Process safety is one component within Shell’s systematic approach to HSE for its worldwide operations, whether it’s the Gulf of Mexico (above left), offshore Brunei (above right) or in the Norwegian Sea (below). Images courtesy of Shell

By Linda Hsieh, managing editor

In summer 2011 offshore Greenland, in an attempt to halt Arctic exploration, Greenpeace activists scaled a semisubmersible rig large enough to drill in more than 8,000 ft of water. This, despite a court injunction and the risk of jail time and significant fines for the activists.

In January this year, thousands of Bulgarians marched in the capital city of Sofia to protest planned shale drilling in the country. Similar demonstrations were reported in the northeast of Bulgaria near Dobrudzha, as well as in other cities to the south and north.

In June, hundreds of people temporarily occupied the Ohio Statehouse in Columbus while calling for the energy industry to reveal the “toxic chemicals” companies add to fracturing fluids.

The same month across the Atlantic Ocean, demonstrators near Preston, England, locked themselves to a drilling company’s gates in an attempt to delay a rig from moving to its next location.

In July, a gas drilling rig in Pennsylvania was forced to temporarily shut down when 150 protesters blocked an access road for trucks headed to the rig.

These events are only the tips of the iceberg. Unfortunately, protests against the drilling industry appear to be occurring with increasing frequency and with increasing public support. It’s almost logical, considering the overwhelming rhetoric out there propagating negativity against the oil industry, targeting everything from deepwater exploration to Arctic drilling to unconventionals development and hydraulic fracturing practices. In August, I received a message in my inbox with the subject line: “Fracking Fallout in Ohio: ‘Throwing Up Until the Blood Vessels in My Eyes Burst.’” The e-mail went on to detail how an Ohio woman did not know that a natural gas company had fractured the shale beneath her home, and how that was correlated to her “blinding headaches, nausea, mystery illnesses that ultimately took her gall bladder.”

It would be convenient to attribute the public’s mistrust of the drilling industry solely to such attacks predicated on fear, but they are only part of the story. Like it or not, the industry itself must accept part of the blame, because fear tactics work best on the uninformed. The public, including governments and regulators, need to be armed with knowledge and understanding of what the drilling industry does and how it goes about its business, and industry simply has not done enough to provide that transparency.

“We’ve got to get better at telling our story,” said John Rynd, CEO and president of Hercules Offshore, noting that this industry has historically been driven by a can-do attitude, not show and tell. “We’re passionate about our people. We’re passionate about our reputation. We do a lot of good around the world,” he said. “We have to get better at sharing that with the public – because many people still think we’re cowboys.”

Engaging the public and helping them to understand our industry is only one piece of the solution, however. Interviews with oil companies, regulators, trade groups and other industry players show that maintaining the drilling industry’s license to operate must also incorporate enhancement of process safety, which encompasses better well control and environmental stewardship, as well as collaboration with regulators and working toward a set of global industry standards.

The control framework starts with a commitment and policy statement that is the basis for all Shell operations. Linked to the statement are goal-based standards to help achieve the company’s Goal Zero.

“Industry’s license to operate is very valuable; it is important we maintain it,” said Kieron McFadyen, executive vice president of safety and environment for Royal Dutch Shell. “Asset integrity, process safety and managing a business responsibly are at the heart of a license to operate, and that’s something we need to do everyday. … As we have seen, if one part of our industry has an incident, we are all impacted.”

The Macondo tragedy may have transformed process safety into a buzz word, but it would be unfair to say that industry did not have process safety prior to the 2010 blowout. “We couldn’t do what we do everyday around the world, in the environments where we work, without process safety,” Mr Rynd said, noting that industry has had numerous well-established critical operating procedures, including well control and rig-moving procedures, for years.

What Macondo did highlight was the significant economic toll that process safety incidents can have on a company and an industry. “Safety is viewed now as an important aspect in the economics of the business, meaning the risk of not operating safely is sometimes too high to bear,” said Raul Vieira, vice president technical center for Bureau Veritas. Mr Vieira works on conformity assessments of design with risk, safety and reliability and with asset integrity management for a range of companies, including those in the oil and gas upstream.

Although process safety has become a buzz word since Macondo, it would be unfair to say that industry did not have process safety before the 2010 blowout. “We couldn’t do what we do everyday around the world, in the environments where we work, without process safety,” said John Rynd, Hercules Offshore CEO and president. To improve safety performance on Hercules rigs, such as the Hercules 350 (above) and the Hercules 300 (below), the company focuses on prevention and reducing risk tolerance. “We have to continue to drive the risk profile to zero,” Mr Rynd said.

