Thursday, July 14, 2005

Chapter 8. Drilling an oil well.

After the seismic surveys have been completed, the results are sent to Holland. In the Hague specialists in the Shell Centre study them and decide on the next location for the exploration rigs. Heavy duty tug boats from Smit Lloyds in Holland are used to move the rigs onto location and position it over the coordinates using satellites, SCADA, GPS or other high tech guidance systems. Depending on the type of exploration rig used, a marine captain comes on board and assists the barge captain with coordinating the anchors being placed on the seabed. If it was a jack-up rig, the whole process of dropping the three anchors and jacking up the rig to the planned air gap takes about two days in calm weather and longer during rough seas.

There will be waiting times for the preloading of the legs to get the proper penetration of each leg into the soft muddy seabed. It has to be such that when the drill bit got stuck later on and an over pull is used to jar it free, the rig will remain stable and does not sink further into the seabed. The next item is to take on board the diesel hammer and the 30”x 40ft x 1” thick conductor pipes c/w with squanch joint connections. The first joint down the hole has a guide shoe welded on the bottom. The conductor pipes are made up in one continuous string and lowered to seabed making up the squanch joints connections as we proceed. When the conductor pipe stops penetrating the mud on the sea bed, the diesel hammer is picked up using the traveling block of the draw works. An adaptor is placed on the box end of the conductor and used as a protector when the hammer is used to ram the pipe into formation, adding 40 ft sections and topping up with drilling fluid (in this case, sea water) as required. After the hammer hits 10x and the penetration is less than a predetermined amount, say 12” we stop and lay down the hammer. The conductor is cut to a convenient height above the grating on the cellar deck or at the moon pool.

A 27” dia. three coned rock bit is run into the conductor pipe under full circulation of sea water or viscous mud down the Kelly to clean out the inside of the conductor. No rotation is required until the rock bit reaches conductor shoe depth. The drill string has a simple BHA (bottom hole assembly) of drill collars, stabilizers and heavy weight drill pipes and the rest of the drill string is standard 5” x 30’ x 19.5 lbs/ft drill pipes. We rotate and drill out of conductore shoe to the 20 3/4” casing setting depth, say 1200 ft. bdf (below derrick floor) circulate and condition the hole using mud and POH, (Pull Out of Hole). The 20 ¾” casing string is run into the 27” hole and hung off at the top of the conductor. A cement stinger is run and stabbed into the cashing shoe. The hole is further conditioned by circulation of drilling mud. Cement is pumped down the hole until we see returns from the annulus at cellar deck. The stinger is POH and we wait on cement to set. When the surface cement sample hardens we increase mud weight slightly, nipple up 20 5/8” BOP and drill out of casing shoe using 17 1/2” tri-cone rock bit to the next casing setting depth. At 13 3/8” casing depth, say 3000 ft, we stop drilling, condition mud and line the hole with the next casing, cement it in place, nipple up 13 5/8” BOP stack. We continue drilling using a 12 ¼” bit. This should take us to target or production casing depth, say 7000 ft.

Schlumberger wireline (or Sperrysun) engineers will survey the open hole as we drill to TD (total depth). Gamma ray logs are run to determine formation depth. The production, 9 5/8” casing is sometimes run using Weatherford contractors. It is cemented in place and CBL (cement bond log) are next run to confirm that cement has been placed correctly. Drilling mud in the hole is displaced by heavy brine. The production casing is perforated by Schlumberger using a tool loaded with explosive charges (gun). Perforation depths are correlated with the reservoir depths. Perforations allow the oil and gas to enter the 9 5/8” production casing and flow up each tubing.[1]This is the end of the drilling phase.

Production wireline crew comes on board to complete the well. They run 3 ½” tubing strings into the hole, making up tubing assemblies as per the completion diagramme. Wireline crew checks the ID using wireline drifts,[2] open and close sliding side doors and set tubing plugs and packers or in general mucking around and wasting valuable rig time! Finally each tubing is hung off in the DCB tubing spool and locked down in place by hanger bolts. The well is made safe by installing XN tubing plugs, closing all production sliding side doors and installing H plugs at each tubing hanger. After pressure testing to 3000 psi, the 13.5/8” BOP stack is nippled down. A Christmas tree[3] is then lowered and installed on top of the tubing hanger and DCB spool using a 10X10 adaptor.After nippling up the X’mas tree and pressure testing to 5000 psi against the H 2-way check valves, the contents of the well is then displaced to diesel. The SSD's are opened. A moderate well head pressure should register on the wellhead gauge. It should flow by itself through control chokes or beans for the next 10 to 15 years if this was a production well. The derrick set is skidded over the next conductor on the production platform and the next well is drilled.

