Dr Lee Hunt, IADC president, 1990-2012

It’s been a distinct pleasure to have served as president of IADC for the past 22 years and to have served with the association before that for six additional years. The time comes for a changing of the guard at the top, and I’m pleased to announce that my successor is Stephen Colville, who most recently was vice president of communications for Shell’s projects and technology business. Stephen has more than 30 years’ experience in government policy and relations, corporate public affairs and lobbying with organizations such as Chevron and the UK Department of Trade and Industry.

While it may seem an unusual step for an association representing drilling contractors to appoint someone with operator/producer experience, lessons learned from Macondo have taught us that we are all stakeholders in this industry. We are in this together. It takes mutual understanding of how we each operate in order to achieve collaborative success.

Over the past nearly three decades, the association has emerged as a global authority for the drilling industry. Our membership has expanded to drilling contractors, operating companies and service companies headquartered around the world, truly achieving a global membership base.

Guiding us through this expansion has been the principle of “Do what is right for the rig.” The rig is the great equalizer in service to our membership, no matter how many rigs or how few in the fleet, no matter the size of the company, and no matter whether they are geographically localized or globally positioned. IADC believes that by pursuing the best interests of the rigs, we are acting in the best interest of our member companies.

In the process, keeping our focus on the rigs means we’re also keeping our feet planted firmly. Our efforts are directly beneficial to the work force of our members, from roustabout to CEO.

Over the years, we also have achieved an increasing level of professionalization in the IADC staff. Many have advanced, professional degrees. All have years of industry experience. Most are recognized as leading experts in the areas they staff, and this makes them very valuable partners with our members.

Our staff has worked and will continue to work to be proactively relevant to the daily business of our members. Companies in today’s drilling business want options and speed, and IADC has a responsive staff to provide what they need.

I am excited and encouraged to deliver into the hands of my successor a highly successful, capable, competent, professional and outstanding IADC. I look forward to watching us rise to the industry’s future challenges and doing what it will take to move IADC to the next level. I know we can. I know we will.

By Joanne Liou, editorial coordinator

Claus V. Hemmingsen is CEO of Maersk Drilling and partner and member of the group executive board of A.P. Moller – Maersk. He also serves on the IADC Executive Committee and is a former IADC chairman (2009).

Claus V. Hemmingsen, CEO of Maersk Drilling

What are some of the most critical issues the industry faces in the coming year?

The industry has 146 newbuildings in the order book, and many of them are with improved technology. The need for competent people, well-trained people and people who can operate high-tech equipment is higher than it has ever been before. I think that’s our main challenge in the industry at large. That challenge of course goes directly to the competence.

We have to make investments in training, talent programs, development of competencies and so on. With the forecasted attrition, retirement and the new units coming out, it’s estimated that the industry will need about 20,000 new people, and they all have to have the required competencies.

The last time we saw a huge increase in activity was back in the ’80s. If you compare the current situation to those times, we had less requirements for our people then and took on crew with limited skills. A lot of these people came off to a rough start. Since then – and up until five years ago – I actually think the growth was very modest, and it was possible to cope with the growth just by having internal development programs and promotion programs.

What we are seeing in the last five years or so and in the coming three years is an explosive growth, and we have simply under-invested in education and training in the last 20 years.

What can we do to overcome the need for competent people?

You cannot undo what you have neglected to do in the past just overnight. There’s a backlog in what we need to do in terms of training and development. That means all of us in our individual companies have to put extra effort in both fast-tracking talent and making sure that we invest in training and developing people, enabling them to handle the new and more complex equipment and the more complex wells so we avoid at all costs coming into unsafe and critical situations.

Is the challenge a matter of finding the right people or putting them through the right training?

I’m an optimist, and I have the greatest respect for people of all nationalities, so I think the talented people are out there. It is more the fact that you cannot make them competent overnight. It takes time.

When I say competent, it is important to realize that competence entails three things: certified training, education and experience. In this industry, we cannot take people from the school bench, put them out there on the rigs and expect them to perform to the high levels that we demand today.

It is of course about the right training but it is also about making sure that we take the time to give people the necessary level of experience in order to reach a level of competence. I think too many people are focused on getting people the right certificates, thinking then they’re ready for the job. It’s the certificates combined with the relevant experience that makes people competent.

You need time on the rigs to gain the necessary experience, but you also need to spend a lot of hours training in a controlled virtual environment, very similar to what pilots do, so you are ready for all well control scenarios.

In Maersk Drilling, we are building a full-scale simulator with a three-dimensional dome. In terms of movement, visual impressions and sound, we can actually simulate all operations on each rig design we have in our fleet, and we can run that simulation together with training operations. It enables the crew to train specifically in the surroundings they find themselves in when going to the rig and gives a team-oriented training where different teams can train their mutual interactions.

This gives a far more realistic training experience, and we intend to try to use the simulator to fast-track the experience that people can gain.

The simulator will be located at the Maersk training center in Svendborg, Denmark. Our well control courses in that facility have been accredited by IADC since the late ’70s, and now we’re building a brand-new, state-of-the-art simulator.

We have a full-fledged anchor handler and supply vessel simulator in the same location, so we have many of the crews of both the supply vessels and the drilling rigs come through that facility every year. The new drilling simulator will be operating by June 2012.

Maersk has six newbuilds under construction this year, including two jackups at the Keppel FELS shipyard in Singapore. The ultra-harsh environment jackups for Norway will be based on the same design as the Mærsk Innovator and Mærsk Inspirer. The rigs will feature upgrades in safety, capacity and efficiency. Additionally, each crew member on the rigs will have their own room, as each jackup will have 150 accommodation cabins.

The industry has made great strides and progress in safety. How can we maintain that momentum with an influx of inexperienced personnel?

The same goes for safety as it does for equipment handling; it’s a combination of education, training and experience building. It’s also a matter of having mentors and people offshore that really take newcomers under their wings and help them get into the swing of things.

Safety is a mentality, and it’s not only work environment safety and people safety; it’s also process safety. We do see that the oil and gas industry is performing at a very high standard, both in people safety and process safety, and if we compare to other industries, these other industries are performing on an entirely lower level than what we are in the oil and gas industry. We really need to instill this safety mindset from the onset.

In safety terms, there’s no silver bullet. It’s hard work. It’s repetitive work. It’s continuous work, day in and day out. You have to keep working on that message, making sure you grow and motivate your people to think safety all the time.

Maersk has six newbuilds under construction. What challenges are you facing in rig safety and design? Are there safety elements going into the designs?

The construction is going according to plan. We are building two rigs in Singapore with Keppel FELS and four rigs in South Korea with Samsung. There is no doubt that these yards are busy, and you need to work very carefully with them to make sure that you get your building schedule maintained and all the technical specifications done.

In terms of upgrades of the newbuildings, in particular the two XL Enhanced jackups for Norway stand out. We’re building them based on the same design as the sister rigs; Mærsk Innovator and Mærsk Inspirer, which we call the XL rigs. They are the biggest jackups in the world and have proven to be very capable and efficient, and that’s all in observance of safety, capacity, drilling efficiencies and water depth.

Now with almost 10 years of operational experience on these rigs, we’re going to enhance the rig design even further. The new jackups will have superior capacities in terms of offline capabilities. They will have a very large hookload with an extreme XY cantilever outreach, and they will be prepared for subsea completions and managed pressure drilling (MPD).

On top of that, we have really gone out of our way to make sure all the areas that are normally exposed are even safer and more automated. We’re also doing a lot to make sure the crews are comfortable. On the jackups, we have 150 single-berth cabins. Everybody onboard will have their own cabin.

It’s quite extraordinary, and it is designed for Norway, which has very high demands for the work environment. We believe it will continue in that direction, so we started this one upfront to make sure we are on the forefront of development.

In that regard, we benefit from the close cooperation between the engineers at Maersk Drilling and the engineers at Maersk Line, the shipping side of the firm, where we can exchange ideas, especially when it comes to fuel optimization and power optimization. There’s a lot we can learn from each other.

Are all of Maersk’s newbuilds going to be equipped for MPD?

All six newbuildings under construction have been designed to accommodate the installation of third-party MPD equipment. We have witnessed an increasing interest in the capability of our units to be able to accommodate MPD equipment and, hence, took this into account during the design review for our current newbuilding program.

We do not yet see interest or demand reaching a level that would convince us to include MPD equipment as part of our standard build specification, particularly since there can be significant variance in our customer’s configuration and the equipment itself is in a state of evolution.

Maersk will begin construction on four ultra-deepwater drillships this year at the Samsung Heavy Industries shipyard in South Korea. Maersk plans to expand its offshore drilling fleet of high-spec rigs from 16 to 30 units in the next five years.

What results are you seeing with automation? Has it led to improvements in safety and efficiency?

Our initial focus in automation has been on safety, by eliminating the risk of personnel injuries and other accidents. Whenever people traditionally have been caught in the way of heavy machinery and handling heavy tubes, we try to automate these sequences so that we don’t have hands, feet and fingers in the way. That’s one thing we have achieved with automation.

We have also enhanced our efficiency with offline capabilities, so while we are doing one operation we can do something offline that prepares for the next sequence. This is one of the key factors that resulted in an improved efficiency of 20% when drilling the first well with the XL design.

Our expectation is that the XL Enhanced rigs will surpass that performance. We are now looking at what we think will be a bigger part of the future, namely the repetitive sequences where we aim to truly automate all of the repetitive work. For instance, on our deepwater rigs, we have a lot of the repetitive drilling sequences that are automated and the machine more or less runs on its own.

What challenges do you face in integrating new technologies?

I think it’s amazing and impressive what the industry has delivered over time to very complex challenges both offshore and onshore. The drilling industry has found solutions to those challenges, but that being said, there is still an opportunity to learn even more from other industries than what we have done so far. We’ve seen efficiency gains on drilling operations, but we have not really seen efficiency gains on the personnel side. That means that while we put more automated equipment out there, we’ve also had to put more people out there monitoring. There’s much more electronic equipment; more things need to be monitored all the time.

We need to further develop the consistency of drilling operations. Some challenges have been replaced by other challenges, but I think we’re moving in the right direction.