In many ways, Macondo also was a tragic reminder that as much as industry has achieved in safety, more had to be done. “Process safety is not new; it has been a focus for the energy industry for many years, but you could argue that Macondo changed the game, to a certain extent,” Mr McFadyen said. “In order to achieve the sort of performance improvements we have seen in personal safety, we also have to raise the profile of process safety within the drilling industry.”

Shell, for one, has taken significant measures to highlight process safety, issuing a comprehensive plan that includes increased reporting of process safety incidents, the development and reporting of leading indicators, the reporting of such indicators and better oversight of compliance with standards. “It was a decisive and comprehensive response to Deepwater Horizon,” Mr McFadyen said. “It’s an approach that recognizes that process safety is a mindset. It’s about having the right people with the right standards, the right equipment and the right environment. Process safety is not a quick fix; it’s a never-ending journey.”

Part of a higher profile for process safety involves a broadening of the way in which our industry benchmarks itself and shares lessons. “As an industry, we are very familiar with the personal injury-related indicators, but I believe we need to raise the profile of process safety-related KPIs, such as specification and maintenance of safety-critical equipment.”

“One of the things we are doing at Shell is tracking leading and lagging process safety indicators to look for interventions that allow us to improve performance,” Mr McFadyen said. With the right will, industry should be able to put these metrics in place, he believes, but the challenge is in sharing them and learning from them – not just any individual company but through the business chain. “It is important to ask ourselves regularly: Are we looking at these things consistently and well enough across the industry?

“By sharing experiences across the industry, we learn from each other and try to avoid incidents. I think this is important for our whole industry – drilling, petrochemicals and production or operations. I know there are examples of this already – my challenge would be, ‘Is there more we could be doing?’” he explained.

To be fair, process safety is an intrinsically harder issue to measure and address than personal safety, i.e., slips, trips and falls. A speaker at an IADC conference once compared process safety incidents to health problems like high cholesterol and heart disease – serious but not so easily detectable as, say, a broken finger. Moreover, treating these quieter illnesses requires close monitoring and a systematic approach involving not just medication but also prolonged lifestyle changes such as a healthier diet and increased exercise.

“The key to preventing process safety incidents is to ensure all operations and equipment stay within their control limits while watching closely for indications and near-miss events so you can properly investigate. Sometimes it’s the very minor things that you have to pay close attention to so you can pinpoint the root causes and make sure you’re managing it right,” said Kristen Ray, vice president of HSEC for BHP Billiton Petroleum.

Although her company takes the same systematic, risk-based approach to both personal and process safety, she acknowledges that the latter does involve more complexity. “To manage process safety, you have to think a little more and you have to look a little harder. It’s not one event – you have to monitor multiple factors that then add up to something important. It’s a more holistic approach,” Ms Ray said.

H&P Rig 395 works in the Eagle Ford for BHP Billiton Petroleum. BHP says it takes the same systematic approach to both personal and process safety, although the latter involves more complexity. “(Process safety is) not one event – you have to monitor multiple factors that then add up to something important,” said Kristen Ray, VP of HSEC.

She also emphasized that process safety isn’t a regional challenge limited to the US Gulf of Mexico (GOM) just because that’s where Macondo happened or because of the SEMS regulation. BHP Billiton Petroleum operates under a safety case for global standards, whether they’re drilling in the GOM or elsewhere.

“It provides a structured way of looking at major accident risk to identify preventive and mitigating controls,” Ms Ray said. Even in places like Trinidad & Tobago where there is no safety case regime, the company opts to have a safety case in place.

BHP Billiton Petroleum also undergoes independent, third-party audits every two to three years to ensure its drilling management system is working as it should be. “Everywhere we drill, in the Gulf of Mexico or Malaysia or South Africa, we have the confidence that we operate under the same standard and that it’s been audited by an independent third party. It’s our way of working globally,” she continued.

Derek Cardno, BHP Billiton Petroleum vice president of drilling and completions for North America shale, encourages other parts of the drilling industry to take on more such voluntary auditing, if only to show that we are open to improvement and have nothing to hide. “These audits show that we’re prepared to open up to bona fide third-party auditors who know what they’re looking for and can ask the hard questions,” Mr Cardno said.

A fleet of fracturing equipment (above) and H&P’s Flex Rig 433 (below) work for BHP Billiton Petroleum in the Eagle Ford, where the company gained a core position after acquiring Petrohawk in 2011. The company believes that industry can’t sit back and hope regulators will write policies that will “hit the right issue.” More efforts must be made to communicate with the public and regulators about technologies such as hydraulic fracturing. “Industry should be seen as technical experts and advisers who will support regulators and work with them collaboratively,” said Kristen Ray, VP of HSEC.

Leading or lagging?

