incrementally

Profile View MD AZ INC

0 0 0

100 0 0

200 25 20

300 45 40

400 70 60

500 90 80

depth

Plan View

True North

East

300 400 500

KB

100

100

200 200

300

400

500

Picture assumes Azimuth is relative to True North. Alternatives: Magnetic North requires magnetic declination Grid North requires Projected CRS Measured Depth units are also needed!

LOCAL COORDINATES: TVD, X-DISPLACEMENT, Y-DISPL

Position difference computed for each section:

DTVD, DX-displacement, DY-displacement

Summing all increments well path in engineering CRS

Transformation to a Projected CRS and a Vertical CRS well path in 3D geodetic space

Profile View TVD X-disp Y-disp

0 0 0

100 0 0

200 10 30

290 60 85

370 140 110

420 240 110

TVD

Plan View

Y-displacement

X-displacement

400 500

KB

100

100

300

400

100

100

200

200 200

300

200 300

500

0

0 0

Be aware that the engineering CRS Y-axis may be aligned with: True North Magnetic North Grid North Also be aware of (local) units!


WELLBORE PATH CALCULATION

Azimuth Inclination Measured Depth

Observations:

deviation data

Easting (X) Northing (Y) TVDSS

+ projected CRS + vertical CRS

Wellbore path

X-displacement Y-displacement True Vertical Depth

Engineering CRS

“displacements”

Latitude Longitude TVDSS

+ geographic CRS + vertical CRS

Terminology varies:

- Displacements East-West and North-South

- Offsets East-West and North-South

- East and North

- dX, dY

- Or just X, Y

April 2016 8


TYPICAL WELLBORE SURVEY REPORT

April 2016 9


THE ENGINEERING (LOCAL) CRS

3 orthogonal axes:

X-displacement

Y-displacement

TVD

TVD

Well Reference Point (0, 0, 0)

April 2016 10


THE PROJECTED CRS (“REAL WORLD” CRS)

3 orthogonal axes:

Easting (X) – axis (or Longitude)

Northing (Y) – axis (or Latitude)

Depth (relative to a geodetic vertical reference)

dept

h

Well Reference Point (E, N, H) WRP

Grid North

This assumes Azimuth = Grid

April 2016 11


THE VERTICAL CRS (DEPTH)

3 orthogonal axes:

Easting - axis

Northing - axis

Depth (below geodetic vertical reference)

Dep

th

Well Reference Point (EWRP, NWRP, HWRP) + projected CRS + vertical CRS

Grid North

Offset height to drill floor: dH

Ground Level Elevation: HTERRAIN

Vertical CRS is needed to qualify geodetic heights and depths

Height Well Reference Point: HWRP = HTERRAIN + dH Depth = TVD - HWRP

April 2016 12


WELL PATH OFFSETS GEODETIC COORDINATES

Simple 3D shift:

𝐸𝑁

𝐷𝑒𝑝𝑡ℎ𝑃𝑜𝑖𝑛𝑡 𝑖𝑛 𝑤𝑒𝑙𝑙𝑏𝑜𝑟𝑒

= 𝐸 𝑁 −𝐻 𝑊𝑒𝑙𝑙 𝑅𝑒𝑓 𝑃𝑡

+ X-disp Y-disp

𝑇𝑉𝐷 𝑃𝑜𝑖𝑛𝑡 𝑖𝑛 𝑤𝑒𝑙𝑙𝑏𝑜𝑟𝑒

Assumes offsets are related to Grid North ! Requires Projected CRS to be defined, e.g. “NAD27 / Pennsylvania South”

Well Reference Point (WRP):

Horizontal: center of wellbore at the surface

Vertical: Top Kelly Bushing

Drill Floor

Rotary table

Sea floor

…. April 2016 13

RECAP OF WELL PATH

Well path depth levels

Coordinates: 1. True Vertical Depth (TVD) 2. X-displacement 3. Y-displacement

Units of measure: 1. Metres 2. (International) Feet This local 3D CRS needs to be related to: 1. a Geographic CRS or a Projected CRS 2. a Vertical CRS This requires coordinate transformations! True Vertical Depth varies in definition: TVD = Depth in Vertical CRS TVD = Depth below Well Reference Point

(i.e. local) TVDSS = Depth relative to MSL (in USA)


Re-referencing wellbore survey data

EXAMPLES 1.1

15 April 2016


COMMON SOURCES OF ERRORS IN WELL TRAJECTORIES

April 2016 16


EXAMPLE OF WELL TRAJECTORY ERRORS

An oil company provided well data to a partner, who assumed they were relative to Grid North, but were True North!

