University of Nigeria Virtual Library

Serial No. Author 1

IDOWU, A.O.

Author 2

Author 3

Title Seismic Modeling of An Offshore Field in the Niger Delta

Keywords

Description Basin Subsidence Decompaction and Burial History Modeling

Techniques.

Category

Geology

Publisher

Basin Subsidence Decompaction and Burial History Modeling Techniques.

Publication Date

Vol. 02/01 Oct. 1986.

Signature

SEISMIC MODELLING OF AN OFFSHORE FIELD IN THE

NIGER DELTA

BY:

A. 0. I[DOWU NIGERIAN NATIONAL PETROLEUM CORPORATION (E & E DIVISION)

P. M. B. 12701 LAGOS.

SEISMIC MODELLWG OF AN OFFSHORE FIELD IN THE NIGER DELTA

INTRODUCTION :

Historically. seismic data has been used to map the geometry of lithologic units in the subsurface, mainly from the continuity of rdection and the character of reflection packages. Identiftcation of broad features like folding and faulting of beds and their associated trap situation have also been achieved using seismic data.Growing interest in stratigraphic exploration techniques has led the seismic interpreter to examining the more subtle featurcs of reflection character, namely polarity, amplitude and waveform and def&g the limits of seismic resolution. In the Niger Delta, the use of seismic modelling teclrniques has attracted considerable attention in recent times. The following is an account of a modelling study of an offshore drilled prospect in the Niger Delta.

OBJECTIVES OF THE MODELLING STUDY:

I . To make a synthetic model f r o n ~ known geology of the field.

2. To obtain, empirically, a good match between the synthetic model and the field seismic data, and thereby establish the dominant frequency content, amplitude, and phase of the seismic data.

3. Modct.the reservoir geomelry of the FieId'i pay zones.

4 . Evaluate seismic events by substitution of various combinations of oil and gas sand parameters.

BASIN ASSUMPTIONS FOR DATA PROCESSING OF THE MODELS:

A computer program package was used to compute the synthetic seismic records for the established geologic models. This program was designed to model a zone of interest by assuming an average velocity to the top of the zone, and from this point the coded interval velocities were used in subsequent computations.

For a given geologic structure, a zero offset distance, two dimensional record section is generated according to Kirchoffs solution of Hugyen's principle, The geologic structure is appro- ximated with plane segments. Each segment has a reflection coefficient and an interval velocity above the boundary (or segment) and an interval velocity below the boundary associated with it.

An appropriate reference shot pulse is chosen and the wavelet is convolved with thc geologic model to generate the synthetic seismogram,

The prospect bcing modeled is located approximately 26km offshore Southeastern Niger Delta in OML 67. Water depth in this area ranges from 12.20111 to 18.30m. The units modelled are Intra-Biafra sands of Miocence a e (Figure 2). Thcse sands occur within the Agbada Formation which comprises alternating marinefpaalic sands and shales.

Biafra sands are very coarse to very fine grained, poorly sorted and uncons.~lidar,~d to partly consolidated.

Structurally, the field is bounded to rht: north and south by down-to-the-ba.in reHonaI growth faults 1 and 4 (Fig. 3) in betwcen wlicii an east-west trending rollover anticline ~ l e r l n p e d ,

Ncrth castSoutllwest strike seismic l i r ~ i . 1806 {Pig. 3) ha8 been modelled, a1 ,rl Tic!,. ; I ~ , I $

amplitudt. events (Iicl's) representing dilfereni samls haw been i ~l:~~nn.ll&Ited (Fig. 4).

Thc horizontal coveragc of the model is 5.6km over a time window of 0.5 second (fig. 4). The top of' the modcl is 1.2. seconds (1223 metcrs subsea) and the bottom is 1.7 seconds (1775 ~nctcrs. subsea) in the control wcll. The vertical thiekncss of the sectionis about SSOmcters. A velocity of 7990 meters per sccond was assumed to top of the modcl at 1225 rncters subsea.