As the 2009 chairman of IADC, you noted two issues that you wanted to focus on, one being the public profile of the industry. The industry’s public image took a blow in 2010. How important is it for the industry to promote its image? What can the industry do to create a better image?

It’s an interesting situation because everybody in this world consumes fossil fuels. Everybody has a view on the effects of that, and very few have a view on what it actually takes to explore, find, produce and deliver oil and gas for people’s consumption. I think IADC, as well as oil companies, could do a lot to better portray the image of the industry.

I can’t find many industries that come close to how we operate. If you look at the modern rig, it is safe, it is clean, it does not require hard physical work with all the automated equipment, and it provides a good working environment. I think we have an excellent story to tell, not only to potential employees but also to the general public that this is not a dirty or dangerous industry entailing hard physical labor. This industry has an important purpose in providing energy to the world in a safe and environmentally responsible manner. That is what we need to communicate.

Of course, in the last two years, all the attention has been on the accident in the Gulf of Mexico and how to avoid accidents in the future. We have an opportunity to lead from there and say, “OK, there was that accident, and there are all these things that have been discovered and made contingencies for.” We need to make an effort to go out there and tell the public about all the things that were not wrong and all the brilliant technical solutions we have found, all the focus on safety, the relentless focus on avoiding spills and so on.
We need to turn it into something positive instead of constantly reacting to the negative or to criticism.

Maersk has had an environmental reporting system in place since 2007 to collect data on emissions and fuel consumption. What environmental targets has the company achieved in performance? What environmental goals do you have?

We are in the process of setting targets for our environmental performance for the coming years based on where we are now. It’s much more than just a target for emissions reductions. Of course that has to be part of it, but it also has to factor in the specific operations we are carrying out.

Today’s complex wells at deeper water depths cannot be compared directly with the environmental footprint from the operations we used to do. If you look at the machinery we put onboard and the specifications of the engines with the higher fuel efficiency, lower emissions and all the control and monitoring we do, we’re much better able to report on how we’re doing.

It’s also about how we control the chemicals we use. To reduce cost, complexity and risks we aim at two things: to reduce the variety of alternatives or substitute chemicals in our systems and to reduce the volume of hazardous chemicals onboard. This will reduce cost of administration, protection and management, risks related to storage, waste and handling and consequences from exposure to chemicals using it or spilling it. We plan to renew the ISO 14001 certificate and include the whole process, including chemical management, leakage management, waste management, etc.

One thing IADC has worked on since my chairmanship is the environmental performance indicator. It takes a long time and has been difficult to find common ground among contractors to find a good method of benchmark and how we can report together, like we do on safety.

Recently we have agreed that we will follow the IPIECA standard instead of creating our own, but I do think that drilling contractors have a task ahead of us in finding a more determined way to improve our environmental footprint, monitoring systems and benchmarking profiles to increase our individual performances.

Egyptian Drilling Company (EDC), a joint venture between Egyptian General Petroleum Corp and A.P. Moller – Maersk Group, has the Zoser jackup working in Egypt. Despite political tensions and social unrest in Egypt, EDC has been able to operate without interruption in the last year.

Is the industry as a whole doing enough to improve environmental performance to levels that are comparable to its safety initiatives?

If you go back and ask the guys who were here in the beginning of the ’80s when the safety focus started, that was also hard work and an uphill battle to get everybody to record and everybody to agree on which standards to be used. Environmental recording is much more complex, and that’s why it’s much more difficult to agree on what makes sense.

It is difficult – each well is different and so is the profile of the geology in which you’re drilling. One well can be easy; the one right next to it can be very complex and they can have huge differences in the environmental footprint. You cannot just do an emission per foot drilled. It’s much more complex, and I appreciate that, but I think we have the task ahead of us to find a way.

In October, Maersk signed a contract with BP for the Maersk Discoverer for work initially offshore Egypt. Do you think political implications are going to affect activity in that region? Do you see potential opportunities for more activity there in the next year?

There is a lot of tension in the countries affected by the Arab Spring, including Egypt, where we are also active through our joint venture Egyptian Drilling Company. We have been operating through the last year without any interruptions in Egypt and expect to continue to do so.

Will it be a big market for us in the future? From a Maersk Drilling perspective, it depends on the possibilities within the deepwater market that we intend to pursue. Our main markets for deepwater rigs remain the West African coast, the Brazilian area and the Gulf of Mexico. And we of course maintain our jackup focus on the North Sea market and Norway.

In 2012, do you plan to place more orders for rigs?

We have a clear ambition. We have 10 drilling barges in Venezuela and 16 large offshore rigs operating worldwide. We would like to increase those 16 to 30 by 2016. We have a plan to expand the fleet by 14 units in the next five years. Out of those 14, we have already placed orders for six. The timing of the ordering of the other eight units depends on market conditions, how we get the new equipment ready and that we see satisfying results. We will not order before we are satisfied with what we see in the existing newbuilding program.
We will take it one step at a time and make sure we don’t grow faster than we can ensure that we have competent people to run our equipment in a safe and efficient manner.

By Linda Hsieh, managing editor

David Payne, vice president of drilling and completions for Chevron

David Payne is Chevron’s vice president of drilling and completions.

From an operator’s perspective, what do you see as the most critical challenge confronting your operations today?

It’s people. We have real challenges making sure we have the right competencies in place to deliver, both for us as an operator and for our business partners, the drilling contractors. In every position there is a gap – qualified roughnecks, qualified MWD operators, qualified mud engineers, qualified drilling engineers, qualified drilling superintendents, qualified rig supervisors, you name it. Getting enough people is absolutely job No. 1.

Are we having trouble recruiting people into the industry?

No, we don’t have any trouble recruiting people – we just can’t train them fast enough to cover the gaps because of the increased workload and retirements.

People also have other career options. I’ve lost drill site managers (DSMs) who typically would’ve never expected to be a drilling superintendent; they get hired away as drilling superintendents by operators who can’t close their personnel gap.

I can’t just hire somebody from the street to be a DSM. We have no problem finding bodies. In fact, we have no problem finding highly motivated, smart people who want to work, but they just don’t have the knowledge and experience. You can’t take a 20-year engineer from the auto industry and plug-and-play him into the drilling industry as a 20-year engineer.

Industry seems to be doing a lot of accelerated training. Is that helping?

Yes, but there’s a limit to how much you can do. I think there are some opportunities at the rig level and with IADC to do things more consistently and collaboratively across IADC’s membership that would help with rig crew competency. We’d like to see IADC take its training standards to a whole new level; not just putting out competency expectations for different job families, which are available today, but actually talk about how that training happens, how people achieve the competencies and how you verify competency.

We’ve suggested having a tracking system that’s usable across all of IADC’s drilling contractor members. If somebody leaves one contractor to go to another, they take their competency record with them. When they apply for a job, there’s no question about what competencies they’ve developed because there’s a record in a global tracking system. This way you can have confidence that if they say they have a certain competency, they actually have it.

How does field experience fit in to the training and competency development?

We would definitely like to see our engineers spend more time in the field. They need to spend time in the field to gain enough competence to be in charge at some level on location. If we don’t get them to that point before we bring them into the office, they won’t be as effective. This is a limitation for the industry. If we hire an engineer straight out of university, it’s two years until we see him in town actually doing engineering work.

You can’t accelerate experience. There are certain things you can do to accelerate their learning, but it only goes so far.

There are ways to leverage experience though. We just opened a remote operations center in Houston that allows us to do that. Twenty years of experience can come in multiple packages. Having one guy with 20 years of experience and 20 guys with one year of experience are not the same thing. The remote operations center allows us to leverage the one 20-year guy to help folks with less experience make better decisions.

In one of your public speaking engagements last year, I heard you advocate the idea of engineering for simplicity. How is that approach reflected in your drilling and completion operations?

Standardization is what will help us to get through this increase in activity. Simplifying can be defined not only as making things simple but making complex systems repeatable. When you have to redesign a complex system every time you use it, you’re increasing its complexity. You can simplify that system by making it repeatable.

There are different ways to simplify. We’ve worked hard to do as much standardization as we can in the deepwater Gulf of Mexico, where we drill some of the most complex wells in the world. We’ve got a fairly significant level of standardization in how we do things and how we put wells together because that allows us to not have to repeat the engineering process for every piece of it.

Is that only in the drilling part of it?

Drilling and completions. Sometimes we get caught up in this idea that every well is different. Every well doesn’t have to be different; it’s only different if we insist it’s different. There are ways to make things similar. The more you can standardize how you do drilling, how you do completions and how you do planning, the more repeatable it is and the less complex and more dependable the system becomes.

Are you taking lessons learned from your shale wells as far as making them repeatable?

Factory drilling is all the rage now, but we’ve been doing factory drilling for more than 30 years in Thailand. We drove standardization to a very high level in Thailand. If you took an engineer to Thailand today and ask her to design for each of the four or five fields we have there, she would never design one single well type. But because of the value of standardization, we are doing exactly that – using a single well type for all those fields. It’s repeatable, and that’s why we can drill five-day wells in Thailand.

We’re also doing this in the Piceance in Colorado, where we’re drilling 22-well pads and knocking out wells in 3.5 days, over and over and over. We’re heading that way in the Wolfcamp in West Texas.

At the same time that you’re trying to engineer for simplicity, wells are without a doubt becoming increasingly complex. How is this complexity affecting the way you manage your wells operations?

The industry is obviously more complex than it used to be. We’re expecting more reservoir information while we’re producing to allow for better overall reservoir management. That creates some complexity, especially around completions. We have to make sure we’re applying technology where it belongs, not just applying technology because we can.

There are times when it can be really simple. For example, we could’ve drilled our wells in the Piceance with rotary steerables, but we didn’t because it didn’t make any sense. By simplifying the system to the minimum, we’re able to be more effective and more reliable.

Pacific Drilling’s Pacific Santa Ana ultra-deepwater drillship has been equipped for dual-gradient drilling and will operate for a subsidiary of Chevron in the Gulf of Mexico. Chevron is in discussions with its business partners to look at ways to improve equipment reliability to 99.9%, particularly in the deepwater segment where spread rates are highest.