As industry works to raise the profile of process safety within the industry, it’s also important to note that it isn’t something to be pitted against personal safety. This isn’t an “either/or” issue; effort must be made to improve both types of safety. “If you don’t have personal safety, you can bet you’re not going to have good process safety,” said Charlie Williams, executive director for the Center for Offshore Safety. The group has collaborated with industry groups such as IADC to provide tools and best practices for SEMS compliance in the US Gulf of Mexico and continues to collect data related to audit findings and to develop safety performance indicators.

At a public hearing in July held by the US Chemical Safety Board, the regulator issued a strong call-out for the drilling industry to develop more leading indicators for process safety, criticizing what they saw as an overreliance on lagging indicators. For industry, however, this is also not an “either/or” issue – both types of indicators can be helpful and should be used.

“The most important thing is keeping track of the data, having the data lead to a learning and taking action on the learning,” Mr Williams said. “We’re actually moving away right now from this idea of leading and lagging indicators.”

For example, he said, tracking the loss of one barrier, under a two-barrier philosophy, could be measured as nonproductive time and seen as a lagging indicator. But such data could also be a prognosticator to underlying issues with a company’s safety and environmental management system (SEMS) if data shows that a company is losing a barrier too often. “There must be something wrong with the process with which I’m doing this. Otherwise I wouldn’t be having all these barriers that I have to fix,” he explained. In this way, what could be seen as a lagging indicator could also be a leading indicator, if a company uses it to realize that it needs improvement in its safety management system before an incident occurs.

The important part, therefore, is the learning. The challenge then becomes, are we learning fast enough to prevent repeat occurrences of similar events? Mr McFadyen urges the industry to find ways to further speed up this learning curve. “One of my biggest concerns is that when reviewing the root causes of an accident, we might find we’ve seen this before somewhere else in the industry but hadn’t acted fast enough to prevent it from happening again.”

Scheduled to speak at the IADC Drilling HSE Europe Conference in Amsterdam in September, Mr McFadyen said he’s prepared to use his presentation to challenge the global drilling industry to learn even faster. “If we are seeing repeat incidents happening in different companies or different jurisdictions or different geographies, then as an industry we should be concerned and compelled to do even more.”

Supporting efforts to engage stakeholders and provide a better understanding of the industry, energy industry experts participated in roundtable discussions at the Earth Science Educator Conference held in Houston in August by the Offshore Energy Center. Among the participants were (clockwise from top left) Galen Cobb, Halliburton; Roger Pinkerton, Marathon Oil; and John Rynd, Hercules Offshore. More than 120 Houston-area teachers also got the chance to view energy-related educational materials, such as the OEC’s mobile offshore learning unit.

A key part of the solution has to be the timely dissemination of critical information about incidents, he believes. “The drilling industry is actually quite close-knit. It is well placed to be an inspiration to other parts of the energy industry when it comes to the learning and sharing of incidents.”

In June at the IADC World Drilling 2012 conference, Magne Ognedal of Norway’s Petroleum Safety Authority (PSA) participated on a panel session devoted to license to drill. He took to the podium expressing his frustration with the lack of information coming out about recent safety events, urging industry to share critical information in a more timely fashion. “No information – does that build trust? In my mind, it doesn’t,” he said.

The challenge, however, is that oil companies are discouraged from early disclosure when governments rush to prosecute in the immediate aftermath of an incident. “The big issue in all of this is around liability and criminal prosecution. Like it or not, it’s a real issue, and it’s a tremendous concern. It’s an inhibitor of what everybody wants to achieve,” said Mr Williams, who also sat on the World Drilling panel.

Although there are no easy solutions, industry must attempt to discuss the issue more openly with governments and regulators; it’s the only way to have progress.

“I also see the need for the drilling and safety community generally to continue to work closely with our legal colleagues to help produce learnings at the times when they can be most helpful. This relationship should be one of cooperation, not tension,” Mr McFadyen said.

Focus on prevention

For drilling contractors especially, prevention is central to their safety management approach, and Mr Rynd fears that regulators may be placing too much emphasis on BOPs or other equipment that kick in downstream of a safety event. “If the well is designed properly, if the mudweight is kept proper, if the flow-in/flow-out is kept proper, if the hole and pipe are kept full – if you follow the basic fundamentals of drilling – the need to use the BOP would be very rare,” Mr Rynd remarked. Rather than looking to have some kind of “guaranteed shearability,” the industry should be directing more focus toward preventing incidents from occurring in the first place.

For Hercules Offshore, achieving this goal rests with reducing risk tolerance, Mr Rynd said, whether you’re talking about personal or process safety.

“Rather than having more procedures or regulations, the challenge is our risk tolerance. We have to continue to drive the risk profile to zero. It’s about everybody doing the right thing every day every moment,” he noted. “If you get away with doing something risky, you might do it again and maybe push the envelope the next time and the time after that. We are constantly educating and reinforcing the behavior piece of it all the time.”