Procedurc:

The density and interval vdoc i~y of each gross litliologc intcrval as encountered in Nkop-1 well, were determined from the density and sonic logs, The reflection cocfficients.were calculated for [hc rock layers, Thc ranges of thc intewal velocities, densities and reflection coefficient for the shale, gas sand and water sand within the model arc as follows:

ROCK TYPE Shalc Gas sand Waler u r i c 1

ROCK TYPE Shale Gas Sand Water Sand

RANGE OF INTERVAL. VELOClTIES (Mcters per second) 2360 - 2700 1800 - - - 7,440 2065 -- 2590

ICANCI: OF 1)ENSITIEi (Grams per cubic ccntin~ctcrs) 2.23 2.33

ROCK TYPE ICANCE C) F REFLECTION COEFFICIENTS ShalclCas Sand -0,158 - -0.055 Gas S;~i~l/Walcr S;lnrl +0. 1 I - t0.156 Wllrcr Sand/Sl~a!c -0.028 - 0.037 4-

Six-[race synthc!ic seismograms wcrc g c ~ ~ z r a [ e d to clctcrrnine the best match for the phase, amplitude and frcqucncy conlent of thc source \vavelct and the scisrnic data (figure 5). Six pulses in he minimum phase and six p1ses.in the zero phase wcre tesled. Thc 5-35 Hertz mini- mum phase wavclet was chosen as [he best approximalio~~ o r rhe original seismic source signature (Figure S and 6).

After choosing thc source wavelet, a geologic rnodcl of thc field was made by picking re- flection times from seismic line I806 corrcspanding to lithologic interfaces of intcrcalatcd sailds and-shales. The geologic structrlrc is simulated with segments of plancs. Each plane segment is assigned a reflection coefficient, an intcrval velocity above and an intcrval velocity bclow the segment (Figure 7). The velocity to the top of the rnodel was derived by obtaining a fit of the synthetic to the seismic scction. The synthetic was moved up and down until a good match was achicvcd. The velocity requircd to place the synthetic in its proper time position was then utilized to convert the time structure of scisrnic line 1806 to dcpth structure section across the field.

The shot pulse, intcrval velocities, reflection coefficicnts and planc segments were coded and entered in to the computer program to generate synthetic seismogram for the Field reservoirs (Figure 7 and 8). The synthetic rnodel was compared with the seismic section and adjusted where necessary to obtain the best approximation of the seismic section 1806.

Five gas sands are numbcred from olie through Gve in order of increasing depth (Figure 7). Two additional geologic models wcre nu[ and the corresponding synthetic seismograms generated. For the second model, 85 feet of oil on water was substituted in the No. 4 sand (Figures 9 and 10). The third model was obtained by substituting 35 feet of gas on 50 feet of oil on water in the No. 4 sand (Figures 1 1 , 12).

RESUL'IS AND CONCLUSION:

1. There is a good match between the synthetic and the seismic data. The 5-35 Hertz (i-e. frequency content), minimurn phase wavelet gave the best approximation of the seismic data (Figures 4 ,6 ,8) .

2, The reservoir geometry (including that of the pay zones) is well matched.

3. The HCls (Hydrocarbon Indicators) are very rominent particularly for gas sands on the synthetic model for the field reservoir (Figure 8y.

The gas sands of numbers one through four are clearly defined but the fifth and thinnest uas sand is not as obvious as the upper four. The fifth gas sand(8.5 meters thick) is nevertheless identifiable on the synthetic record.

m mamating the role of the capital market in the development of the Petroleum industry and how to anhance the. potential for the future development of the Petroleum industry, I have opted to emphasize the role of the insurance industry to which I belong. This will enable us to appreciate how inurance companies assist in accelerating the prcess of general economic development.

Ammg other roles, insurance companies provide financial security to business men and industnarists including those operating the Petroleum Industry, by securing actual losses sustained. This enables enterpreneurs to acquire the necessary confidence to venture capital more freely as the assurance that they will be indemnified in the event of loss is as valuable as the actual payment of money after a loss has taken place.

Inarance Companies encourage people to save, and these savings are deployed by way of Investment into the economy. Other saurces of investment of Insurance companies include their statutory Reserves which they maintain, Reserves for outstanding claims, unexpired Risks and Contingency.