Are there technical limitations holding back the goals you have for your drilling programs?

The biggest limitation is in the economics. We haven’t found anything we can’t drill; it’s just a matter of how much you want to spend. From a technical standpoint, the technologies are being developed as we recognize the challenges. Sometimes we’ll see a challenge before we have the technology, but so far we haven’t run into anything where we haven’t been able to come up with a solution.

I think the next big challenge will be the Arctic and figuring out if we can find a solution that’s affordable. As you move out into deepwater in the Arctic and go further north, the weather window is extremely limited. If you can’t drill year-round, what are you going to do with the equipment when you’re not drilling? That comes with enormous costs. There is no doubt we can drill the wells, and we can do it safely. But can we do it within an economic window?

On the land side, do you see value in some of the low-cost versions of downhole technologies that target onshore applications, like rotary steerables?

Absolutely. It’s horses for courses. Low-cost rotary steerables can be the right answer for a lot of the shale gas business. Actually, in a lot of cases, low-cost rotary steerables can be the right answer offshore as well. Not every offshore well has to be expensive.

Most of the time you only hear people talk about how expensive offshore wells are.

In deepwater, it’s expensive. But there are certain provinces where you can significantly lower the costs of your wells without increasing risk if you can get out of the box and think a little differently. We’ve drilled with surface BOPs in east Kalimantan where weather conditions were benign, and we dropped the well costs dramatically.

You mentioned earlier that economics is a limitation when it comes to investing in technology for your operations. How do you support technology innovation in your organization against the need to cut costs and manage risk?

We have an expectation in our organization that we’re going to be the clear leader in the industry, so we set expectations around performance improvement and risk management. To deliver performance improvement and be the best in the industry, we have to employ the correct technology.

Technology development has its costs. We budget a certain amount of money every year that we take away from the business units to invest in technology. At the same time, we’re not the only ones developing technology. When we have this expectation that we’re going to be ahead of the rest of the industry, we can’t get ahead of the rest of the industry if we’re not a leader in technology implementation. We have to be willing to work with business partners – big service companies who have big technology budgets and some small companies that can often be quite innovative.

As an industry, are we investing enough in new technology?

Chevron has worked toward as much standardization as possible in the deepwater Gulf of Mexico, where wells are some of the most complex in the world. The belief is that increased standardization in drilling, completions and planning will bring increased dependability and repeatability.

I think so, but one area that concerns me is whether there is enough basic research being done. And the question is, where does basic research belong? Is it an industry responsibility or a government responsibility?

We have an alliance with Los Alamos National Labs that allows us to tap into the basic research they’ve done that’s been financed by the government. We can then invest additional funds to take that research and find ways to apply it practically in our business. It’s a win-win because we can take publicly funded research and use the results to improve energy security in the US.

Earlier when you mentioned working with your business partners on technology development, did you mean getting into the development process earlier?

I meant being involved in how they prioritize what technology they develop and partnering to allow them areas to test new technologies. We can be more engaged and not just wait until they show up with a finished product. If we get in the game early, we have an opportunity to arrive at solutions that are better for both parties.

Are there any specific areas of technology where you see the need for development the most?

Shale completions and resolving the challenges around footprint and water use are areas of some urgency. There are some places where we clearly need to be more collaborative on not only water usage but water disposal. There are some headwinds that we’re having to fight to be able to operate, and the best thing we can do is to take down the sail that’s blocking our ability to move forward.

Do you think the industry is having to fend off overly stringent regulations around the development of these shale wells?

Actually, my opinion is there aren’t enough regulations. We don’t have enough appropriate regulations in place, and that’s creating part of the problem. Not every operator is operating at what we would consider to be an acceptable standard to the neighborhood in which they operate. There’s an opportunity for industry to collaborate with government to establish appropriate regulations to ensure that we’re not all put out of business by those who choose not to operate responsibly.

Looking to equipment reliability, how are vendors meeting your expectations?

Because of the cost of doing business in deepwater, what may have been an acceptable level of reliability for onshore or other inexpensive wells is no longer acceptable. A company may be proud of its 98% uptime, but if we have five services on the rig and every product service line is at 98% reliability, that means they are each having 2% downtime, and not all at the same time. If you add it up for five product service lines, we have 10% downtime before we even get started, and that doesn’t include the rig contractor.

We have started conversations with our business partners about the fact that 98% is not good enough and 99% is not good enough. What we need is 99.9% reliability. We need tools to work all the time, or we need to build in redundancies so the rig is making progress as much as possible.

What have been their responses to that?

Very positive. They’re up for the challenge. In some cases, we’ve already made some significant progress. There’s plenty of work to be done, but I think they recognize the need.

The flip side of that is, we have to be willing to pay for the changed expectation. You can’t say, same price as you gave me last week but instead of 98% reliability, I want 99.9%. It’s not a 1.9% improvement; it’s a significant step-change to go from 98% reliability to 99.9%. That comes with a cost, but when it’s worth the cost, we have to be willing to pay. We have to talk about how to make it worth their while to get to 99.9%.

Are there certain pieces of equipment or technology where reliability challenges loom the largest?

It’s not just top drives and BOPs, it’s all rig equipment in the critical path. Particularly offshore, pipe-handling equipment, top drives, etc, are all run by computers, and there’s a lot of software involved. It’s all remote-controlled and very complex. There are a lot of interface issues. It’s not dependable enough, and it doesn’t operate fast enough.

Here we have an opportunity to change the way we run our business, too. Currently, the original equipment manufacturers (OEMs) manufacture and deliver the equipment to the rig contractor. Once the rig contractor takes ownership, the OEM no longer sees it until something is seriously wrong. Maintenance, upkeep and small downtime events are all invisible to the OEM; they don’t see it at all. There’s no feedback loop that drives them to truly improve. They’re trying to do new things and they’re talking to people, but it’s not a data-driven process.

We’re starting to see progress toward creating that feedback loop, and the operator needs to be in that loop. What is good business for the drilling contractor may not be good business for the operator. We have to create financial incentives for them to change the way they’re doing business and change their relationship with the equipment manufacturer. We all need to be under the tent working together, but historically we have not been.

But it’s up to the operator to bring everyone into that tent, right?

That’s right. Technology development and change follow the money trail, and that starts with operators. That’s why we have to provide incentives for not only contractors but equipment manufacturers further down the line to change their business model in a way that’s going to improve everyone’s performance. Reliability really matters.

To me, reliability is more important than technology development. Reliability is good business, particularly in deepwater.

How does automation fit into your vision for the future of drilling?

It has to be part of our business in the future, and we’re already having conversations about how to get there. Absolutely automated drilling with feedback loops carrying information from downhole will take the automatic driller concept to a whole new level. Again, there’s limited incentive for drilling contractors to implement automated drilling due to the financial risks of adding complexity to the system. We’ll have to create an incentive contractually.

And a lot of people forget about automated well servicing. If you can make that work, it would be good business with an opportunity for a step-change in safety.

Image courtesy of CNPC

The drilling industry is built on people, and we’re running short. Despite ongoing recruitment efforts around the world, as well as accelerated training programs in place, we know we can’t undo a couple decades of neglect overnight. “You can’t accelerate experience,” said David Payne, Chevron’s VP of drilling and completion. Real-time operations centers that leverage the experience of industry veterans appear to be helping, however, as is simulator-based training.

On the technology side, industry leaders see gaps in areas such as subsea BOP control systems and water use/disposal related to fracturing. Most also agree that higher levels of drilling automation are on the way. However, perspectives on the value proposition of automation differ across segments of the business, and a shift in the business model may be needed to incentivize the next step.

Further, a shake-up in the way that operators, contractors and equipment manufacturers interact with one another could be on the horizon. “We have to find a way to change the model, to find a way to apply technologies that will actually give a better result,” said David Reid, National Oilwell Varco senior VP of global accounts and chief sales officer.

Finally, everything still comes back to safety. The industry remains focused on incident prevention and safety leadership, whether by engineering hazards out of rig designs or building in redundancies to enhance equipment reliability. There’s no silver bullet, however.

“It’s hard work. It’s repetitive work,” said Claus V. Hemmingsen, CEO of Maersk Drilling. “You have to keep working on that message, making sure you grow and motivate your people to think safety all the time.”

• David Payne, Chevron
• Claus V. Hemmingsen, Maersk Drilling
• Liao Yongyuan, China National Petroleum Corp (CNPC)
• John Lindsay, Helmerich & Payne
• Zuhair Al-Hussain, Saudi Aramco
• David Reid, National Oilwell Varco
• Angelo Calderoni, Eni
• Graham Brander, Apache Corp
• Holger Temmen, KCA DEUTAG
• Julio M. Quintana, TESCO Corp
• Datuk George Ling, PETRONAS
• Nicholas Gee, Weatherford International
• Robert W. “Bill” Rose, Prospector Offshore Drilling
• J.F. Poupeau, Schlumberger

Xtreme Drilling and Coil Services recently unveiled the XSR200, a land coiled-tubing well intervention unit with a depth capability of 23,500 ft. It is the largest such unit for land operations, according to the company. The unit is designed to aid North American operators as they push horizontal drilling to record lengths in shale plays.

The XSR200 land coiled-tubing well-intervention unit has enhanced its depth capability to service the long wells in North American shale plays.

“Most of the units in the market can only get to about 14,000 ft or 15,000 ft,” Tyson Seeliger, vice president of sales and marketing for Xtreme Drilling, said at the unit’s December debut in Houston.

With the XSR200, which uses 2 ⁵/₈-in. coil and has an 86-ft mast, Xtreme Drilling has been able to remove the surface equipment limitations of conventional coiled-tubing units and allow for the completion of deeper wells.

“We built the rig around the most aggressive well depths, which were 23,000 ft. The Eagle Ford is already starting to push out further and further,” said Reg Layden, general manager of international operations. “The weight of the string (on our surface equipment) is 110,000 lbs to 120,000 lbs and our injector pulls 200,000 lbs. We’re only limited by what our coil can do now.”

