Exploration Risk Assessment for Storage in the Evaluate stage
Table of Contents
Objective
Include a summary of the Risk Register established in the Risk section of the study that - uses the developer's Risk Management System (RMS), ranks all identified risks, defines all fatal flaws or extreme risks and identifies mitigation actions generally, but specifically has detailed responses to extreme and high risks. Review and refine decision tree options / value analysis.
Major Deliverables
Focused exploration risk assessment report including summary information and highlighting key issues from the following analytical tools:
- Risk Management System (RMS) and associated methodology approved by the developer/stakeholders (e.g. Features, Events and Processes (FEP), Decision & Risk Analysis (D&RA), etc.)
- Risk Register containing a detailed description of perceived exploration risks for the project in the following risk categories:
- Technical in the following sub-categories: technical in the following sub-categories: sub-surface, existing wells, injection well(s), onshore and offshore (if applicable)
- Legal
- Commercial (contract)
- Commercial (finance/funding)
- Political/social
- Health & safety
- Environmental
- Market forces; the Risk Register should also contain the following entries:
- Description of the consequences resulting from each exploration risk identified for the project
- Estimated value of the risk in terms of likelihood and impact (e.g. "show stopper", blocker, manageable or low/medium/high), with probability assessment (P10, P50, P90). These may also be combined to produce a risk score for detailed evaluation. To assess the risk potential after the implementation of a given mitigation strategy, residual risk may also be evaluated for likelihood and impact (and optionally a risk score)
- Mitigation options/actions required to address risk
- Owner of the risk (e.g. operator, stakeholders, surveying/drilling contractor, etc.)
- Highlighted areas where further work is required due to uncertainties or the presence of alternative strategies (e.g. MMV options)
- A refined graphical representation of ranked options (e.g. decision tree analysis, critical path analysis (CPA), Boston Square decision chart), based on the selected RMS. This process should be able to capture time-based (duration and delay) information for feedback into cost analysis
Defining Risks
At this stage, the risks outlined at the Identify stage need to be defined and ranked more clearly in terms of likelihood and impact, which will require a probability assessment in the absence of existing risk data/statistics. Mitigation strategies for each risk must also be captured at this stage.
The risk register may be in the form of a spreadsheet or database as illustrated below (with one example):
| Risk ID | Stage | Description | Conse- quence | Category | Likeli- hood | Impact | Mitigation Strategy | Owner | Uncertainty/ Further actions |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Exploration | High demand for drilling rigs due to high oil price | Inability to secure drilling rig for offshore appraisal drilling | Commercial | Medium | Medium | Consider alternative service provider, buy rig, consider onshore alternative | Share- holders | Fluctuation in rig market needs to be investigated |
Categories of Risks
Risks fall into two main categories:
- Specified/well-defined: The assessment panel should be able to identify these risks based on previous hydrocarbon industry and CCS experience or from cases histories of analogous projects
- Unspecified: These risks are more difficult to capture and may involve the use of new technology or methods with a high degree of uncertainty existing over the eventual outcome
Types of Risks
Evaluate extreme and high exploration risk, document the likely consequences and formulate a detailed response (in brackets), since these are likely to be the main "show stoppers" for a storage project. Guidance examples are provided below for each of the following risk categories:
- Technical (sub-surface):
- Structure has insufficient capacity (fails to integrate with source-site objectives - evaluate the option to change the project objectives for injected volume or consider alternative site)
- Faults/fractures/fluid migration pathways detected in the overburden (potential storage compromise - perform modelling studies to assess probability of leakage and rates, assess effectiveness and sealing capacity of any secondary seals)
- Shallow gas pockets detected in overburden (potential drilling hazard and migration pathway for leaking CO2 - evaluate repositioning options for rig placement or ERD, assess proximity of shallow gas to storage site caprock and secondary seals and likelihood of migration connections being present)
- Technical (existing Well/s):
- Tests indicate that some wells have corrosion problems, with poor cement bond and pressure integrity (potential leakage pathway for CO2 - evaluate remedial options in cost/benefit terms and if favourable implement, if unfavourable consider an alternative site)
- Technical (injection Well/s):
- Sanding and formation integrity problems predicted (injectivity problem - perform sand control study to evaluate whether sand screens will need to be included in the completion design)