The long term nature of the funds required for the development of the Petroleum industry makes it more attractive to life funds of an insurance company. You may have heard that there are four main investment principles of life funds to which all actuarial students have to be familiar. They are as follows:-

i. "The Liabilities of the Fund as far as they can be specified, must be met as and when they arise".

ii. "The requirements set cut in the first principle must be met with as much interest surplus as possible".

iii The risk involved in maximising the return must not be so great as to imeril the fulfdment of liabilities within the bounds of significant likelihood".

iv. "The investment should not be such as would be found objectivable by the original savers (i. e. policyholders) on social or ethical grounds, and subject to principles 1, 2, and 3, above, investments chosen must be those which can be held most beneficially on such considerations".

The importance of these fundamental principles to investment in the Petroleum Industry is that the long term nature of the projects must be matched with the rate of return. Once this is satisfied, you have reasobale expectation that insurance Companies will participate more freely by injecting capital into the Petroleum industry.

CONCLUDING REMARKS

Insurance Companies are imprtant financial intermediaries whose investment functionsplay an important role in enhancing the capital market. either through direct lending or equity participa- tion. Since increased exploration and development activities have to be encouraged in order to enable us discover new fields and utilize current resources to a maximum, there is need for restruc- turing the economy towards a greater private enterpreneurs participation in the petroleum industry

I am aware that many insurance companies prefer to keep substantialamount of their funds in Time deposis far beyond their cash requirements. Your Association should therefore encourage interaction between your industry and the capital market (including those operating self adminis tered pension schemes) so that together you may exploit the potentials of the Petroleumindustry to the benefit of aU concerned.

I am also aware that some Nigerians have investible funds, while by your exposae you possess the technical knowledge and information on viable proiects in the Petroleum industry. There is therefore no reason why you should not come up with these projects for financial or specialist advisory assistance. Finally, the eyes of this nation can only be opened through research Your investment in Research will bring amore efficient and cheaper way of exploration, production, exploitation and trasportation of oil. You deserve all encouragement and you can count on the Capital market for translating some of your ideas into reality in the future.

Mr. Chairman, Distinguished Ladies and Gentlemen, 1 would like to thank the organisers once again for making it passible for me to share my rhaughts with you on the potential for local capi- tal investment in the Petroleum Industry, and 1 hope that you will find my contribution of bencfil to your deliberations. I would finally like to wish you a very successful Conference.

Thank you.

Having given a brief history and definition of the Petroleum Industry, we should now consider for a moment the Capital Market in order to appreciate fully its implication. Capital is a major factor of production anil its inadequacy may be%al reflectink genuine inadequacy arising from actual shortages of investment funds in an economy. On the other hand, it may be ~IIuso~y, merely epitomising frustrations occasioned by unnecessary impediments to the free flow of investment funds with such impediments being indicative of underlying rigidities and imperfec- tions in the Capital market. In other words, the efficiency or otherwise $the management of capital resources - current or potential - could mean the difference between adequacy and inadequacy of capital.

In any economy, there exists facilities for creation, custodianship and distribution of financial assets and liabilities. These facilities make up the fmancial market,of which the capital market, whcih is narrowly defmed, and deals with long term investments, is a sub-section. Capital is supplied to business through such channels as individuals, banks institutions like Insurance Companies, PensionILife Funds and Government in various forms eg. Equity, Direct loans on short or medium Terms by Commercial Banks, and long and medium Terms by Pension and Life Funds.

Some of the Capital is provided to the recipients and are not represented by any Instruments i.e. share Certificates, Treasury Bills/certificates. Debt Negotiated fmancing, not represented by instruments remain a foced arrangement between the debtor (the recipient of the capital) and creditor (the suoolier of caoital) until settlement. In other words. such debts are not transferable1 negotlabfe and t'h'erefor in rhal~ry have no secondary market. Th~sis the pos~tion bas~cally wth the short and med~um capital pronded m form of overdrafts, loans and advances by banks to b~s~ncsc concerns. Marketabhtv can onlv be created when oblinations are re~resenied bv instruments which become transferable for vaiue. Thus, ror capital, have the money markc;. where short term instruments like Treasuw Rills. Tressurv Certificates. Certificales of bmosit. Commercial Paper etc. are traded; and thd capith markei where the lbng term instrume& like shares-pre. ference and ordinary-Debentures, Government stocks etc. are traded. The markets may be formal as represented by the Stock Exchange or informal as represented by the monay market, and the private placements of dealing in long term securities in the capital market. Both the formal an(' the informal markets have their distinct impacts on economic development.