Saudi Aramco develops downhole drilling microchip to acquire data

Saudi Aramco’s EXPEC Advanced Research Center (ARC) Drilling Technology Team (DTT) recently achieved the first major field test of its four-year project to develop industry’s first downhole drilling microchip.

“This important stage of the microchip technology development has proven that the project is on the right track to deploy such a miniature device for practical and useful applications in the near future,” Nasser Al-Khanferi, DTT chief technologist, said. EXPEC ARC worked with Tulsa University on the project.

The microchip has the potential to change the way downhole data is acquired. Such data can help drillers more readily diagnose hole problems while drilling to optimize and improve rig operations.

“Our dream was to develop a low-cost and alternative downhole data acquisition system capable of recording measurements such as pressure and temperature along the circulating path of drilling fluids,” Shaohua Zhou, DTT technologist, said. “Such a technology would optimize mud and cement formulations while drilling and further reduce well cost.”

A microchip is pumped or dropped into the drill string and, acting like a robot, is capable of recording in-situ data and stores it on board the chip while traveling downhole, eventually returning to surface with the circulating drilling fluid. Once recovered at surface, the recorded data would be instantly downloaded wirelessly at the rig site or transmitted to an operations center.

GDM 850 top drive

GDM 850 top drive built for the future

Global Drilling Support (GDS) recently unveiled the GDM 850 top drive at its Houston facility – a Serial No. 1 top drive that will be installed on a newbuild 3,000-hp inland barge to drill offshore Nigeria for Mega Drill. The concept behind the design focuses on reliability and equipment longevity.

“We wanted it to work not for today’s drilling parameters but for future drilling parameters, with enough speed and torque to withstand what operators will be drilling in five to 10 years,” said Keith Holliday, president of GDS International.

The GDM 850 features a 1,500-hp motor with a self-aligning coupling, a solid drive pinion, a helical gear assembly and forced-spray lubrication. Submerged thrust bearings also extend operational life.

The GDM 850 operates at 1,570 continuous hp and delivers 64,000 ft-lbs of continuous torque at 0-116 RPM up to 250 RPM.  A comprehensive maintenance module provides for proactive servicing of the unit.

Additional information about the GDM 850 can be found at www.drillingcontractor.org.

Woodside pushes total section depth to 6,250 ft

Woodside Petroleum recently reached a total section depth of 6,250 ft on the Tidepole East-1 exploration well offshore Western Australia with the help of AGR’s riserless mud recovery (RMR) technology.

It was the first time that Woodside had used the casing while drilling (CWD) method on one of its wells, and the company believes the depth reached sets a record for the technique. RMR enabled Woodside to use the type of drilling mud needed to maximize the wellbore smearing effect that CWD provides.

Woodside Petroleum drilled a total section depth of 6,250 ft on the Tidepole East-1 exploration well offshore Western Australia using AGR’s riserless mud recovery technology, which recently passed the 500-well landmark.

The system allows top holes to be drilled using weighted mud, with fluid and cuttings returned to the rig and with no discharge. It is also able to supply the low pump rates and good hole-cleaning capability required to drill efficiently despite the relatively narrow annulus that was a feature of this project. There were no losses to the formation during that stage.

Standard internal or external wellhead adapters could not be used on this project for the RMR’s suction module (SMO) without extensive modification to the permanent guide base, or without causing difficulties when it came to landing the high-pressure wellhead on the low-pressure wellhead later in the operation.

AGR provided a solution involving an internal adapter being devised that could be split. This meant that the casing could be drilled down with the SMO.

The operation went smoothly, achieving a rate of penetration of approximately 197 ft/hr.

Aker Wirth marks delivery of 250th TPK 2200 mud pump

Aker Wirth’s TPK 2200 mud pumps can operate in extreme temperatures and pump up to 1,640 liters of drilling emulsion per minute.

Aker Wirth recently delivered its 250th mud pump in the TPK 2200 series to the Daewoo Shipbuilding and Marine Engineeringshipyard in South Korea.

The jubilee pump will be one of four pumps in Vantage Drilling’s Tungsten Explorer deep sea drilling vessel. The drilling vessel will go into service in 2013 and will be capable of drilling in water depths up to 3,600 meters.

The TPK 2200 can pump up to 1,640 liters of drilling emulsion per minute at a maximum pressure of 517 bar. It can operate from -40°F/°C to 140°F (60°C).

FMC sets deepwater completion record at 9,627 ft on Tobago field

FMC Technologies’ enhanced vertical deepwater tree (EVDT) system has set a deepwater completion record of 9,627 ft (2,934 meters) on the Shell-operated Tobago field in Perdido in the Gulf of Mexico. The record, achieved in November 2011, surpasses the previous milestone of 9,356 feet (2,852 meters) that was established in 2008 at Shell’s Silvertip field, also part of Perdido. The previous record also was achieved with an FMC-designed EVDT.

Ulterra bit drills Eagle Ford well at record pace
Ulterra’s 8.75-in., six-bladed matrix bit with 16-mm cutters recently drilled from surface casing to a total depth (TD) of 9,953 ft at a record pace of 93 ft/hr in the Eagle Ford Shale. The new U616M drilled to TD in 107 hrs, a time savings of 37.5 hrs over the fastest offset of 144.5 hrs. All three intervals – the vertical, curve and lateral – were drilled with the same bottomhole assembly. The U616M bit incorporates technology to maintain the high rates of penetration required in the drill-out, as well as the ability to track straight in the lateral section. The combined directional and performance advantages of the U616M increase slide efficiency and motor yields to reduce slide percentage and on-bottom drilling hours.

Smith Bits’ Kaldera drills record 77 hours in single run

Smith Bits’ recently introduced Kaldera advanced roller-cone bits has set a drilling record with 77 hrs in a single run, marking a 37% increase in on-bottom drilling hours compared with offset runs. The bit is made for geothermal and high-temperature drilling applications using advanced materials technology for an engineered sealing and lubrication system.

It’s not your father’s oilfield. Necessity, celebrated mother of invention, demands that we drill smarter, work better.

This issue presents the cream of the crop in smart drilling, beginning right on the cover with the Noble Bully I drillship and its Huisman tower.

As you will see in our Critical Issues in Drilling and Completions section, recruiting, training and sustaining a 21st-century work force tops the list. Accelerating new-hand training is a huge challenge. We must bring them not only up to speed but up to light speed.

IADC: Train smart
IADC, the industry’s training accreditation and certification standard bearer, is helping companies train smartly to quicken competency. IADC’s Knowledge, Skills and Abilities (KSA) represent competency metrics for basic rig positions – toolpusher, drilling, motorman and so on. This cornerstone competency matrix will soon undergo a major revamp, a step-change expanding the KSAs to cover specialized jobs, like subsea engineers, ballast control officers, among others, as well as non-basic rig positions.

Further, to train smart, records must be portable. For years, IADC has offered the Training and Operations Passport to record training courses, job assignments and even medical and immunization information.

The passport is great, but our new tool is even better. The IADC SkillSTICK* represents a digital revolution in information technology for the drilling industry. The 16-gigabyte thumb drive accommodates a plethora of data – employee profile, eLearning courses, certificates and licenses. The SkillSTICK even allows space for personal photos and files.

Perhaps best of all, the IADC SkillSTICK will sync with an online training matrix, storing key information in the “cloud.”

Maintain smart
Discussing rig maintenance probably sounds like a weak second act, after the post-space-age SkillSTICK. This could not be more wrong. The world of rig maintenance is changing fast, in philosophy, method and technology.

In your granddad’s day, the approach to rig maintenance was pretty much, “When it breaks, fix it. If it ain’t broke, don’t fix it.” With condition monitoring, this attitude is changing fast. The best time to fix a problem is before it occurs.

With condition monitoring, we continuously review data indicating how a piece of equipment is performing. In fairness to Grandpa, he lacked the electronic and software tools to even attempt condition monitoring.

“Fifty years ago, we had mechanical engines. We didn’t really have to do anything with them. We ran them until they died,” Sepideh Otmishi, Caterpillar, said.

The question today, explained Steve O’Leary, Seadrill, is, “How do we qualify our equipment for continued service?”  Mr O’Leary and Ms Otmishi spoke at the IADC Condition Monitoring Workshop, organized by the IADC Future Technology Subcommittee and hosted on 19 January by National Oilwell Varco.

Past practices of simply shopping for new equipment every five years is unacceptable, Mr O’Leary said. “It’s got to be fit for purpose every time we use it — not just every five years.”

Changing old habits did not come easily, though. “It took a while to get people onboard. It’s a big part of what we do now,” he added.

Successful condition monitoring means working closely with the OEMs.

But one of the problems is a lack of reliability data. This is an industry problem that IADC has tried to tackle.

But, as Mr O’Leary said, “It’s going to take the whole industry.”

For PDFs of presentations from the IADC Rig Condition Monitoring Workshop, click here.

For more on the IADC passport, click here.

For details on the IADC SkillSTICK, click here.

* SkillSTICK is a mark of Indaptive.

Mike Killalea can be reached via email at mike.killalea@iadc.org.

Click here to view the embedded video.

Mark Denkowski, IADC’s Vice President of Accreditation and Certification, comments on the current status of HUET in the Gulf of Mexico and IADC’s efforts to standardize the training in the video above.

Petrofac begins water safety, survival training at NASA for oil, gas industry

At NASA’s Neutral Buoyancy Laboratory, students go through training on how to escape a helicopter in an emergency. Petrofac worked with Raytheon to offer the program at NASA.

In a partnership between Petrofac Training Services and Raytheon Technical Services Co, NASA’s Neutral Buoyancy Laboratory (NBL) in Houston recently evolved into a multipurpose facility that houses courses in water safety and survival training for the offshore oil and gas industry.

Using the 6.2 million-gal, 40-ft deep NBL pool, helicopter underwater egress training (HUET) is one of the first programs being implemented.

Taking place in the same pool that contains a full-scale replica of the International Space Station and where astronauts train, the survival training programs for the oil and gas industry began in December and offers drilling contractors, operators and service companies another outlet to train in a realistic environment.

Read more about Petrofac Training Services here.