Organizational risk tolerance must be reduced as well. “Drilling is a team effort, and nearly all incidents involve multiple opportunities, often from numerous organizations and diverse skill sets, to intervene and stop the falling dominoes,” said Richard McClaine, vice president QHSE for Hercules. “The greatest challenge that our industry faces today is reducing the overall risk tolerance, not just of the individuals that work on the drilling rigs but collectively as an industry, reducing our tolerance for at-risk behavior. This requires engaged leadership persistently demanding that we are constantly doing the things we already say we are going to do,” he said.

A GEO Southern tank battery sits on BHP Billiton Petroleum’s Natho A 1H location in the Eagle Ford.

Regulators & regulations

When it comes to regulations, industry appears to agree that we don’t need new regulations but that companies must work more closely with regulators to allow for more transparency and understanding on both sides; antagonism is futile.

“We have always tried to be proactive and meet with regulators to explain how we work and what our plans are. That’s always well-received,” BHP Billiton Petroleum’s Mr Cardno explained. “We want to be absolutely open and honest with them that we’ve got nothing to hide.”

In many cases, regulators have shown that they actually welcome and appreciate industry engagement. Post-Macondo, for example, US regulators were receptive to the work of the Joint Industry Task Force, according to Dr Brenda Kelly, IADC senior director of accreditation and certification. “Regulators were aware of our efforts. We were in fact able to impact the regulation that they put out. They incorporated a lot of our questions and our challenges into the notice to lessees,” Dr Kelly said.

In the UK, too, the industry and regulators came together after Macondo to form a review group to study the UK regulatory system and ensure it was sufficient. “This was done on a cooperative, collaborative basis with a fair degree of mutual respect,” said Malcolm Webb, chief executive of the Oil & Gas UK. “We looked at what we could learn from Macondo and where we could make improvements while recognizing that we had different roles to play in this.”

On a broader level, the European Commission also has set up the EU Offshore Authorities Group for national regulators and plans to create a forum where industry would be invited to share information and learnings about offshore issues. “We are looking at the best way to link up the industry and other stakeholders into this work group,” said Eero Ailio, European Commission deputy head of unit, DG Energy.

He hopes that such a forum would help to enhance communications between regulator and industry – including from drilling contractors, a segment where he has seen more of a “wait and see” attitude.

“Having said that, I feel that in the past few months things have started to change. We sense something is happening,” he said, noting recent meetings with IADC to discuss the association’s role in training and helping contractors to share information.

Oil companies, too, recognize that they can’t simply sit back and hope regulators will write policies that will “hit the right issues.” They will have to work harder at communicating their efforts, their challenges, their technologies.

“Industry should be seen as technical experts and advisers who will support regulators and work with them collaboratively,” Ms Ray noted.

Mr Cardno agreed, adding that engineers spend a significant amount of time preparing applications for permits to work, particularly in the Gulf of Mexico since Macondo. “Additionally, there can be a large number of revisions to account for any changes required while drilling.”

While welcoming any and all legislation that will further contribute to the safety and environmental excellence the industry has built, Mr Rynd at Hercules Offshore is concerned that the pendulum may have swung too far to one side, taking industry focus off the critical path.

“We’re getting incidents of non-compliance on things that are well-intended but don’t make critical impact,” he said. In fact, for the first time in many years, lost-time incident rates and recordable incident rates are trending upward in the Gulf – something that Mr Rynd suspects may be the result of overzealous rig inspections that divert attention from the critical path.

“I have an overarching concern that we’re getting pushed by well-meaning individuals who may not fully understand our business and are subjecting everyone to get the eye off the ball,” Mr Rynd said.

Mr McClaine added, “The reality is, we can be so focused on the drops of oil under our feet that we don’t see the fire in the corner.” Industry has to get back to focusing on executing the policies and procedures it already has in place, he said, not reinvent the wheel with excessive regulations that will dilute a set of finite experienced human resources serving the industry today.

Regulator point of view

From the vantage point of regulators, however, they still appear to lack sufficient confidence that industry will follow through without additional oversight. Speaking at the IADC World Drilling panel session, Gavin Guyan, general manager safety and integrity for the Australian national regulator NOPSEMA, pointed to pictures of blowouts and burning rigs as the public perception of the industry. “Until we can change that perception and develop that trust … possibly more and more constraints will be imposed upon the industry,” Mr Guyan said.

In conjunction with the International Regulators Forum (IRF), NOPSEMA is working on a tool that aims to address the softer organizational issues around safety: decision making, management of change, situational awareness, communication and contractor management. In particular, he said, regulators are looking to address what they call “dynamic capability” – the ability to recognize and deal with change.