Having attempted to defme the Petroleum Industry and the Capital market so that their characteristics can be clearly recognisable, I would now like to refer briefly and specifically to the History of Petroleum in Nigeria. This should be a useful prelude to the appraisal of the potent~al for local capital for investing in the Petroleum Industry. Prior to the discovery,of oil in lar, quantity in Nigeria about 1956, the country relied on importation of petroleum and petrolel products to meet the small locall demand. By 1965, the Port-Harcourt Refmery was corn11 ssioned with an initial refining capacity of 35,000 barrels per day.

At the intial stage, oil did not play a ~ i ~ c a n t role in the nation's economy and the Government merely supervised the activities of oil companies all of which are foreign owned through a regulatory ministry which was later transposed into the Nigerian National Oil Corpora- tion in 1971. After the Civil war in 1970. oil started t o olav a dominant role in the nation's

jeconoy and Government activated its %licy 'towqr+ fuU paiticipation in exploration a n d m i ~ n i refining, d~stribution and marketing. e natlon jo~ned OPEC in 1971 and by 1973 acquired 35 per cei i ownership in oil produciig companies. -The level of participation was raised to 55 per cent in 1974 and subsequently to 60%.

From the second nat~onal plan period, Nigeria began to realise the benefit of a co-ordmated petroleum policy. While pursuing the policy of 'maximum production', the nation began to indigenise and Nigerianise. The immediate effect was to place many Nigerians working in the industry in decision making positions. Simultaneously, the NNPC which was created out of thc NNOC, began exploration, refining and transportation operations and was also directly in charge of supervising government majority shares in the foreign oil companies. The nation began to reap large revenue and high forward and backward linkages from the petroleum sector. The Petroleum Sector consequently became the iargest revenue earner, the largest source of scarce foreign ex- change and a large employer of labour.

CURRENT ISSUES IN DEVELOPMENT OF PERTOLEUM INDUSTRY IN NIGERlA

Oil, is by nature, a wasting asset. Like most natural resources, the supply is foced. There is therefore a oroblem of manaeine suoolv on ootimal basis. This imohes a full utilization of current - - .. . resources a i d a conservation policy that c i at least elongate the useful life of our oil reservm beyond the 25 years projection.

On the legislative side, the promulgat~on of Associated Gas Re-Injection Decree No. 99 ot 1979 was intended t o terminate the flaring of associated gas in our oil fields by 1st January, 1984. Although this decree has promoted the reinjection of considerable gas reserve in various fields, it has nonetheless, btpn impossible for oil companies to put a total break on gas flaring. To halt this economic waste of our resources entails the reactivation of the LNG project. Earlier efforts in utilization of our associated gas witnessed the establishment of the Bonny LNG Company as a Consortium between NNPC, Phillips, BP, Shell and other foreign oil companies. The Bonny LNG Company was liquidated in 1982 after the withdrawal of Philhps and BP as a reaction to a 3 year postponement of the project by government.

In the course of time, finance became a major constraint to the project and Government had to scale down the project by 50 per cent t o a 3 train plant. Even then, the cost of the project re- mained rather staggering. Having regard to the resources available in the local capital market, it is doubtful whether the local capital investors can participate to a high degree in this project. The continuous fall in our oil revenue may also not assist govenunent in fmding alternative local sources of finance from the local market. To worsen our hope for reactivation of the LNG project is the continuous decline in demand and demand potentials in traditional markets in Europe, Asia and the Americas. It is also understood that the largest LNG consumer, Japan, FI reducing her consumption by 20 per cent in the 1990's. The American LNG market appears closed, while virtually all European countries appear to have a programme of reducing the volume of gas con- sumption (Belgium and Spain) or replacing gas with nuclear energy (France) or are currently looking elsewhere for the supply of gas (Germany).

