Print this page
Email this to a friend
Discuss this article (0 Comments)Drilling development improves exploration
by ArabianBusiness.com staff writer on Thursday, 01 February 2007
zoom
Drilling is the sharp end of the oil business and the challenges seen in this sector are reflected throughout the entire industry.
As the pace of drilling activity in the Middle East and around the world increases, investment is needed. Areas calling out for investor attention include the drilling rig fleet, new technology and the seemingly perennial oil industry issue of people.
Rigs in use across the industry are ageing. After an extended period, where there was little new build activity, the expansion, upgrade and development of new rigs is just starting to get under way.
"Land rigs are obviously cheaper, however during the downturn in the 1980s there was a massive consolidation of land-rig builders, resulting in a new rig building capability today that is only a fraction of what it was 25 years ago," said Attilio Pisoni, Schlumberger's drilling and measurements VP for Middle East and Asia.
"The pace of new built land rigs has picked up, with statistics indicating that approximately 150 new land rigs were added worldwide in 2006, however this is way short of the number of new rigs that were added in 1981, when 1,500 were built."
The surge in demand has accompanied the rise in oil prices. As prices have risen it has became more feasible to look at drilling in previously uneconomic areas, resulting in a capacity issue within the drilling industry. Resources, whether rigs or expertise, have been much harder to come by.
The increase in work being done has also highlighted the need for more experienced, or at the least, qualified crew. The average age of a worker in the oil industry varies by world region, but frequently sits in the late 40s and the industry as a whole hasn't always worked to attract the interest of potential employees.
The problem exists in equal measure for the large international oil companies and the service industry that supports them. The people-intensive service industry is faced with the prospect of recruiting not just hundreds of engineers, but thousands, something it only started doing a few years ago.
"Efficiency improvements due to increased automation, remote monitoring, remote operations and related new technologies will help, but in themselves are not the answer to the problem," said Pisoni.
"Looking on the bright side I can say that the commercial exploitation of more marginal reserves will require considerable technical ingenuity and will continue to provide worthwhile and challenging careers for the best and the brightest."
Tight resources have driven the need for efficiency and this is where technological developments have stepped in. A key issue is the accurate placement of the well. If this is done with precision, the drilling equipment can move in and be directed to the best part of the reservoir. The faster this process happens, the sooner companies can move the available resources on to the next project.
"With so much less available in the market, this put a lot of pressure on the industry to deliver," said Paul Schuh, region sales manager for the Middle East and Asia Pacific for Baker Hughes Inteq. "So from a service company point of view, we are specialising in developing technology to drill faster and increase the rate of penetration, while also putting wells in the right place. This allows us to drill more wells per rig per year, without jeopardising the quality of the result, or safety of the well."
Of course when it comes to developing new technology someone has to pay for it. In recent years the increases in investment into research, and exploration and production in general, have been fairly modest. One industry survey quotes the estimated exploration and production expenditure to have only increased by about 5% since 2000.
Though this figure does not include the national oil companies, it does illustrate that investment in research and development by the majors has slipped steadily downwards. This has left the main burden for financing the development and testing of new technology squarely on the shoulders of the service industry.
"The service industry has been through it's own consolidations where oil company procurement initiatives, related to supplier rationalisation and cost cutting during the long down period, resulted in a reduction in the total number of players," said Pisoni.
These factors have left services companies with important questions about new technology: how much value does it add to the market and is it worth the cost of development?
"This is a prevalent discussion point at many conventions and conferences," said Schuh. "Twenty years ago oil companies spent big money on technology development, but they have moved that aspect of the work into the service industry."
"This is a two edged sword. We need revenue to support the work, but we don't always have the finance to develop at the speed the industry needs. The industry also doesn't always want to pay the price for the technology produced."
And it can be a high price, with service companies dedicating substantial cash resources to developing new technologies. As an example, Schlumberger spent US $619 million in 2006 alone, a 23% increase on its previous year's spend.
The combination of ageing rigs, personnel shortages and service industry-based technological developments has created a focused environment for the drilling industry. For a while now a great deal of research has been aimed at increasing the rate of penetration, or ROP, of the drilling process.
Schlumberger sees the most important technological drilling development over the last five years as the introduction of Rotary Steerable Systems (RSS).
"This technology has dramatically increased ROP and has allowed ‘designer well' trajectories to be drilled," said Pisoni.
"It has allowed record horizontal displacements in Extended Reach Drilling wells, which would be impossible to achieve with Positive Displacement Motors.
"An added bonus is that the hole trajectory is smooth without the micro doglegs associated with conventional directional drilling, where rotary drilled intervals are interspersed with intervals that are slide drilled. This greatly reduces the risk associated with running casing, especially in highly deviated or horizontal wells.
"ROP improvement, that takes into account both efficiency and durability is a key research focus for drilling technology.
"Adoption by the industry of RSS is continuing at a breakneck pace, due to continued high rig rates combined with ongoing improvements in RSS capability. This trend gives every indication of being maintained, with the major push from the operators being to improve reliability and optimise the entire bottomhole assembly and the drilling procedure. This is one of Schlumberger's key focus areas."
While the importance of ROP has been a focus of the market for several years there is some thought that it may be reaching its peak for now.
"Drilling companies want to cut days off their drilling programmes," said Schuh. "When you look at a typical project in the last 15 years, technological developments have been reducing drilling time. But it's fast getting to the point where it's hard to reduce that any more. Technology is already at a point where we can drill faster than we can get all the data we want. The amount of time spent not drilling on a project, flat time, is becoming greater than drilling."
Many majors were less focused on collecting data when wells were cheap to dig. Now the cost of drilling wells has risen, they need more accurate information.
"As the cost of drilling rigs has gone up dramatically in the last 18 months, oil companies have an increasing interest in the development and use of new technology," said Schuh. "With this the cost of drilling operations has gone up so substantially that operators have looked for technologies that will reduce their costs. The goal is to reduce flat time."
Baker Hughes offers the example of its TesTrak tool, which measures formation pressure while drilling, providing the information in real time. Getting information from wells in real time has been one of the most significant breakthroughs in recent years, allowing greater accuracy while drilling.
"While you're drilling, you need to know the pressure and have the correct mud weight in place, to avoid any kicks that will blow the wells out," said Schuh.
"Technologies like TesTrak enable engineers to read bore pressure of a formation in real time. It's a dream for reservoir engineers to know what the bore pressure is while they're drilling.
"TesTrak also removes the need for wireline, but it is not cheap, so it has to show its value by cutting days off the drilling programme. As a result of rising drilling costs, it has been easier for us to sell this technology now than when we developed it three years ago."
Technology such as TesTrak is proving its value on high dollar operations, such as offshore rigs, where even saving a single day has an impact.
"We are pleasantly surprised by how well new technologies are being received," said Schuh.
"The industry has gone from being a late adopter to an early adopter inside a few years."
READERS' COMMENTS
MORE FROM ARABIANBUSINESS.COM
TOP IN MIDDLE EAST ENERGY
TOP MIDDLE EAST BUSINESS STORIES
ALSO IN MIDDLE EAST ENERGY
LATEST MIDDLE EAST BUSINESS FEATURES
Mobile
EMIRATES ID DOWNLOAD
