Conoco UK Ltd., the North Sea arm of Houston-based Conoco Inc., is reaping benefits with its "finder-well" approach, which carefully plans a bare-bones drilling program and then freezes that plan to reduce drilling costs by 30% on average.
That method was used to drill Conoco's recent Kappa discovery that cut a 150-ft hydrocarbon column that was logged but not tested in the central North Sea about 125 miles northeast of Aberdeen (OGJ Online, May 16, 2000).
The company plans to drill an appraisal well later this year to determine the economic viability of that find, probably by coring, drill-stem testing, and collecting water samples and pressure data. The low-cost finder well has been plugged and abandoned, having accomplished its purpose of simply determining that hydrocarbon deposits are there.
The finder-well approach saves money by deferring testing and evaluation of a discovery until an appraisal well is drilled, said John Williams, general manager of exploration for Conoco UK.
Like similar drilling programs being adopted by offshore operators around the world to cut costs, the finder-well approach starts with careful planning of the well by a multiple-discipline team "6-8 months before it's spudded," Williams said, in an exclusive interview.
"You decide first the critical uncertainty that the well is to address. In the case of an exploratory well, it's simply to determine if there are oil or gas reserves in place where you think they are," he said. "You decide next what are the minimum features you need in your well to obtain the data that you need. Then you challenge that plan to make sure you've addressed all the potential problems."
Each drilling plan is tailored to a particular well's unique features. However, Williams said, "Once you get your plan worked out, freeze it [because] changes cost money."
Williams got his first experience with the finder-well concept as exploration manager for Conoco in Indonesia during 1989-93, in an effort to do more drilling in the South Natuna Sea Block B despite budget constraints.
He determined that, by streamlining the well design for quick drilling, the company could reduce costs from the normal range of $2.5-4 million/well to an average $1.5 million/well or as low as $1 million in some cases. "We saved enough on three wells to drill a fourth," Williams said.
Other operators, like Unocal Corp., also were developing their own methods to cut drilling costs in Indonesia at that time. But those efforts were made on an individual company-by-company basis. A more uniform approach was adopted in the mid-1990s by the UK Offshore Operators Association, which worked with UK government officials in developing its Cost Reduction in the New Era (CRINE) and Double-the-Value-of-Wells programs.
Conoco included its finder-well approach among the "best practices" it shared with other North Sea operators under the CRINE program. Recent changes in UK regulations made it possible to use that approach.
As a result, Conoco saved 25% on the two discovery wells and one appraisal well that it drilled in the North Sea in 1999. Now, Williams said, "Quite a few companies are drilling finder wells."
Of course, not all prospects benefit from the finder-well approach. "Some are so small that they can only support one or two wells. So if you have a discovery, you'd have to plan on keeping that well as a producer. You have to know the economics of the area," said Williams.
Finder wells also aren't necessarily geared to some of the latest technology for reducing drilling costs. New slim-hole drilling can cost more than a conventional well designed around the finder-well concept, Williams said.
"This is not rocket science or brain surgery-it's pretty much common sense," he said. "The process can work anywhere. But you need the self-control to stick with the plan that you work out." Otherwise, he said, "It's easy to start adding on features that drive the cost up."