Odfjell Drilling secures record pre-contract with BP for semisubmersible

Odfjell Drilling has been awarded a pre-contract award with BP for a newbuild semisubmersible for operations in the UK’s West of Shetland region. The new unit will be active in the UK’s Schiehallion and Loyal fields and will form a key part of the Quad 204 development. Quad 204 is a joint venture to redevelop Schiehallion and Loyal. The full contract, subject to approval, will have a fixed duration of seven years and is due to start in Q4 2014.

The sixth-generation rig will be built in South Korea by Daewoo Shipbuilding and Marine Engineering (DSME).

“The new rig for BP is of the enhanced GVA7500 harsh-environment design and will be a sister rig of the Deepsea Atlantic and Deepsea Stavanger previously delivered to us by DSME,” Simen Lieungh, president and CEO of Odfjell Drilling, said. Odfjell’s Deepsea Metro I and Deepsea Metro II sixth-generation ultra-deepwater drillships were delivered from Hyundai Heavy Industries in 2011.

West Esperanza to drill offshore Equatorial Guinea 

Seadrill has received a letter of award from Hess Equatorial Guinea for an eight-well drilling contract offshore Equatorial Guinea for the semi-tender rig West Esperanza. The contract duration is a minimum of 18 months.

The West Esperanza is under construction at the Keppel FELS yard in Singapore and scheduled for completion in Q2 2013. Operations are expected to commence at the end of that quarter.

Noble Energy discovers natural gas offshore Cyprus

Noble Energy has made a natural gas discovery on Cyprus Block 12 offshore Cyprus. The well encountered about 310 ft of net natural gas pay in multiple high-quality Miocene sand intervals.

The Cyprus A-1 discovery well was drilled to a depth of 19,225 ft in water depths of about 5,540 ft. Results from drilling, formation logs and initial evaluation work indicate an estimated gross resource range of 5 trillion to 8 trillion cu ft (Tcf), with a gross mean of 7 Tcf.

Keppel AmFELS to build semisubmersible from existing hull for Diamond Offshore

Diamond Offshore has contracted Keppel AmFELS to construct and upgrade a moored semisubmersible from the existing hull of Diamond’s cold-stacked unit Ocean Voyager. Delivery is expected in Q3 2013.

Keppel AmFELS will reconstruct the rig and install equipment, such as a modern drilling package and sponsons to the pontoons to enhance rig stability. The rig, to be named the Ocean Onyx, will be designed to operate in depths up to 6,000 ft and have a variable deck load of 5,000 long tons, a five-ram blowout preventer and capacity for 140 personnel.

“We think significant opportunity remains for new deepwater units,” Larry Dickerson, president and CEO of Diamond Offshore, said. “No new capacity targeting the standard mid-water and deepwater markets is currently under construction, and this rig should be ideally suited to meet emerging demand in this segment.”

TOTAL enters JV with Chesapeake in Utica

TOTAL E&P USA is entering a joint venture (JV) with Chesapeake Exploration and affiliates of its partner EnerVest and will acquire a 25% share in Chesapeake’s and EnerVest’s liquids-rich area of the Utica Shale.

The JV covers approximately 619,000 net acres, of which 542,000 net acres are brought by Chesapeake and 77,000 net acres by EnerVest.

The JV plans to ramp up drilling activities in the coming three years, with 25 rigs planned to be mobilized by 2014 to fully appraise and develop the acreage.
TOTAL’s share is expected to reach 100,000 barrels of oil equivalent per day by the end of the decade.

“TOTAL is conscious of the environmental aspects linked to developing shale acreage and is confident in Chesapeake’s capacity to manage the Utica shale operations in a responsible manner,” Yves-Louis Darricarrère, president of TOTAL E&P, stated.

Deepsea Metro I begins drilling campaign in Tanzania

Odfjell Drilling began its drilling program with BG Group in Tanzania in January. The Deepsea Metro 1 drillship can drill in water depths up to 3,000 meters.

Odfjell Drilling’s Deepsea Metro I commenced its drilling program in January for BG Group in Tanzania. The contract with BG has a firm duration of 365 days, with three six-month options.The first three wells will be Jodari-1, Mzia-1 and Papa-1.

Deepsea Stavanger completed a successful deepwater program in the same area for Ophir Energy in 2011 with BG as partners.

The Metro I drillship is capable of drilling in water depths up to 3,000 meters (9,842 ft). The rig has a dual derrick with a main work center and an auxiliary work center to facilitate simultaneous operations. Both work centers are equipped for drilling. The Metro I was built at the Hyundai Heavy Industries yard in Ulsan, South Korea.

CROSCO rig kicks off  operations in Egypt CROSCO Integrated Drilling

CROSCO Integrated Drilling & Well Services Co Ltd recently commenced drilling services for Sipetrol International SA using the 2,000-hp drilling rig Emsco-605. The rig is operating at the Opal Sinai-1 well in the Rommana concession, located in Egypt’s North Sinai region. The contract calls for two firm wells plus one optional well.

“The commencement of CROSCO drilling activities in Egypt signals recommencement of CROSCO drilling activities in North Africa,” Igor Vrban, president of CROSCO, said. The company is preparing additional rigs in Egypt and working to quickly return to work with three rigs based in Libya as well.

Statoil makes discoveries  in Barents and North seas

Statoil and its partners Eni Norge and Petoro made a substantial oil discovery in the Havis prospect, in the same license as Skrugard in the Barents Sea. The well, drilled by the Aker Barents semi, has produced a 48-meter gas column and a 128-meter oil column.

Statoil estimates the volumes in Havis to be between 200 million and 300 million barrels of recoverable oil. The updated total volume estimate for the Skrugard and Havis discoveries is between 400-600 million barrels of recoverable oil.

In the North Sea, Statoil’s drilling of the Skinfaks South well has been completed, and the estimated volume is between 1.9 million and 6.9 million barrels of oil equivalents. Skinfaks South is west of the Gullfaks field in the North Sea Tampen area, where Statoil focuses on infrastructure-led exploration (ILX).

In 2012, 40% of Statoil’s exploration wells on the Norwegian continental shelf will be ILX wells.

New Urca Drilling semi to support Brazilian E&P

Urca Drilling has contracted Fernvale, a subsidiary of Keppel Offshore & Marine, to design and construct an ultra-deepwater semisubmersible based on Keppel’s proprietary DSS 38E design. The semi is intended to support the exploration of Brazil’s vast offshore hydrocarbon resources, and delivery is expected in Q4 2015.

Urca Drilling is a subsidiary of Sete Brasil, which specializes in chartering drilling rigs for Brazil’s pre-salt exploration.

The DSS 38E is an enhancement of Keppel’s fifth-generation DSS 38. It is designed to meet the requirements of deepwater areas, such as Brazil, Africa and the Gulf of Mexico. The rig will be able to operate in water depths up to 3,000 meters, have a drilling depth of 10,000 meters and accommodate 160 people. It will have vertical and horizontal riser storage and be DP-3 capable.

By Mike Killalea, editor

Liao Yongyuan, vice president of China National Petroleum Corp

Liao Yongyuan is vice president of China National Petroleum Corp (CNPC) and conference chairman for the 2012 IADC/SPE Asia Pacific Drilling Technology Conference & Exhibition, 9-11 July, Tianjin, China.

As vice president of CNPC, what do you see as the most critical challenges confronting your drilling operations today?

Technical engineering service is a very important component of CNPC as an integrated international energy corporation. CNPC is dedicated to building an integrated energy corporation, so we not only have a very important job within China conducting oil and gas exploration and production but also the very important job of providing technical services to our overseas operations.

Over the past few years, we have been facing quite a lot of challenges. First, in the past we were exploiting very shallow reservoirs with very few difficulties. Nowadays we are developing very poor resources in very deep reservoirs. Also, geological conditions are quite complex, which poses challenges to technical and engineering services. The average well depth for CNPC is increasing 100 meters per annum.

Second, we have a large number of engineering and technical service teams within China, and that leads to some difficulties in managing those teams. Again, we are also encountering some difficulties due to complex geological conditions.

Another area of endeavor is to increase both single well production and recovery rates, so that is very challenging. In addition, parts of China are piloting areas like tight gas and shale gas. Also, Chinese government authorities are paying more attention to safety and environmental protection and energy conservation, posing challenges in these areas, including emission reduction.

I would like to name a few examples. Ultra-deep wells in the Tarim Basin were drilled to about 8,000-meter total depth. Downhole temperatures encountered in the natural gas well we are drilling in the Daqing area have bottomhole temperatures well above 252°C. In Tarim, the steepness of the formation requires mud densities of some 2.6 g/cm3. So we are experiencing some challenges in terms of the  mud density and the very complex geological conditions.

Another challenging area is toxic gas like H2S.

We have encountered virtually all challenges facing the global industry. This has put pressure on us to improve our management practices and our technologies.

I want to come back to the international aspect in a little bit. But first, it has been big news that CNPC and Shell have launched a joint venture and are working together to develop a highly automated well manufacturing system. We around the world are watching this closely. What does CNPC hope to achieve with this well manufacturing system that you’re developing with Shell?

The joint venture (JV) with Shell and CNPC is a partnership between two very strong companies. Shell is a very large international oil company while CNPC is an integrated energy corporation combining an oil company and a technical and engineering service.

CNPC’s advantages include equipment manufacturing and technological service. Further, we conduct wellbore operations, drilling and completion. Shell has extensive experience in gas development and in well-construction technologies under government commission. The combination of the two companies means that we will be able to efficiently develop coalbed methane (CBM), shale gas and tight gas.

Our goal is a highly automated well-manufacturing system. Shell’s experience with automated drilling technology will allow us together to develop a fully automated drilling system, as well as provide services in well completion.

Shell and CNPC have partnered in Australia. Together, we acquired Arrow Energy to develop CBM there.* In addition, Shell already has operations in China to develop shale resources.

This joint venture will help CNPC in three ways. First, it will improve CNPC’s operational capability. While we are making strides independently in this area, we still lag the majors.

Second, the JV will enhance CNPC’s equipment manufacturing as we develop this fully automated, high-efficiency rig and well-construction system. This is very new to us.
Third, we will improve our ability to explore and produce resources independently, that is, without a commissioned partner.