“How can apparently experienced, apparently technically competent people draw a completely wrong conclusion in a set of circumstances? … The ability for people to draw a conclusion that suits their current operational needs and their background is a common phenomenon,” Mr Guyan explained.

He also suggested that it’s “very possible” for regulators to start assessing such cultural measures and perhaps impose constraints. “We need to satisfy the public that we can manage risk proactively. If collectively we can’t achieve that, we will be continually addressing these types of matters and coming out with more and more constraints that will make our industry more and more difficult,” he said.

While NOPSEMA expects to present its work to the IRF for consideration in September, the European Commission too is moving ahead on a new offshore safety regulation that would move the all EU offshore E&P markets under a consistent, goal-setting regulatory regime for the prevention of major accidents.

Eero Ailio, European Commission deputy head of unit, DG Energy, says the commission believes a goal-setting approach to regulations will deliver better results than the prescriptive approach in the long run. “It’s better because the regulator concentrates on setting the objectives, enabling it to have dialogues with the industry on how to reach those objectives,” he said. “There is also less risk that the regulator assumes some responsibility for risk control.”

“We feel that indeed the industry can do better, but obviously they have to be in the right regulatory environment, and we believe we can improve this environment in the EU,” Mr Ailio said.

Compared with the prescriptive approach to regulations – which sets precise rules and requirements that industry must strictly follow – the commission believes that the goal-setting approach will deliver better results in the long run. “It’s better because the regulator concentrates on setting the objectives, enabling it to have dialogues with the industry on how to reach those objectives. The regulator does not prescribe the means of how the industry achieves the outcomes but leaves it up to the innovation, the intelligence and the initiative of the industry to find the best ways. … There is also less risk that the regulator assumes some responsibility for risk control, which belong rightly to the industry,” Mr Ailio said.

“We hear from the industry that they appreciate this margin of maneuver to sort out themselves the best way to reach the objectives set by the public authorities. Together with the independence of the national health, safety and environmental regulators, this is a central element in what we’re trying to achieve in Europe,” he continued.

However, moving all nation states in the EU under a goal-based approach may not be so easy, primarily because this regulatory framework involves a higher level of complexity than the prescriptive method. “I once heard from an operator that before being capable of implementing a goal-setting approach, you need to be capable of compliance with the prescriptive approach,” said Mr Vieira with Bureau Veritas. “I do not assume that every company could easily move from a challenge in meeting prescription to implementing a goal-setting system.”

Mr Webb with the Oil and Gas UK agreed, noting that countries in the EU without the same regulatory history as the UK may face difficulties “if they all of a sudden have to adopt this new complex set of arrangements.” Industry groups are working with the European Commission to persuade them to change the legislation into a directive instead. A directive would allow individual member states to amend local laws to comply with the principles set out by the commission.

For countries like the UK that already have goal-setting regulations in place, the commission’s proposed legislation would cause headaches as well, Mr Webb said. “The regulation approach will result in a great deal of bureaucratic activity in the countries where leading regimes are already in place as far as safety is concerned – the UK, Norway, Denmark and the Netherlands,” Mr Webb said. “We’re not saying that we don’t want to see the highest of safety standards applied everywhere across Europe, but, in our view, this is definitely not the way to do it.”

Regulators’ role

Whatever may come out of the European Commission, NOPSEMA or any other regulatory body around the world, one point of consensus is that effective oversight of industry can only be achieved through strong and knowledgeable regulators. This means that not only do governments need to resource their regulators appropriately, they also must ensure regulatory bodies can attract the right caliber of people with professional expert standing, Mr Webb said. “The existence of regulations never made anything safe in themselves; it’s the way those regulations are implemented,” he explained.

One project is being undertaken in the North American shales to address the issue. Earlier this year, ExxonMobil and GE announced they would each contribute US $1 million to the development of a training program targeting regulators and policymakers involved with shale oil and gas. Under the project, the Colorado School of Mines, Penn State University and the University of Texas at Austin will develop curriculums that give regulators access to the latest technology and operational expertise of the industry.

The curriculum will be designed around four basic areas: petroleum geology; petroleum technology, including principles of drilling operations and well design; environmental management technologies and practices; and federal and state oil and gas regulatory requirements.

Initial focus will be on state regulators, with each of the three educational institutions contributing specific information about their respective shale regions, said James Ladlee, who is managing the project for Penn State. “What we really want to do is bring industry, education and government together under the same roof to make sure that we offer a quality product, that it’s useful for everybody,” Mr Ladlee said.

Training will likely be led by a mix of academia and industry experts and involve a blended learning experience comprising classroom learning, online courses and field-based experience. The groups hope to launch classes by early 2013, Mr Ladlee said, adding that industry interest has been strong. “Immediately after it was announced, I had several people from industry call and say they would be interested in helping out with the project,” he said.

