National oil companies in Brazil, Venezuela, India, Oman, and Kuwait take varied approaches to accomplish their drilling programs.
In general, there has been a continuing movement away from operator-owned rig fleets, a trend shared by NOCs. This means they and other operating companies compete for the same rig fleets. Contracts are becoming more standardized for fungible rig requirements, and contracts for offshore rigs are lengthening, particularly for the more limited deep and ultradeepwater units.
Although India’s Oil & National Gas Corp. (ONGC) and Brazil’s Petroleo Brasileiro SA (Petrobras) operate offshore rigs, there are no new floaters under construction for any NOC.
Land drilling programs attract bids from international rig contractors predominantly based in North America, Europe, and China. Companies such as KCA Deutag Drilling Ltd., a wholly-owned subsidiary of Scotland’s Abbot Group PLC, and Houston-based Precision Drilling Corp., a wholly owned subsidiary of Weatherford, find it expedient to establish national holding companies to facilitate work.
Brazil
Constraints on deepwater rig availability have caused Petrobras to reschedule its push to ultradeep water to 2007-08. The company was unable to secure appropriate rigs through its conventional bidding process and headed to direct negotiations.1 Meanwhile, Petrobras is accelerating shelf development off Brazil, with priorities on 4,500-6,000 ft water depths, and developing land prospects, for which rigs are more readily available.
Drilling activity in Brazil has increased to 22 rigs drilling onshore in first-half 2006, from 19 onshore in 2004.
Petrobras manages its own fleet of 14 offshore rigs, including 4 jack ups, 4 semisubmersibles, and 6 platform rigs. Four of these rigs were drilling in June (one jack up, three semisubs), one platform rig involved in production, and all the others with workovers, according to Rigzone.
New offshore contracts for 24 offshore rigs, including rollovers, running for 5-year terms, and totaling nearly $2 billion, were signed in 2005-06.1
Petrobras now employs 25 other offshore rigs from contractors, including Diamond Offshore Drilling Inc. (4 semisubs, 1 drillship); Louisiana Overseas Inc. (1 semisub); Noble Drilling Corp. (1 semisub, 3 drillships); Pride International Inc. (5 semisubs); Brazil’s Queiroz Galvão Perfurações SA (2 semisubs); Brazil’s Schahin Cury SA (1 jack up, 1 drillship); and Transocean Inc. (3 semisubs, 3 drillships). Overall, 28 of 39 rigs working off Brazil are engaged in drilling.
Venezuela
After several years of reduced activity, drilling has picked up momentum in Venezuela. By May 2005, there were more mobile offshore drilling units working there than in any other Latin American country (OGJ, June 20, 2005, p. 47). The majority of MODUs in Venezuela (45 of 52 in May 2005) were drilling barges, working in Lake Maracaibo. According to Rigzone, there were 50 rigs off Venezuela earlier this month, including the 45 barges. Petroleos de Venezuela SA operates half of all MODUs in Venezuela, including 21 drilling barges, 2 jack ups, and 2 tender assist vessels. PDVSA is beginning to increase the size of its land rig fleet in preparation for several development initiatives.
Venezuela currently operates about 90 land rigs, and plans to purchase 28 new rigs from a Chinese manufacturer. At the Offshore Technology Conference in May, Luis Vierma, vice-president for exploration and production at PDVSA said that some of the rigs will be assembled in Venezuela, beginning in 2008, under a joint venture with China Petro Technology and Development Corp. CPTDC is a subsidiary of China National Petroleum Corp.
Although no rigs are currently manufactured in Venezuela, Vierma said that by 2010-11, “we’re going to be able to build our own rigs.”
PDVSA has dropped some production around Lake Maracaibo, mainly due to a shortage of gas for gas lift but also because a lot of wells are out of production and need to be repaired. There is scope for more drilling rigs here.
Heavy oil drilling in the Orinoco belt will require more rigs and will focus on cluster drilling up as many as 24 horizontal wells from a single location.
On May 31, China’s Xinhua News Agency reported that PDVSA’s Eulogio Del Pino said the company would spend $1.4 billion to exploit 25 mature fields in 2006, together with Chevron Corp. and Petrobras.