We believe that China is rich in resources. But again, in exploration development, we are still behind international major oil companies.

CNPC is running 25 fewer rigs than in 2007 but has increased its number of wells and total footage by 29.8% and 45.5%, respectively. The company’s overall drilling speed has also increased 10% a year over the past couple of years.

Where will CNPC apply the well-manufacturing system?

The technology will first be applied to joint ventures overseas together with Shell, specifically in the Arrow CBM project in Australia. Second, we will utilize the well-manufacturing system within China on joint Shell/CNPC blocks. Finally, as the technology develops, we may apply it to projects separately by Shell and CNPC or to international projects owned separately by the two companies.

CNPC drilled a shale gas well in Szechuan in 2011. Have you drilled any other such wells since the first one, and what challenges does CNPC face in developing that resource?

We have drilled several wells in Szechuan for shale gas. Some were quite successful, and in some we have encountered difficulties. We have drilled horizontal wells within 30 days and are seeing good results.

One of the key difficulties lies in correctly interpreting the physics of the reservoir. Therefore, we may have difficulty maintaining good wellbore stability.

The second area relates to the quality of the drilling fluid. This affects the drilling speed, of course, and poses difficulties for well completion. However, of the two problems, this is the easier for us to solve. We have dedicated research to this problem and are liaising within CNPC to tap additional resources.

I believe that progress is on the horizon. Despite these difficulties, we will not slow our pace in developing shale gas.

One of the newer technologies that has come on globally is rotary steerable systems. The high cost of rotary steerable systems have prevented it from being used extensively on land drilling, but now there are some simpler versions. Is CNPC beginning to use rotary steerable systems to speed directional drilling on any of its rigs?

We have applied Schlumberger’s rotary steerable systems in about 15 long horizontal wells. In 2011, our drilling plan called for about 1,000 horizontal wells, and that will increase to 1,500 horizontal wells in 2012. In addition, we plan to drill horizontally outside of China.

There is a high demand for rotary steerable systems, but the price is very high, which limits our ability to expand the use of these systems. As for simplified versions, they can satisfy operational needs and reduce prices. CNPC welcomes products featuring both low price and high quality.

Horizontal well technology plays a very important role in CNPC, because it can improve well production and increase E&P efficiency, and therefore, profit. If we can succeed in reducing costs, we will develop more horizontal wells in the future. Since rotary steerable systems account for a significant portion of horizontal-well costs, costs reductions here are extremely beneficial.

When we’ve talked about shales, you’ve referred to drilling speed issues and well stability issues. I’ve seen these myself just in deep wells in China. How is CNPC working to increase drilling speed?

In recent years, we have dedicated much effort to increasing drilling speed, efficiency and quality. Since 2005, we have successfully increased drilling speed in the Szechuan field.

CNPC’s overall drilling speed has increased 10% per annum over the past couple of years.

We are taking multiple approaches to improve drilling speed. First comes safety. As we work to improve speed, we want to ensure safety for equipment, personnel and the well. Second is management. We closely manage each step of the drilling process to ensure speed increases. Third, we are striving to apply advanced technologies developed by CNPC, as well as by our international peers, and to advance our practices to make best use of those technologies.

Fourth, we are building cooperation and synergies between our technical and engineering teams and those of international oil companies. This is to ensure that common goals exist. To build these synergies, we are reforming and restructuring our technical and engineering segment, beginning in 2007.

Our success is born out in some statistics. Currently, we are running 25 fewer rigs than in 2007. However, the number of wells and total footage have increased 29.8% and 45.5%, respectively, compared with 2007.

We have also worked hard to innovate technically. We will in the future release 10 technical results. Some of them will be very significant internationally and are already taking leading positions within China. We are using international benchmarks to judge the work of our own teams. In turn, this creates incentives for our teams to increase drilling speeds. We also offer prizes, like gold, silver and bronze medals, as further incentives.

I know that CNPC has worked hard to improve the capacity of its petroleum engineering technology services. What progress has CNPC made in that area?

First is that we have seen overall improvements in service level and in our competitiveness. We have also experienced efficiency increases for single rigs and single crews. Second, footage is increasing. In our Daqing drilling operations, for example, we drilled more than 9.8 million meters. This year, with just two drilling crews, we drilled about 110,000 meters, with average well depths of 2,500 meters. Further, we achieved these results over just nine months, because we do not drill during winter (in Daqing).
Internationally we have drilled 120,000 meters per annum. We could not have expected such results in the past.

We have also seen very significant progress in technology. We have increased our core competitiveness. In the past, we would rely on imports for hardware or facilities. But more recently, we have developed numerous advanced technologies within CNPC in the engineering and service side. Our engineering and technical service team have generated significant value for our customers. Thanks to these developments, CNPC now enjoys a good reputation not only in China but also among our international peers.

CNPC has applied rotary steerable systems in about 15 long horizontal wells. In 2012, the company’s drilling plan calls for about 1,500 horizontal wells, up from 1,000 last year. CNPC also plans to drill horizontally outside of China.

We’ve talked a lot about the technical side and discussed the challenges and progress that CNPC has made. Now I’d like to talk a little bit about our most important asset – our people, their competency and HSE. How has CNPC worked to increase the competency of its personnel on rigs?

We have put significant efforts in HSE system construction. We all know that the engineering and technical service industry is a very dangerous industry, so we are striving to train our people in HSE and in their skills.

There are three areas of effort here. The first step is to strengthen team training and to ensure they receive certificates before going to work. Each employee must be trained before going to work on the operation. And after training continuously over the past few years, we have observed a significant improvement in employee skills and HSE philosophy.

Over the past few years, we have accelerated our training efforts. We train our employees using multiple tools and methods, including simulation training. Also, each of our engineering and technical companies have their own training centers.

We are further summarizing lessons and experiences from material accidents from the past, as well as lessons from our international peers. We are looking for critical points to improve.

We have focused specifically on well control and mechanical injury. Our training has led to solid HSE results. In the past two years, we have had no material accidents, no fatalities, no major injuries and no environmental incidents.

We have learned from our international peers the value of the DuPont STOP program and have successfully combined DuPont STOP with CNPC practices. This has produced good results.

Frankly, in the past we considered the engineering and technical aspects of HSE as most important. That is no longer the case, due to our improvements. Still, we have a very large gap with our international peers.

That’s not something we are proud of, and we simply need to move forward pragmatically and steadily.

CNPC has, for some time, been moving to work internationally. What competitive advantages does CNPC have in petroleum engineering technology service internationally?

We began operating overseas more than 10 years ago. The target for this year is to build the “overseas Daqing oil field.”** That’s what we call it. The target is to reach total overseas oil and gas equivalent production of around 100 million tons per year and 50 million tons equivalent for CNPC’s share of production. That (latter amount) should be equivalent to the highest one-year production of Daqing in its peak time.

We can reach this target this year, thanks to CNPC’s international expansion. We have also experienced rapid development in the technological and engineering segment, even though we did not launch these services overseas until after we began international oil and gas exploration development.

We have advanced in three areas. First is our international scale. Currently, CNPC operates 280 rigs internationally in more than 40 countries with about 1,040 teams. These crews work in areas like logging, well testing and job prospecting. This represents 20,000 people, and the overseas revenues of the engineering segment will account for more than 30% of our total engineering segment. This increase in scale has occurred in just the past five to six years.

The second area we call orderly development. In the past, there would be many CNPC subsidiaries working in a single country, and they inevitably competed with one another. During 2008, we consolidated our overseas teams, and the results have been very satisfactory.

Third, we are learning from our international peers and trying to localize overseas employees. Currently, the Chinese-to-local employee ratio is three to seven, overall. For some products, only one in four employees is Chinese, and in a few, we are at 100% local employees.

Further, we have successfully trained our staff to function well internationally. This requires work in four areas. First is language, in order to communicate with local people easily. Second is project knowledge. Third is a detailed knowledge of the technology, and fourth is experience and knowledge of local laws and regulations.

CNPC has recognized the opportunities available internationally. The key is to have international teams available to quickly recognize these opportunities.

CNPC’s engineering and technical arms have gained international recognition. Like our operations in Iraq, our major achievements are accomplished by the CNPC engineering service. So here we are actually as good as our international peers. Our next step is to increase efforts in researching core technologies and special applications, where a gap still exists between us and our international peers.

* In March 2010, CNPC subsidiary PetroChina and Shell Energy Holdings Australia acquired Australia-based Arrow Energy.

**Daqing is China’s oldest and most prolific oilfield. Located in northeastern China, it is among the five largest fields in the world.

John Lindsay, executive VP and COO of Helmerich & Payne.

AC-drive technology helps contractors engineer hazards out of rigs, prevent injuries, enhance opportunities for automation

By Joanne Liou, editorial coordinator

John Lindsay is executive VP and COO of Helmerich & Payne. He is also a former IADC chairman (2008) and serves on the IADC Executive Committee.

What are the major issues facing land drilling contractors? What can the industry do to meet those challenges?

The biggest challenge today has to do with key drilling personnel – quality personnel. With today’s rig activity levels and the drilling difficulty in terms of well complexity, approximately 80% of all rigs drilling today on US land are drilling directional and/or horizontal wells. That puts a burden on the employee base, since all of those rigs require directional drillers. Directional drilling companies want to have the best directional drillers they can get, and they’re going to source those drillers – usually the most experienced guys on the rig – from a drilling contractor.

Another strain on drilling contractors is losing rig managers, who are being lured away by consulting companies or even, in some cases, by our own customers. That continues to be a challenge.

We’ll have to continue to invest in people, find areas that we can attract people into the business, which would include field people and engineers. We need to continue to hire engineers fresh out of school and train them. There are opportunities to attract technicians from different technical fields, whether it be electrical or other types of technicians. There’s a great opportunity to attract people coming back from military service overseas as well.

Another challenge is maintaining safe operations, as safety continues to be a major focus in the industry. Data trends for the total recordable incident rate (TRIR) for the US land sector increased each quarter during 2011 over the course of the year, and that’s not the outcome we need. Historically, the industry struggles to maintain an improving TRIR in times of high activity, and we believe the long-term solution is rig safety by design.