IADC organized a panel session devoted to the topic of license to drill at its World Drilling 2012 Conference in Barcelona, Spain, on 13-14 June, to discuss challenges related to earning the trust of the public and regulators. Speakers on the panel were (clockwise from top left) Charlie Williams, Center for Offshore Safety; Dr Brenda Kelly, IADC; David Payne, Chevron; Magne Ognedal, Petroleum Safety Authority; and Gavin Guyan, NOPSEMA.

The ultimate decision-maker: The public

Trust and reputation are two things that almost go hand-in-hand, and unfortunately, the drilling industry does not fare well with either when it comes to the general public.

A lack of transparency is often cited as a reason for the lack of trust. “In relation to our engagement with regulators, we often hear they want to see more transparency associated with how we operate – what are our standards, how do we ensure compliance against standards, what is our performance, etc,” Shell’s Mr McFadyen said. “It’s incumbent upon all industry players to get out and engage our stakeholders.”

Last year, in an effort to promote transparency, Shell issued a set of oil and gas operating principles for onshore tight sand/shale. “We shared our operating principles, and the response I’ve seen is this goes some way to meet the needs of society,” Mr McFadyen said. “But I think in the future, the demand is going to be even more transparency associated with performance.”

From a regulator’s perspective, Mr Ailio at the European Commission said the fragmented way the oil and gas industry is regulated around the world also makes transparency difficult. “This is something that makes it difficult to assess performance in many parts of the world. Even if you look at Europe as a region, there are huge differences in what you find in terms of information,” he said.

“There are virtually no global rules – the kind you can find, for example, in the maritime sector. The industry then adapts to the situation and develops their own standards, their own ways of working, and some companies have their own global corporate standard,” Mr Ailio continued. He urged industry groups to work on developing frameworks for more consistent global industry standards – for example, competence standards for key people on offshore installations and well control practices. (IADC has a project under way to develop worldwide competency guidelines for all rig-based positions. Please see p.20, July/August 2012 Drilling Contractor.)

It’s not just regulators who are urging industry to develop consistent global standards. At the IADC World Drilling 2012 Conference, Chevron’s VP of drilling and completions David Payne called for the development of global operational standards so that “we raise the bar for the entire industry.” Not only that, but once such standards are in place, industry groups should be empowered to audit their member companies against the established standards and hold them accountable for the audit results. Making use of learnings and systems from other industries, like nuclear power, could be a powerful way to enhance the way we promote higher performance in drilling, Mr Payne suggested.

This undertaking will not be easy, and industry must have patience and stay committed to any effort for change. In the nuclear power industry, for example, significant efforts for improvement were made after the 1979 Three Mile Island incident, but “it took five years before there was significant impact to how they were running their business,” Mr Payne explained. Considering the much broader scope and larger size of the drilling industry compared with nuclear power, “it’s going to require consistent leadership over a longer period of time to drive change. It would be optimistic to expect to see radical change in an industry as complex and versatile as ours,” he said.

Showing and telling

Developing global operational and auditing standards would be a step-change for the drilling industry, but just as important, industry would have to go out of its way to share those efforts with the public if the goal is rebuild trust and reputation.

“We need to be vocal about the many good things we do as an industry and tell the public about them. We tend to just be quiet and go on about our business, and let the public have their perception,” Mr Cardno said.

So much so that, over the years, it’s gotten lost amid all the negativity out there how much this industry really cares. “We care about people, we care about the environment, we want to do the right thing. Many people join our company because their core values are aligned with ours,” Ms Ray said. “People don’t really care how much you know until they know how much you care, so we have to explain that we’re here doing the right things, and we want to help.”

In August, the Offshore Energy Center (OEC) held an Earth Science Educator Conference that brought together more than 120 Houston-area teachers to showcase the energy industry. Twenty energy industry experts, including Mr Rynd with Hercules Offshore, participated in roundtable discussions. Other participating companies included Shell, ExxonMobil, ConocoPhillips, Marathon Oil and Anadarko.

Energy companies also got a chance to tell teachers about energy-related educational materials, such as the Schlumberger-published book “When I Grow Up I Want to Be an Engineer” and the OEC’s mobile offshore learning unit.

Engaging society won’t be achieved through a marketing campaign or by taking out ads in newspapers. “We need to go to the grassroots level and show people what our industry does,” Mr Rynd said.

Targeting premium opinion formers through special publics, regulators and politicians is also important. “We need to continuously look to improve process safety and go out and engage our stakeholders about what we are doing,” Mr McFadyen said. “At the end of the day, when it comes to our license to operate, society will exercise that power through social media, through local representation, or they will do it through politicians and government agents, including regulators. No question about it, they get to decide.”

By Katherine Scott, editorial coordinator

Bob Warren feels industry should promote a positive message about the business through educational outreach.