Regarding the depleting nature of oil an optimum utilization programme might be our best bet but this requires a lot of capital investment. As Nigerians, we should not play the rule of spectators and expect Government alone to take both the initiative and the financing of projects in the Petroleum Industry. Assuming a daily production of 2 million barrels, our reserves may not exceed 25 years. Consequently, it is imperative to increase the level of investment in oil explora- Pion in order to ensure the replacement of fields as current ones get depleted. It is also desirable to encburage the establishment of petrochemical industries utilizing oil and gas as feedstock for polymers, detergents, synthetic fibres and specialized chemicals. It is therefore of utmost importance that professional working in the Petroleum Industry liaise more with those in the finance and insurance world in order to familiarize each other with investment and financial opportunities.

i

A meaningfill expansion of the Petrochemical industry can assist the economy in achieving the desired diversification of the economy as well as a reduction in the import bill of raw materials needed to grease the wheels of factories even in the other sectors of the economy. Despite the tremendous investment opportunities, it is doubtful that many operators in the capital market are aware of the potentials for investment in the Petroleum industry.

The fault is in the huge communication gap between the fmance and Petroleum industries, and in the inadequacy of economic and other data on ventures and venturecapital. Also, the large capital requirements, the long lead time and uncertainties of both the political climate and policy formation and implemontaion, appear to me to scare and discourage Institutional investors.

In the circumstance, Government may have to take substantial foreign loans to finance Petro- chemical projects. The question bogging the minds of policy makers has often been described by writers on the energy policy as what k i d of loan to take - multilateral, bilateral or commercial loan?, how much loan and under what terms and conditions?; how to meet the foreign exchange cost of the loan in future; and how to ensure the financial viability of the project and self liquida- tion of the loan. In view of the mismanagement and system of accounts behueen the Federal Government and some Government owned institutions, there is little hope that the local capital market will be willing to support some of the projects initiated and executed by these government parastatals. It is common requirement to obtain project feasibilities before financing and to insist on prudent financial management and control. It may therefore be that private investors could be organised into consortia for the purpose of investing in the Petrochemical industry.

A historical look at the Capital market in Nigeria, which of course includes the Insurance Funds, shows that the local capital market in its modern sense become active in 1960 with Establi- shment of the Nigerian Acceptances Limited, now NAL Merchant Bank which incidentally is celebrating its 25 years Anniversary this week. Between 1960 and 1975, four other Merchant Banks joined the Nigerian Acceptances in providing medium and long term funds to investors, investment management, equipment leasing, acceptance credit and specialist advisory services. In the 70's, Government also initiated the formation of Development Banks like the World Bank assisted - NIDB, Nigerian Bank for Commerce and Industry and the Nigerian Agricultural Bank. These Banks together with private and public insurance companies invest in capital projects all over the country by contributing to the equity of companies, debentures and loans, Mortgage and Commitments undertaking as well as Block Discounting.

0x1 the legislative side, the promulgarlon of Associated Gas Re-Injection Decree No. 99 01 1979 was intended t o terminate the flaring of associated gas in our oil fields by 1st January, 1984. Although this decree has promoted the reinjection of consid~able gas reserve in various fields, it has nonetheless, been impossible for oil companies to put a total break on gas flaring. To halt this economic waste of our resources entails the reactivation of the LNG project. Earlier efforts in utilization of our associated gas witnessed the establishment of the Bonny LNG Company as a Consortium between NNPC, Phi.Uips, BP, Shell and other foreign oil companies. The Bonny LNG Company was Ijquldated in 1982 after the withdrawal of Phillips and BP as a reaction to a 3 year postponement of the project by government.

In the course of time, finance becatne a major constraint to thc project and Government had to scale down the project by 50 per cent to a 3 train plant. Even then, the cost of the project re- mained rather staaering. Having regard to the resources available in the local capita! market, it is doubtful whether the local capital investors can participate to a high degree in this project. The continuous fall in our oil reveliue may also not assist government m finding alternative local sources of f i a n c e from the local market. To worsen our hope for reactivation of the LNG project is the continuous decline in demand and demand potentials in traditional markets b Europe, h i a and the Americas. I t is also understood that the largest LNG consumer, Japan, LS reducing her consumption by 20 p e r cent in the 1990's. The American LNG market appean closed, while virtually al l European countries appear to have a progratmle of reducing the volume of gas con- sumption (Belgium and Spain) or replacing gas with nuclear energy (France) or are currently looking elsewhere for the supply of gas (Germany).