And, finally, with the challenges of personnel and safe operations, the ultimate challenge for drilling contractors is providing value for each of our customers. There’s a technology component that the industry needs to continue to focus on that will ultimately help us to consistently create value for our customers through the cycles.

Is our personnel challenge something that we can learn from the past or this a new challenge in trying to attract new personnel?

An H&P FlexRig5 works in Pennsylvania. The FlexRig5 maintains FlexRig3’s safety-by-design features while incorporating performance capabilities for longer laterals and deeper wells. To help maintain safe operations, H&P focuses on designing potential hazards out of its rigs. The company is currently building about four rigs per month.

As an industry, we have to continue to invest in people, and that means investing in people through the cycles. Companies need to grow their own; they need to teach new employees the business and communicate their respective cultures. If we continue to invest in people, the personnel challenges lessen over time. The challenge never goes away as this business will continue to be cyclical.

Since 2005, H&P has committed to build 234 new FlexRigs,  including 71 in 2011. With these newbuilds, and 40 left to deliver as of January, how is H&P ensuring it has competent people for each rig?

H&P has a training facility called the Personnel Development Center (PDC) that we instituted in 2002 when we built the first AC-drive FlexRigs, the FlexRig3. In 2002, we set out to build FlexRig3s at a cadence of two rigs per month, which we had never done before, and we recognized a need for a more formal training process. At the PDC, our employees go through various training modules, including safety, leadership training, team-building and technical training over a two-week period. We’ve had more than 5,000 people go through that facility in the last six years.

It’s not everything that needs to be done in terms of training; there’s other training that our men experience as they work for the company, but that’s the training that goes along with the newbuild FlexRigs.

On average, we have about 20 to 25 men per rig, depending on the crew complement. We are currently building four FlexRigs rigs per month, so we’re training between 90 and 100 men per month. Most of the people we’re hiring are coming into the entry-level positions; however, because we offer a great work environment, there are some experienced people that are attracted to the company.

Today’s work force has an advantage over previous generations in that they know and understand computers. We have a very bright work force, and we’re getting a lot guys with four-year college degrees who are starting out as roughnecks, and they’re finding entry into an industry and an entry into what they would consider a good company. We’re excited about it.

It’s a great way to get a start, and that’s where the value is created in the industry. The value proposition is not created in our corporate offices; it’s made out in the field and by the people who work on the rigs. Learning the business on the rig goes a long way toward understanding how things are done. It’s instrumental in our ability to understand how rigs can be designed and built better. It goes into the H&P safety-by-design philosophy.

How is the safety-by-design philosophy helping H&P approach industry’s challenges?

Left: New-hires participate in a training course on an ST-80 iron roughneck at H&P’s Personnel Development Center in Houston. About 5,000 people have completed training at the center since 2002. Right: A FlexRig3 works in Pennsylvania. FlexRigs have pioneered the use of AC variable-frequency-drive technology in onshore drilling.

From a contractor’s perspective, we have to design and build better rigs. We have to design rigs that have safety by design, allowing us to design out a lot of the hazards that existed in older rigs. Legacy rigs have hidden traps, and people continue to hurt themselves in the same way because of the older designs. An improved work environment goes a long way toward attracting better people.

Roughnecking is still a difficult job, but it’s not nearly as difficult if you’re not doing as much manual labor or out there getting hurt.

H&P has had an engineering training program since the ’70s, where an engineer would begin their career with the company as a roughneck, and I’m one of many who entered that program over the last 35 years or so. Unfortunately, several of the engineer trainees, including myself, suffered minor injuries as roughnecks – smashed fingers and stitches working on old, conventional SCR rigs.  Those experiences are among many factors that enabled us to design a safer rig. Safety by design has been very strategic to much of the success we’ve had in our safety improvements and FlexRigs.

We’ve made strides in safety, but you noted that TRIR numbers have gone up in 2011. Does more need to be done to prepare new-hires to be safe and to reinforce safety practices among industry veterans?

Any time in the industry that we’ve seen a large increase in activity, typically you see an increase in the number of accidents, and the TRIR goes up. As an industry, we have to continue to invest in safety by design and better technology solutions. Training is a very important aspect of what we do for safety and what we do with new employees and new employee indoctrination.

However, safety by design, investing in more technology solutions, improving rig designs – that’s really the best investment you can get for your money. Training, as important as it is, is really the least effective means of preventing injuries. The best solution to prevent injuries is to remove the hazard altogether – designing the hazard completely out of the rig or out of the piece of equipment you’re working with. That’s the most effective investment that we can make.

Don’t get me wrong, training is very important, but it’s much more effective when employees are working in a rig environment that employs safety by design, during the design phase of the rig.

An AC-drive FlexRig5 sits in the Houston rig-up yard before being transported to the rig site in Pennsylvania. The FlexRig5 follows its predecessors FlexRig3 and FlexRig4 in its safety-by-design features. Since 2002, H&P’s FlexRig3s have accrued approximately 30 million manhours while averaging a total recordable incident rate of 1.15, compared with the industry average of 5.15 in the same time period.

We built the first Flex3s in 2002, and we’ve accrued close to 30 million manhours. From a rig activity perspective, that’s approximately 500 rig years of activity since 2002. The average TRIR over that time is about 1.15, compared to an industry average of approximately 5.15 over the same period. The industry has invested literally millions of dollars in training people, but the bottom line is that a rig that has a better design criteria with many of the safety hazards designed out of it is inherently a safer working environment. Your training dollars go further.

Finally, another key ingredient in attaining safety success requires leadership on the rig to create a working environment where employees are empowered and obligated to stop the job when they believe there are unsafe conditions.

What are some of the features of H&P’s latest AC-drive FlexRig5?

With the Flex5, we set out to preserve the key drilling performance features of the FlexRig3 and incorporated a lot of the experience we had from unconventional shale plays where we have been drilling longer-reach horizontal laterals. The FlexRig5 is designed for a pad drilling application, where customers are typically drilling six to eight wells but sometimes as many as 20 wells on a pad. Pad drilling enables multiple wells on a single pad without having to rig the rig down with trucks and move it to the next location.

The Flex5 design criteria resulted from customer feedback. It’s a larger rig than the Flex4S pad rig that we designed in 2006, targeting longer laterals and deeper measured-depth wells while preserving the safety-by-design features and the drilling performance  associated with the Flex3.

What technology gaps still exist, and where do you see the industry heading in the future?

A majority of rigs that have worked over the last 10 years when the industry’s TRIR averaged a little over five are conventional, legacy-type assets. They are rigs that were built primarily in the ’60s, ’70s and early ’80s. Those rigs clearly have a technology gap, but then you have the advanced-technology rigs, AC-drive rigs, that are in a completely different class. There are approximately 2,000 rigs working today in US land. Approximately 40% of those are mechanical rigs, 35% are SCR rigs and 25% are AC-drive rigs. In those classes of rigs, there are distinctly different technologies.

The mechanical rigs are on the lower end of the technology spectrum, the SCR rigs are in the middle, and the AC-drive rigs have the best technology today. With the technology gap on the lower-end rigs, the older fleet is effectively reaching an obsolescence factor. It’s going to be hard to apply the down-hole and surface technologies that we’ve seen as beneficial to drill the types of horizontal wells that are being drilled today.

You can put a top drive on a mechanical rig, but it’s not nearly as effective as having a top drive that is integrated into the mast on an AC-drive rig that has PLC controls and an integrated operating system. The cost-per-foot difference demonstrates there’s a dramatic difference.

H&P sends its rig crews to its Personnel Development Center in Houston for two weeks. Since H&P is producing about four FlexRigs per month, about 90 to 100 crew members are being trained every month. As industry looks to recruit additional personnel, there are opportunities to attract technicians from other technical fields, as well as people returning from military service.

Our customers and other operators are beginning to shy away from the older rig technology and investing in new rigs and are willing to commit to multi-year contracts.
Will automation become more present in the designs?

I would classify what the industry has done to date as more related to mechanization. We’ve replaced spinning chains and tongs with an iron roughneck, and we’ve added hydraulic catwalks and top drives. I think there is automation potential in the future, but I don’t think that will be possible unless you have AC-drive technology on the rig. I think the digital downhole data that we’re able to obtain with AC-drive rigs will eventually allow us to do more in an automated way, but we’re probably still a couple of years away from being able to do that.

There’s little doubt as we leverage more AC-drive technology that we’re going to be able to do more in the way of drilling efficiency. I think it’s more of an innovation process over time. We’ll find better ways to utilize the data to automate certain functions.

What challenges or opposition do you think the industry will have to overcome in regards to hydraulic fracturing? How are environmental regulations affecting business?

H&P doesn’t have a pressure-pumping business, so we are not as involved in this debate as others, but there’s no doubt that it is a concern for the industry. If people believe it is impacting their drinking water, that is a serious allegation. I think it’s obvious that it is difficult for the public to get the hard facts from the media.

I believe the industry is being more transparent, more communicative with the public and the regulatory bodies, and that is the right thing to do. There’s so much information out there; it’s hard to tell where the facts begin and the fallacies end. I believe there will continue to be opposition to hydraulic fracturing, but I also believe the facts are on our side, and the industry will manage through this.

From a drilling rig perspective, we have taken an environmental initiative by design. As an industry, we have to continue to work on being proactive – whether it’s rigs that have a smaller environmental footprint, rigs that move less frequently, require fewer trucks, less emissions, having engines that are more emission-friendly, rigs that contain drilling fluid effluent more effectively … I think all of those things are very important.

We can demonstrate to local communities and to regulatory bodies how much safer and environmentally sound we are today than we were five or 10 years ago.

Are we perfect? No, but look at how much safer we are. And look at how much less emissions we have and less environmental footprint we’re leaving behind. We are getting better, and we are striving to continue to get better. We just need to get better at a faster pace.

With the influx of new-hires to the company, the H&P Personnel Development Center was set up as part of a formal training process that includes modules on safety, leadership, team-building and technologies.