Promoting a positive message about the oil and gas industry is one of Bob Warren’s ongoing missions. The industry has to work harder to emphasize that this is a career destination with unlimited opportunities for people who are willing to work hard, said Mr Warren, president of Baclenna Inc, a Houston-based energy consulting service.

“The earlier that message becomes part of the discussion, the sooner a young person can say, ‘I could work in the energy sector,’” he continued. “At some point, all young people need to make a career decision, and they need to make an informed decision.”

Mr Warren got an early start himself, when he was 17. “I walked up on a rig in West Texas and told them I needed a job. The driller told me, ‘Get a hard hat, and get on the floor.’” The gritty smell of diesel fuel, the nonstop noise of drilling operations, and the experienced, older men from whom you learned everything – Mr Warren was hooked. “It gets in your blood. They were my heroes. It becomes part of what you are, and you don’t ever want to turn back,” he said.

After earning a bachelor’s degree in petroleum engineering from Texas Tech in 1970, he worked as a drilling engineer for Conoco before serving a tour of duty in the US Army. He then joined Pool-Intairdril in 1974 and worked through their operations in the Middle East. After rotating back to the US 14 years later, he earned an MBA at the University of Texas and joined Pride International in 1991. For the next 20 years, his roles at Pride included vice president of international operations, marketing, investor relations and industry affairs.

In 2011, Mr Warren founded Baclenna. “We exist to serve industry companies and organizations who need assistance moving some part of their presence to the next level. We can provide expertise to develop an organizational requirement, a community affairs program or an international startup,” he said.

Mr Warren says his drive to educate the younger generation comes from his respect for the industry. “This is a dynamic, multifaceted industry that requires more people who are self-starters and can think outside the box,” he said. “It attracts men and women who seek the challenges that don’t exist in other places, who are really energized by the (job) requirements, and work to higher standards because it’s the right thing to do.”

He believes more effort must be made to inform young people about industry career opportunities and encourages parents who work in the industry to reach out to their children’s schools. “Participate on some level in the education system – give talks, go to the classroom on career day,” he said.

“There are many opportunities for moms or dads to talk about their role in our business.” It encourages discussion and transparency of an industry that is too often maligned and misunderstood, he said.

Today’s young people should know, too, that the industry is a doorway to worldwide destinations. “You can work in Oklahoma or West Texas, or offshore Gulf of Mexico or Brazil. The globe is your map, and there’s not another industry like that.”

Beyond the oilfield, working in the drilling business has provided the opportunity to give back through charitable organizations and industry association work. Mr Warren is a director for the Texas Oilman’s Charity Invitational Fishing Tournament, which raises money for children’s charities, and is a director of Boys & Girls Country and Houston Achievement Place, both foster care organizations. He also serves as a director for the Offshore Energy Center and IPAA Petroleum Academy Board, both focused on energy education initiatives. “There are enormous opportunities to contribute with these and many other organizations.”

Mr Warren is a longtime participant with IADC activities, serving on the Ethics Committee since its inception in 2007 and as an OTC director on behalf of IADC from 2006 to 2011. The association presented him with an Exemplary Service Award in 2010. “IADC fosters the fellowship of this industry,” he said. “It’s essential that (IADC) continues to be represented everywhere there’s industry activity.”

Recently, Mr Warren launched a consulting project for IADC to review the association’s committee structures. He will provide recommendations concerning committee alignment with members’ critical issues. “As part of his work, Bob will interview current and past committee chairpersons and attend various committee meetings. IADC is pleased that he is working on this important project for us,” said Steve Kropla, group vice president of operations and accreditation for IADC.

Archway residents Jennifer and Caroline (back row, center) accept a donation check from NSC co-chairmen Gavin Sutherland (back row, left) of KCA DEUTAG and Darren Sutherland (back row, right) of Prospector Offshore Drilling. Archway offers care and support to people with learning disabilities.

The IADC North Sea Chapter (NSC), led by co-chairmen Gavin Sutherland, KCA DEUTAG, and Darren Sutherland, Prospector Offshore Drilling, recently donated a total of £30,500 to four charities.

Following a funds collection at the chapter’s annual safety awards ceremony on 11 May, the NSC presented £3,500 donations each to the Children’s Hospice Association Scotland (CHAS), Archway and Befriend a Child.

Each year the NSC raises funds through personal and company donations at the annual safety awards ceremony. The funds are then matched by the chapter. Over the past six years, the NSC has donated more than £100,000 to charities in the Scotland area.

Using NSC funds, the chapter also  recently donated £20,000 to the Aberdeen branch of RNLI, a charity that attends to various life-saving situations at sea.