- Poor injectivity predicted due to porosity/permeability anisotropy (injectivity problem - perform fracturing and geomechanics study to evaluate whether this step needs to be included in the drilling/completion process)
- Technical (onshore):
- Unpredicted ground conditions encountered during site investigation such as springs, contaminated land or uncharted mine workings (complex problem - evaluate the extent of the problem in relation to the storage site and whether this can be addressed by remedial action or repositioning and if not, an alternative site may be required)
- Technical (offshore):
- Evidence of recent seismic/tectonic activity (potential storage integrity problem - perform a detailed geophysical/geomechanical study to assess the frequency/magnitude of events and potential for storage site compromise and if high, consider alternative site)
- Legal:
- Hydrocarbons/minerals discovered in proposed storage area (potential for storage permit to be delayed/revoked - evaluate delay to project caused by re-negotiations, if excessive or position appears to be untenable, consider alternative site)
- Ownership dispute with third party (potential for storage permit to be delayed/revoked - evaluate delay to project caused by re-negotiations, if excessive or position appears to be untenable, consider alternative site)
- Commercial (contract):
- Inability to secure survey vessel/vehicles (delay to survey operations and project - evaluate options/costs to hire or buy from alternative contractors and perform (re) schedule risk analysis, if position appears to be untenable, consider alternative site)
- Inability to secure drilling rig (delay to appraisal/injection well drilling operations and project - evaluate options/costs to hire or buy from alternative contractors and perform (re) schedule risk analysis, if position appears to be untenable, consider alternative site)
- Commercial (finance/funding):
- Funding fails to materialise or is withdrawn (potential project cancellation - evaluate options to secure alternative funding or choose scaled-down alternative site)
- Political/social:
- Change of government policy to storage regulations (potential project delays/cancellation - assess the likely impacts of these changes and if critical, evaluate storage options in other international regions)
- Local objections/protests against storage site (potential project delays/cancellation - ensure that sufficient public outreach activities have been organised prior to exploration activities, implement negotiation process and if that fails consider alternative site)
- Health & safety:
- Exposure to radiation or chemical spillage/leakage during exploration activities (HSE inspection, clean-up operations and project delays - ensure that HSE guidelines are in place on site and evaluate additional options to secure site and implement fast clean-up response)
- Environmental:
- Saline formation fluids being forced to seabed/surface (contamination from excess salinity and mobilised heavy metals - perform modelling study to assess flow pathways and volumes of fluid expected, evaluate options/costs to reduce pressure via water production wells and treat appropriately)
- Market forces:
- Project delays cause project to miss qualification deadline and lose funding (potential project cancellation - ensure the Schedule Risk process is performed regularly enough to capture critical activities at early stage)
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- Unpredicted rise in fuel/equipment/personnel costs (potential project cancellation due to cost increase - assess the likely impacts of these changes on the project budget (contracts/cost control) and if critical, evaluate storage options in international regions with lower operating costs)
Tasks
- Estimate the probability/frequency of these preceding risks occurring and rank according to potential impacts on project success in environmental, economic and technical terms (Risk Matrix). A database of key performance indicators (FEPs) or hydrocarbon industry experience (e.g. case histories and risk register) may help to identify potential risks/scenarios and may provide a solution in some instances
- Document any areas of uncertainty for further Evaluation
- Describe potential risk allocation, management or mitigation options that could be considered for further Evaluation or recommended for direct implementation (e.g. phase behaviour management during injection into depleted/depressurised reservoirs, ranked choice of alternatives from a portfolio of storage site options)
Examples
Key Personnel
Expert panel of risk assessment specialists and/or professional representatives from the following technical, economic, environmental, legal and HSE:
- Chairperson and Steering Committee
- Management representatives from the project developer
- Senior representatives from the regulatory authority and local/regional government
- Geologists/Geophysicists/Geochemists
- Geomechanical/Geotechnical Engineers
- Petroleum/Reservoir/Drilling Engineers
- Environmental Consultants
- Legal Practitioners (Liability, Property and Mineral/Oil/Gas/CCS)
- Financial/Economic/Political Analysts
- Risk Assessment/Safety/Insurance Analysts (HSE)
*In some cases, multi-discipline experts may be available (e.g. geology/geophysics), who may be particularly suitable for these roles.
This content expresses the point of view of individuals in the CCS community and not necessarily the views of their organisation or the Global CCS Institute.