How can the industry sustain its level of activity even with the low natural gas prices?

The low gas prices affect our drilling activity, but since oil prices have remained above $80 a barrel for the most part since coming out of the downturn, we have had extraordinary rig activity levels. If you were to look at the previous 15 years of my career, a $3 natural gas price would have meant a whole lot of rigs being stacked. But with the unconventional oil and liquid-rich plays, oil prices above $80 and bifurcation of the rig fleet, the industry has derived completely different drilling economics.

Our customers are able to make money in this commodity price environment, and the economics are conducive for drilling contractors to invest in newbuild rigs.

By Linda Hsieh, managing editor

Zuhair Al-Hussain, vice president of Saudi Aramco's Drilling and Workover group

Zuhair Al-Hussain is vice president of Saudi Aramco’s Drilling and Workover group.

From your position at Saudi Aramco, what do you see as some of the most critical challenges confronting your operations today?

Number one is HR issues, which includes replacing aging field personnel, knowledge transfer to the next generation and localization of the drilling industry. Second is HSE. There are limited academic venues for getting an HSE educational foundation, not just in the Middle East but globally. We also need to provide more hands-on field experience for HSE officers on the rigs.

Third is technology. We need to transform current field personnel into a technology-savvy work force and need more rig automation to mitigate chronic HR shortages and improve drilling and safety performance. Harnessing the value of real-time data transmission and deepwater drilling pose challenges as well.

All of these issues are not independent to Saudi Aramco; they are industrywide except perhaps localization of the drilling industry. Currently the world produces about 86 million bbl/day. Of that 86 million bbl, only 21 million, or 24%, comes from Middle East North Africa (MENA) countries while the remainder comes from the rest of the world. At the same time, there is about 1,355 billion bbl of oil reserves in the world, of which about 758 billion, or 56%, is held by MENA. Eventually that 24% production percentage will swing, and, when it does, we have to be ready with competent, trained professionals here in Saudi.

How does today’s well complexity, whether with multilateral drilling, geosteering, extended-reach wells or intelligent monitoring of wells, affect the way you manage your wells?

Saudi Aramco is utilizing all of this technology both onshore and offshore on oil and gas wells alike. It has greatly enhanced our ability to reach reserves that were unreachable before, as well as more efficiently drill existing fields and sidetrack old wells more successfully. We are able to look at a new development project knowing that we will be using the latest drilling technology to develop this field as efficiently as possible, going farther and hitting tighter targets than ever before.

How are real-world technical limitations holding back the goals you have for your drilling programs?

An array of high-tech tools are deployed to find and produce oil and gas in Saudi Arabia. Saudi Aramco is open to collaboration with partners to test new technologies showing potential and evaluate their performance. Image courtesy of saudiaramco.com

Of course we all want to be able to drill farther horizontally and deeper without the concern of torque and drag and motor failure limitations, but at the same time we realize that we have to learn how to walk before we can run. The industry is progressing at a very rapid pace so it’s only a matter of time before these objectives are realized.

Gap areas are in high-pressure/high-temperature (HPHT) with extended-reach drilling and in HPHT with slim tools, as well as in lost circulation.

How are you supporting technology development/innovation in your organization against the need to cut costs and manage risk?

Each new technology, if selected by our engineering specialists, is evaluated separately, then judged on its own merit. Not all new technologies are trial-tested; however, if a new technology makes sense, we are willing to share the risk associated in testing it and evaluate it based on its actual performance. In doing so, Saudi Aramco has been at the leading edge of many technological advances when others might be too risk-averse in some situations.

What are your concerns with the reliability of today’s equipment?

At Saudi Aramco, all the equipment we use has to conform to strict API and industry standards. For example, we require all our drilling contractors to have API blowout preventers with all OEM parts, never any substitutes. In addition, before any new equipment is introduced into our system, rigorous independent-party inspections have to be satisfied.

Does true drilling automation fit into your vision of the future of drilling?

Absolutely. Today there are rigs being operated by drillers and assistant drillers only. No rig floor operators or derrick men. Nowadays, we have more than one computerized system to control drilling parameters and optimize ROP and avoid drill pipe sticking. Horizontal wells are being monitored and geosteered remotely. Geological models are being updated on a real-time basis while drilling, so well placement optimization is taking place on real time, too.

Drilling rig automation will improve performance, safety and reduce manpower.

How many real-time operations centers does Saudi Aramco have now? What value are they adding to your drilling operations?

Presently there are two real-time operations centers (RTOCs) operated by Saudi Aramco – the GOC (Geosteering Operations Center) and the D&WO RTOC (Drilling & Workover Real Time Operations Center). The GOC focuses on landing directional and horizontal wells as planned. The GOC team communicates with the rig site and directional service companies to geosteer through the reservoir, modifying the geological model as required.

Value adds are providing an effective real-time collaboration space for better and faster decision-making and placing the horizontal section in the best part of the reservoir using the geosteering workflows.

The RTOC objectives are focused on drilling trouble avoidance and performance enhancement for critical well sections. The drilling specialists use a number of complex applications running simultaneously in real time to generate simulations based on engineering modeling analysis and offset correlations, providing faster and better decision-making.

There are also three other RTOCs operated by directional service providers where the focus is on directional tool performance, MWD/LWD log quality and the directional plan delivery.

An offshore platform takes shape in the Karan gas field. Discovered in 2006, Karan is Saudi Aramco’s first non-associated gas field located in Saudi waters of the Arabian Gulf. Image courtesy of saudiaramco.com

Going back to 2008 when we spoke with you for this same feature in DC, you mentioned five items as being of top importance. Let’s see how far we have come on these issues now that it’s 2012. First, you cited the ability to de-complete the complex multilateral completions without extended fishing operations.

The concern is still valid, and the answer is “slight change” for the existing market available technologies. However, introducing breakthrough technologies such as the WetConnect and more of wireless downhole tools will eliminate the use of cables and hydraulic lines and consequently reduce greatly fishing operations and risk.

Second is the ability for reliable well intervention for the multilateral, extended-reach, maximum reservoir contact (MRC) wells.

The concern is still valid, and the answer is also “slight change” for the existing market available technologies. However, introducing completions with permanent downhole valves with no inside-wellbore cables allows complementing infinite laterals in multilateral wells with smart equipment. Utilization of tractors and vibrators on coil tubing along with advanced deflector tools would help in intervening extended-reach and MRC wells.

However, chances of success are still slim. Introduction of active coil is a new era in intervening wells where the electric/electronic cable transmit required data effectively and reliably.

Third is the ability to remove drilling cuttings from highly inclined and horizontal wells to facilitate running tubulars, completion equipment and whipstocks.

This concern is greatly mitigated by introducing technologies that drive tubulars and completion equipment, such as SwivelMasters, Turbocaser, sacrificial motors, chemical as lubricant, etc. Such and other technologies still require further assessment. However, initial analysis is promising. This concern is not only mitigated by introducing made-for-purpose technologies but also by modifying drilling practices and introducing better fluids into the equation, as well as preparing the hole properly.

Fourth is shortage of competent and experienced rig crews, drilling engineers and service company personnel.

As mentioned earlier, this continues to be an industry concern, not just Saudi Aramco’s concern.

Fifth is severe lost circulation across fractured and vulgar formations contributing to rig lost time, high mud costs and well control problems.

This concern is still valid, and the answer is “slight change.” However, advances in non-conventional lost-circulation material, drilling with casing and drilling underbalanced or balanced would greatly help mitigate this concern. The main issue with such a concern is the well control issues, which could be catastrophic if a loss were to induce kicks in highly pressured reservoirs. Competency of hands handling such operations must be maintained at the highest level at all times.

Other than these five issues, what are some new problems you’re encountering when drilling or completing your wells or in well intervention?

As stated before, a shortage of competent trained manpower continues to be a source of concern to us, and I am sure many other operators around the world. Whether it is among the drilling crews or service company crews, both in the field and in the shops performing tool maintenance and quality control, it all results in lost time that could and should be avoided if these people were properly trained.

Have there been any drilling/completion technological innovations that you’ve come across in the last year that you think of as a true step-change?

One technology that we are currently testing and seems to be very promising is the Turbocaser Express. This tool is an expandable turbine that can be connected to the bottom of the completion with a reaming shoe.

The benefit is that you will guarantee the deployment of the completion at all times, even in areas where wellbore stability issues are a concern. This is even more relevant these days when well geometry and completion jewelry is getting more complex, i.e., multi-stage frac completions.

Shale and tight-gas frac technology is definitely a game changer.

Are the drilling rigs on the market meeting your needs and where would you like to see improvements?

Geoscientists and petroleum engineers remotely guide drill bits from the Geosteering Operations Center in Dhahran. The real-time operations center works on landing directional and horizontal wells as planned. Image courtesy of saudiaramco.com

Today, for the most part, they are meeting our demands, with the exception of quite a bit of loss time both due to rig maintenance issues along with inexperienced rig personnel. We are looking at new-generation rigs with smaller footprints that are more automated and fast movers.

Do you anticipate Saudi Aramco needing significantly more rigs in the near future?

Soon we will start exploring in deepwater. We are looking at the unconventional gas plays in the Kingdom.

Has the Macondo incident had any impact on the way you conduct your drilling operations?

Not really. We at Saudi Aramco embarked on a very rigorous system of well control policies and procedures about 12 years ago. More recently, just prior to Macondo, we recognized that we had some problems in personnel well control competencies, which we have cleared up by implementing a very thorough well control competency test. This is in addition to our rig supervisors having to possess a valid IADC WellCAP well control certificate.

We are adjusting our requirements for well control certification to be competency based, and I urge our industry to follow suit.

Has Saudi Aramco taken a new look at your well control policies and procedures since Macondo?

No. However, we are working with BOP manufacturers and technology developers on a new concept for BOP equipment addressing reliability and high H2S environments.
In conclusion, Saudi Aramco is very optimistic of the future and in our ability to overcome the issues and challenges and meet the requirements of oil supplies. This optimism is based in part on our sizable resource base, investment in human resources and technologies, best-in-class operating practices, and our deep commitment to environmental protection.