Sincrudos de Oriente CA (Sincor) is one of four heavy-oil upgrading projects in the Orinoco basin. Sincor is a joint venture among PDVSA (42%), Total SA (47%), and Statoil ASA (11%). The first drilling program ran from 1999 to late 2003, during which time the company drilled 322 wells. Drilling didn’t resume until late last year, with plans to drill 8 wells in 2005 and as many as 84 wells in 2006-07.2
On May 23, 2006, a “top PDVSA official” said that the company wants to assume 60% of each of the four heavy oil projects. On May 26, Statoil and Sincor told Dow Jones that the question over future ownership control of Sincor would not affect the 6-year, 452-well drilling program, according to heavyoilinfo.com.
Nabors International Drilling Ltd. (NDIL) sent its first two Chinese-built programmable AC electric (PACE) rigs to drill for Sincor in eastern Venezuela earlier this year. The rigs are 1,500 hp each. Rig 669 spudded its first well Feb. 15 and is working under a 5-year contract (Fig. 1). Rig 679 spudded Mar. 15 and is working under a 2-year contract.
Nabors has 88 PACE rigs on order from yards in Canada and China. The company has recently established a PACE training center at its Houston headquarters, including a PC-driven simulator that includes a full driller’s console with joystick controls and realistic video footage of drilling activities filmed from a driller’s cabin on one of the Venezuelan rigs.
India
India’s national oil company, ONGC, runs the most rigs in the country, both on and offshore. President and CEO Subir Raha told OGJ that the company operates a fleet of about 70 land rigs and 50 workover rigs; it leases additional rigs as needed.
ONGC has its own fleet of nine jack ups and one drillship, the Sagar Vijay. The company also has 20 additional rigs working offshore, operated by drilling contractors: Aban Loyd (4 jack ups, 1 drillship-the Frontier Ice); Dophin AS (Belford Dolphin drillship); Great Eastern Shipping Ltd. (1 drilling barge off India, 1 jack up working off Iran); Jagson International Ltd. (1 jack up); Nabors Offshore Inc. (1 platform rig); Noble Drilling Services Inc. (2 jack ups); Pride International Inc. (1 jack up); and Transocean Inc. (7 jack ups).
Oman
Petroleum Development Oman, based in Muscat, no longer manages its own rig fleets. PDO rigs were last used in 1988 and 1991, according to Salah Al-Bahlany, deputy manager for PDO’s development drilling in northern Oman.
PDO has drilled 300-400 wells/year in the last 5-6 years, and there are about 9,000 wells in the country, mostly cased. As in neighboring countries, shallow, sulfurous carbonate aquifers can cause casing deterioration.
PDO is run by the government of Oman (60%) and Royal Dutch Shell (40%) and has about 4,700 employees. The biggest challenge it faces, Al-Bahlany said, is the shortage of competent personnel, especially among contractors. Third-party contractors are obliged to increase the national content of their staffs progressively, as proscribed by the Omani agency, OPAL.
A variety of contractors provide rigs in Oman, including KCA Deutag, Precision Drilling, Schlumberger Drilling Services (SDS), UAE-based Dalma Energy Services, Ensign Drilling (was OD&E), Oman-based National Drilling Services (UGER), Oman-based MB Petroleum, Croatia’s Crosco (workover rig only), and a single drilling rig from an Algerian company. By yearend, China’s Great Wall Drilling will have three drilling rigs in Oman.Two Omani companies, Shaleem Petroleum Co. and MB Petroleum Services LLC, supply hoists.
Rig contracts are mostly on day rates on 3-4 year contracts, although some campaign drilling projects are managed by the contractors. About 30 rigs currently are engaged in development drilling in Oman; the number will soon rise to 35-36, Al-Bahlany said. The rigs are fully utilized.
In general, shallow reservoirs are carbonate in northern Oman and sandy in southern Oman, and there are deep limestones and dolomites. PDO drills shallow wells with brackish water and also uses synthetic oil-based muds, polymers, and bentonite. In carbonates, the company uses mica and marble chips as lost-circulation materials.
Four contractors supply 2,500-3,000 hp rigs for deep exploration drilling: Ensign (ODE), Dalma, KCA Deutag, and SDS. PDO contends with some high-temperature, high-pressure and sour reservoirs; the company uses 13Cr tubulars for H2S.