Regarding the depleting nature of oil an optimum utilization programme might be our best bet but this requires a lot of capital investment. As l!igerians, we should not play the rule of spectators and expect Governiwnt alonc to take both the initiative and the financing of projects in the Petroleum Industry. Assuming a daily production of 2 million barrels, our reserves may not exceed 25 ycars. Consequently, it is imperative to increase the level of investment in oil explora- tion in order to ensure the replacement of fields as current ones get depleted. It is also desirable to encourage the establislunent of petrochemical industries utilizing oil and gas as fecdstoek for polymers, detergcnts, synthetic fibres and specialized chemicals. It is therefore of utmost importance that professional working in the Petroleum Industry liaise more with those in the finance and insurance world in order to familiarize each othcr with investment and financial opportunitics.

A nleaningful expansion of the Petrochemical industry can assist thc cconomy in achieving the desircd diversification ol ' t l~e economy as well as a reduction in the import bill of raw matcrials needed to grease the wheels of factories even in the other sectors O F the economy. Despite the tremendous investmcnt opportunities, it is doubtful that many operators in the capital market are aware of the potentials for investment in the Petroleum industry.

The fault is in the huge communication gap between the finance and Petroleum industries, and in the inadcquacy of economic and other data on ventures and venture-capital. Also, the large capital requirements, the long lead time and uncertaintics of both the political climate and policy formation and implemantaion, appear to nle to scare and discouragc Ins t i tu t iod investors.

In the circumstance, Govcn~rnen~ may have to takc substantial foreign loans to finance I'elro- chemical projects. The question bogging the minds of policy makers has oflen been described by writers on the enerjy policy as what kind of' loan to lake - multiiatcral, bilateral or commercial loan?, how much loan and under what temls and conditions?; how to meet the foreign exchange cost of the loan jn future; and how to ensure thc financial viabilily of the project and sclf liquida- tion of thc loan. In view of the misrnanagcmerit and systcm of accounts between the Fedcral Governmcnt and some Governmcnt owned institutions. t hen is Littlc hope that the local capital market will be willing to support some of thc projects initia~cd arid executed by these govcrrln:cnt parastatals. It is conmion requircment to obtain project feasibilities before financing and to insist on pnident financial n m a g m e n t and control. It may thcrcforc h that private investorscould be o r g a n i ~ d into consortia for the purpose of investing in the Petrochemical indusuy.

A historical look at the Capital market in Nigeria, which of course includes the Insurance Funds, shows that the local capital market in its modern sensc bccome active in 1960 with EntabLi- shrnent of the Niyrian Acceptar~ces Limited, now NAL Xtcrchant Bank which incidentally is celebrating its 25 years Anniversary this week. Betwen 1960 and 1975. four other hferchant Balks joined the Niprian Acceptances in providing medium rind long term funds to investors, investment management, equipment leasing, acceptance cwdit and spcialist advlsory scrvices, In the 70's, Government also initiated the formation of Development Banks like the World Bank assisted - NIDB, Nigerian Bank for Commerce and Industry and the Nigerian Agricu1tur:d Rank. 'Ihese Banks together with private and public insurance cornpanla invest in capital projects all over the country by contributing to the cquiry of companies, debentures and loans, Mortgage and Commitments undertakjng as well as Block Discounting.

CONCLUSIONS

Product q h t y and proper handling are the basis of safety in blasting operations. Since the days of Alfred Nobel, explosives and blasting accessories have changed to a large extent. They have become much safer in manufacturing, transport, storage and use. Not many delicate and potentially dangerous products can show a similar safety record for over 120 years similar to the explosives.

Explosives and blasting accessories are classified as dangerous materials. But it will not be helpful to anybody when the danger is overestimated, especially as long as they are handled by qualified personnel. On the other hand underestimating the danger should also be avoided.

Products, whose chamcteristin are presented to prove that they are completely insensitive against everything should be viewed suspect. I fully agree with an American colleague who said: "We believe that no product with the potential for abuse can be made totally "safe" without being useless, be it automobiles, lifesaving pharmaceuticals, or high explosives. The key lies in educating the user to the proper and safe utilization of the product."