Drill it cheaper, faster

Feb. 25, 2002
The petroleum industry at a glance reveals depressed commodity prices and worldwide rig counts that have dropped significantly from the highs of 2001.

The petroleum industry at a glance reveals depressed commodity prices and worldwide rig counts that have dropped significantly from the highs of 2001.

With oil demand outlook weakening, the industry must weigh possible world economic trends in making investment and project development decisions. Against this backdrop, perhaps the casual observer finds it hard to understand, or even notice, the oil and gas industry's relentless pursuit of efficiency.

Even as drilling contractors search for increased business and rigs wait for contracts, innovators in the industry are busy trying to find ways of drilling oil and gas wells faster, more efficiently, and with less expense. The industry also works diligently to develop enabling technologies, as it has since its beginning some 140 years ago, which promise to allow companies to develop reserves that are beyond current reach. Oil and gas operators demand and reward the effort. Also, and sometimes more importantly, the purely engineering challenge of building a better "mouse trap" is a major motivator for the individuals involved.

In an industry that describes its business in terms of oil and gas in place, producible and produced reserves, decline curves, and reserve replacement costs, one begins to understand the existing drivers for increased efficiency.

Finding, developing, and producing oil and gas becomes just a little more challenging as each year marches on, although, as 2002 Society of Petroleum Engineers Pres. Stephen A. Holditch put it, "We are not halfway there-not even close," referring to depletion of the petroleum resource.

The petroleum industry consolidation within the past few years, whereby it was easier to increase booked reserves by acquiring other companies than by drilling wells, is another testament to the drivers of efficiency within the industry.

Operator initiatives

The oil and gas industry's effort to measure and improve efficiency is evident at every turn. Some companies establish corporate cultures where the goal is to continually push the limits of established methods.

One of the many examples that come to mind is Unocal Corp. Through use of dual-activity drillships, a proprietary synthetic drilling mud system, and unique deepwater well programs, the company has set several records by drilling Gulf of Mexico wells more quickly than other operators in the area. Unocal's success has allowed the company to market its methods to fellow operators, serving basically as drilling consultants.

Company initiatives are sometimes formalized as catchphrases and communicated to both employees and the public. BP PLC and Shell International Exploration & Production Inc., for example, have highlighted their efforts in company publications.

BP has formalized an initiative, which it calls Beyond the Best, communicating its effort to become a "Great Operator." As part of the initiative, the company attempts to make company performance transparent and often highlights performance examples, such as a through-tubing rotary drilling application in the North Sea's Magnus field or an underbalanced drilling initiative in Colombia's Boqueron field. Writing in the company's publication Wellconnected, BP's Technology Vice-Pres. Chris Rhodes said, "The adoption of the Common Processes-Drilling Value Assurance, Right Scoping, Technical Limit, and No Drilling Surprises-has begun, and there are anecdotes to couple their application to performance."

BP has placed production as well as capital efficiency on the agenda of the company's drilling and completion organizations, highlighting the 2002 goal of improving performance by 23%, on a dollars per 1,000 boe/d basis, over 2001.

Formalizing Shell's efforts to increase efficiency, the company's Realizing the Limit initiative is comprised of four components: Capital to Value, Volumes to Value, Drilling the Limit, and Producing the Limit. The company says its Drilling the Limit component starts with drilling the "right well" for a given development as the objective. By challenging conventional well designs and modifying them, the effort should typically increase recovery, lower costs per barrel, and lower average well costs by 25-50%.

Innovation, risks

This issue's articles on rig designs, drilling operations, wellbore visualization software, and deepwater cementing applications, in the Practical Drilling Technology special report beginning on p. 72, are about enabling technologies and enhancing drilling efficiency.

The drilling industry clearly has many innovative technologies on its plate, which the developers and innovators work diligently to bring to maturity. The interesting thing to watch will be which technologies play out to become the great successes that bring about paradigm shifts.

For example, is it possible that casing drilling will grow in success to the extent that rigs will no longer require drill pipe and drill collars? How will the solid-expandable tubulars and dual-gradient drilling developments for deepwater wells play out? Will the technologies complement each other, or will one make the other redundant? The industry will decide which of the many technologies are worthy to employ, and history will judge the success.