In general, each well takes three to five weeks to finish drilling, depending on its depth and whether there were technical problems encountered during the drilling phase.The most common drilling problems met are stuck pipes, losses of drilling fluid, well kicks, equipment failures and bad weather. The cost of drilling each well will also increase due to these delays. Usually an oil well costs around 3.5 million ringgit to drill in 1975. This cost includes rig rental, contractors, materials and other overheads. Shell runs a supply base in Labuan complete with a marine department!

If this were an exploration well on the open sea, a well test is then conducted. It lasts for about a week. The well is allowed to flow under different choke sizes for a while and then closed in. The pressure build up is monitored using Amerada gauges.[4] The very slight drop in the reservoir pressure due to production is measured, before and after. This determines reservoir size and extent. If the results are good, ECO, engineering construction offshore will later come and construct an offshore production platform for further development drilling!

Flopetrol contractors usually do the exploration well tests for Shell. The burners are rigged up and all the well products, gas or oil are burned off or flared. These flares are visible for many miles around. It attracts a lot of fish to the rig! At the end of the well tests, the well is made safe and then abandoned. Tubings and casings are recovered and the well is filled with a series of cement plugs and the last outer casings are cut flush at sea bed using tungsten carbide tipped cutters. No visible signs will be left to indicate the existence of the well. The exact location is fixed by GPS. The exploration rig is then moved by tug boats to the next location.

If it were a production well drilled from a production platform, wireline crew will come to service the well on a regular basis. They change the sub surface safety valve annually, run Amerada surveys to determine bottom hole pressures, run sand bailers if necessary. As the reservoir depletes they also change the producing zone by opening and closing sliding side doors at different depths. When the well stops flowing, gas lift valves are set in side pocket mandrels in the tubing strings and gas is injected down the casing annulus to assist the well to flow for a few more years. (Servicing wells was my first job with Shell as a wireline operator). Gas lifting is called secondary recovery. Eventually the well becomes so old and feeble that flowing pressure and production output drops further and a work over is scheduled to give it new life.

A smaller size production work-over rig is moved on location. Some are platform rigs like the Aquadril One. Others are tender assisted eg. the Jumbo (Grande Large). The well is killed by pumping heavy brine solutions down one tubing and up the annulus to displace well contents to brine. When the well is dead, an X type plug is set; all SSD's are closed and the H two-way check valves are installed at the tubing hangers. The x’mas tree is removed. The 13 5/8” BOP stack is nippled up and the tubings are pulled out from the well. It is worked-over as per programme. Some times the well is deepened by drilling further outside the 9 5/8” casing shoe depth, setting a smaller 7”casing, deeper down and recompleting the well as a single string producer from the lower zone. The well is again perforated at the new reservoir depth. A new single string is run into the hole and hung off at the tubing spool. The BOP is nippled down after taking the usual safety precautions. A new single x’mas tree is then installed. After recompletion the well is again displaced to diesel, the plugs removed and it should flow again for another few more years. That is if the geologists and reservoir engineers did their job well!

When I joined Shell in 1972, it cost the company 2.5 million ringgit to drill an average oil well of 8000 ft. The price of crude was at 2.42 USD per barrel.[5] When I left in 1995 the cost to drill one average well has gone up to over 10 million ringgit and the price of crude was steady at 19.60 USD per barrel! At its peak in 1986, during the Opec oil crises, crude was selling at 34 USD on the spot market! What do you think? Did Shell make any money?Assuming that an average oil well produces an average of 1000 bbl/day for an average of 15 years @ an average price of 15 USD. We have 82 million USD from just one average oil well! How many wells are there now in the South China Sea?

After refining, the crude is separated into petrol, diesel, aviation fuel, kerosene, lubricants and other solid products. The value/barrel increases even further! How much does it really cost Shell to refine, transport and market one barrel of crude? What is the resultant value of the finished products per litre? Nobody knows and Shell is not telling! It depends on the type of crude oil, Arabian light or North Sea heavy crude. Is it really a trade secret? What is the price of crude today for North Sea Brent and for Arabian Light? Do you know? Prices and costs are always changing.We know that North Sea crude is selling at a different price from Arabian light. Malaysian crude, being low in sulfur content is selling at a higher price! What about government’s royalty and production sharing agreements? Confusing isn’t it? Is this why we do not get a straight answer from the oil companies?! I am sure some one knows the bottom line; but knowing and telling are two very different things!

[1] Reservoirs are separated by Otis or Baker production packers

[2] Two drift sizes are run. 2.890” above the S4 nipple and 2.735” below the sub surface nipple.
[3] A set of valves used in controlling the well.
[4] Very accurate pressure gauges used to measure exact formation pressure, down hole.
[5] A barrel is 42 US gallons.