There is one rig suitable for underbalanced drilling in Oman, with a rotating control head, Precision Drilling’s PDI 151, working as PDO Rig 54.
Halliburton runs two full hydraulic fracturing systems and one mini-frac system in Oman. Al-Bahlany said they are all gel fracs with non-RC sand. Sand must be imported, and supply was interrupted earlier this year.
Three companies run eight sets of well-testing equipment in Oman: Halliburton, Schlumberger, and MB Petroleum.
Kuwait
On June 13, the chairman of the Kuwait Oil Co., Farook al-Zenki, said that the company plans an aggressive drilling campaign, primarily targeting heavy oil in the country’s northern fields.3
Al-Zenki said that KOC will need to spend $27.6 billion, primarily in drilling costs, to reach a production goal of 4 million bo/d by 2020, up from 2.6 million bo/d currently.
Nayef A.H. Al-Anzi, team leader in KOC’s drilling operations group, told OGJ in late June that KOC is drilling about 80 wells/year. Wells in the north are generally deeper, to about 10,000 ft; wells in the southeast are drilled to about 5,000 ft, on average. Al-Anzi said that KOC is moving to standardized 5-year day-rate contracts with its three main suppliers: Kuwait Drilling Co. (government owned), United Precision Drilling Kuwait, and Burgan Co. for Well Drilling, Trading & Maintenance KSCC.
Burgan Co. was formerly Hamad Al-Hamad & Partners Co. for well drilling, trading, and maintenance WLL (an LLC established in 1970). Burgan became a closed Kuwaiti shareholding company in February 2005.
KOC is currently running eight shallow development drilling rigs, six workover rigs, and six deep drilling rigs (3,000 hp), and more tenders are expected, Al-Anzi said. One of the deep drilling rigs is from Burgan Co; the others from KDC.
In 2005, KOC began contracts for six new rigs with Burgan Co. KOC arranged a 5-year contract worth $68.7 million for a semiautomated, 3,000-hp electric drilling rig with a 2,200-hp mud pump capacity, the first of its kind in the Middle East. The National Oilwell rig can drill to 25,000 ft with a National-Hitec top drive and 1.6 million lb hookload. The BWD-124 spudded its first well on Oct. 9, 2005, and will be used to drill the Jurassic section.
KOC also signed a 4-year, $48.3 million contract for five shallow-drilling and workover rigs, which began in May 2005 (www.bwdkw.com).
In February 2006, KOC began a 2½ year, $13-million contract with Burgan for a 550-750 hp rig. Al-Anzi said these smaller rigs, less than 1,000 hp, are called “swingers” and used for both shallow wells and workovers.
Burgan’s fleet has increased to 24 rigs in 2006, up from 5 rigs in 1988. Eight of the rigs have been working for KOC in 2005-06, up from 6 rigs in 2002-04. Burgan operates from the Abdali Camp in northern Kuwait, Burgan Camp in the south, and Wafra Camp in the Partitioned Neutral Zone (PNZ) between Kuwait and Saudi Arabia.
The PNZ is being developed by the joint operations of Chevron-Texaco and KOC (JO), currently using nine Burgan rigs.
In December 2005, JO began a 1-year, renewable contract worth $12.5 million for the BWD-128 to drill at Ratawi Wells. In January 2006, JO began a 5-year, $102.7 million contract for six shallow drilling rigs.
Burgan notes on its website that “Growth prospects for the oil industry in Kuwait remain strong.... The implementation of Project Kuwait and the KOC 2020 Plan are expected to open various opportunities to the local contractors in the oil drilling market.”
References
- Rasheed, Wajid, “Rig shortage prompts change in Petrobras strategy,” Drilling Contractor, May-June 2006, pp. 24-26.
- “SINCOR to resume drilling operations in August,” Aug. 16, 2005, http://www.dtccaracas.um.dk/da/menu/Markedsinformation/Markedsmuligheder/ SidsteNyt/SINCORToResumeDrillingOperationsInAugust.html.
- “Kuwait plans aggressive drilling program for heavy oil,” June 13, 2006, http://www.heavyoilinfo.com/newsitems/kuwait-plans-aggressive-drilling-program-for-heavy-oil.