~80m error in Bottom Hole position

April 2016 17


REMINDER: WELLBORE SURVEY TERMINOLOGY

ZMD =

Zero Measured Depth

Usually the drill floor (DF), rotary table (RT), or top of

the kelly bushing (KB)

Wellbore Path (lat,lon,depth)

Deviation Data (MD, Az, Inc)

18


RE-REFERENCING AFTER RE-SURVEY

1999: Drilling of top holes and some directional paths with offshore rig

KB = 82 ft (survey and logs)

Platform built, additional wellbores drilled

KB = 192 ft

2009: Re-survey of wellbores to reduce uncertainty (gyro)

19 April 2016


Correctly loaded wells and logs

ORIGINAL WELLBORE PATHS AND GAMMA RAY LOGS

April 2016 20


Adjusted KB down: shifts whole trajectory including logs down

CHANGE OF KB IN SUBSURFACE APPLICATION

April 2016 21


100

200

300

400

500

0 MD

KB=192

CHANGE OF WELLBORE SURVEY REFERENCE LEVEL

100

200

300

400

500

0

Wellbore KB changed

110

KB=82

April 2016 22


RE-REFERENCE WELLBORE SURVEY DATA

MD AZ INC

0 a0 i0

100 a1 i1

200 a2 i2

300 a3 i3

400 a4 i4

… … …

TD a_TD i_TD

23 April 2016

KB=192 KB=82

MD AZ INC

-110 a0 i0

-10 a1 i1

90 a2 i2

190 a3 i3

290 a4 i4

… … …


Correctly loaded wells and logs

ORIGINAL WELLBORE PATHS AND LOGS

April 2016 24


Changed KB, and MDs of wellbore survey (by difference in KB): logs are shifted down the trajectory

CHANGED KB AND MD’S IN WELLBORE SURVEY DATA

April 2016 25


100

200

300

400

500

0 MD

KB=192

CHANGED KB AND MD’S IN WELLBORE SURVEY DATA

110

100

200

300

400

500

0 Log MD

Re-referenced Wellbore

90

190

290

390

490

Wellbore Survey

MD’ KB=82

April 2016 26


100

200

300

400

500

0 MD

KB=192

CHANGED KB AND MD’S IN WELLBORE SURVEY DATA Wellbore KB & MD’s changed

110

90

190

290

390

490

100

200

300

400

500

0 Log MD

Wellbore Survey

MD’ KB=82

100

200

300

400

0 Log MD’

Re-referenced Log

90

190

290

390

April 2016 27


RE-REFERENCING ISSUE SUMMARY

In driller database, all wellbores were re-referenced to platform KB = 192 ft (re-survey)

In subsurface application, wellbore survey data were loaded with KB = 82 ft; then, years later, changed to new KB = 192 ft

And quickly moved back to original KB when logs moved!

Re-referencing to be avoided (particularly in subsurface applications)

Wellbores and Logs may shift incorrectly

Derived information (e.g., picks) in subsurface applications are also already stored using depth (TVD or MD) relative to that reference point (KB)

28 April 2016


CONCLUSIONS

Risk occurs when data is moved. Software allows “convenient re-referencing”.

KB and LAT are not well suited as permanent (geodetic) reference

Who is responsible for integrity?

End-user confidence in data (subsurface projects and planning)

Understand the CRS’s:

1. Observations (MD, AZ, INC): No CRS (but need observation reference)

2. Intermediate calculations (X-displ, Y-displ, TVD): Engineering or Local CRS

3. 3D Geodetic Space (N, E, TVDSS): Projected CRS + Vertical CRS

29 April 2016


OUTLOOK

Recommendation: Towards absolute geodetic referencing for survey and logs:

Avoid transfer of observations between applications

Clarify data model: local vs. geodetic space (vertical CRS)

Required for unambiguous long term storage; correlate well data to seismic

Increase Geomatics involvement in wellbore vertical referencing

30 April 2016


Q & A

April 2016 31

Documents

APSG35_Wellbores_and_Vertical_Reference_Levels - Bert Kampes