IADC plans workshop to cover Indonesia local content requirements

IADC is planning to arrange a workshop for its drilling contractor members on understanding the procedures of goods and services procurement based on Indonesia’s amended Procurement Working Procedure Manual PTK 007/Rev.2/I/2011.

The workshop would be a one-day training session conducted by Indonesian consulting firm PT Patra Mitra Konsulindo. It would be held on 25 October at the Marina Bay Sands Expo and Convention Centre in Singapore.

A minimum of 10 participants is required for IADC to hold the workshop.

IADC held a previous workshop on the same topic in June 2011.

If there is an interest in participating or receiving more information, please contact IADC operations assistant – Asia operations Chit Hlaing at chit.hlaing@iadc.org or IADC industry affairs consultant Derek Morrow at derek.morrow@iadc.org.

IADC boosts ACD with two new hires

Two employees have joined IADC’s Accreditation and Certification Department (ACD).

Brooke Comeaux has been named competence and learning development specialist, and Alma Roberts will serve as accreditation and certification coordinator.

Ms Comeaux’s responsibilities include development and upgrades of IADC’s various training programs, new technology integration and program coordination. She is a graduate of McNeese State University, where she earned a bachelor’s degree in education. In addition, she has a Master of Education degree in technology leadership from McNeese State and a Master of Education degree from Stephen F. Austin University in education administration. Ms Comeaux has worked as a teacher and as a technology project coordinator in a local school system.

Ms Roberts will be primarily responsible for managing the IADC Rig Pass program. She attended El Camino College in Torrance, Calif., and specialized in finance and accounting. She has 18 years of banking experience, most recently as a relationship liaison at Zions Bancorporation, where she provided specialized support to more than 200 banking centers in Texas and California.

Pertgen named IADC director, offshore affairs

John Pertgen has been promoted to director – offshore regulatory and technical affairs. He joined IADC in 2006 as assistant director – offshore technical and regulatory affairs.

Mr Pertgen’s responsibilities involve identifying and responding to national technical and regulatory proposals and initiatives, serving as liaison to IADC committees, and participating in numerous industry work groups as the IADC representative. Mr Pertgen joined the offshore industry after retiring from the US Coast Guard.

AOF meeting planned for October in Singapore

IADC will hold its second Asia Operations Forum (AOF) meeting of the year on 24 October at the Marina Bay Sands Expo and Convention Centre in Singapore.

The meeting provides a forum to discuss key regional issues, as well as an update of IADC activities in the Asia Pacific region. IADC also will invite a guest speaker.

To suggest topics of interests or critical issues for discussion at the meeting, please contact IADC operations assistant – Asia operations Chit Hlaing at chit.hlaing@iadc.org.

Integrated Drilling Equipment’s Sparta Rig features a flexible modular design.

Integrated Drilling Equipment (IDE) has fulfilled its 12th contract for the Sparta Drilling System, increasing its presence in the North American shale plays.

The fast-moving Sparta rig is designed for well programs where drilling time is minimal. The flexible modular design is capable of rigging up the V-door in either the X- or Y-axis position from well to well, meeting strict US Department of Transportation load limitations.

All Sparta contracts have been for complete rig packages, designed, built and tested at IDE’s Houston facility. The Sparta drilling package includes: AC technology, cable festoon systems, alternative fuel upgrades and advanced drilling controls, with options integrated skidding systems and automation upgrades.

IDE recently acquired S&P Drives Automation Controls. Now as International Electric Company Automation and Controls (IEC), the new division will operate with support from IEC Systems – a full-service electrical design, engineering, manufacturing, supply and installation division of IDE.

Swent named Ensco executive vice president

James W. Swent III has been promoted to Ensco executive vice president, effective immediately. Mr Swent had been senior vice president – chief financial officer since 2003.

“His business acumen and financial expertise have been instrumental in our redomestication to the UK in 2009, our major acquisition in 2011 and our organic growth through new rig construction, all while maintaining a strong financial position,” Dan Rabun, chairman, president and CEO, said.

Murchison Drilling Schools hires two instructors

Murchison Drilling Schools (MDS) recently expanded its staff.

Bob Dein was hired as a lead instructor. He holds a bachelor’s in petroleum engineering from New Mexico Tech. Mr Dein spent 32 years with Chevron, where he worked as an engineer, wellsite leader and superintendent.

Bob Haagensen has been hired as an instructor. He has a master’s from Western State College. Mr Haagensen has 16 years of experience in teaching and 32 years of operational experience. Prior to joining MDS, he worked for MI Drilling Fluids.

V&M Ohio pipe plant for shale market in operation

V&M Star, a Vallourec group subsidiary, recently pierced the first shell from its new plant in Youngstown, Ohio. The new plant will produce up to 500,000 MT of seamless pipe in sizes 2 ^3/8 in. to 7 in., to serve the shale oil and gas market in North America.

GE acquires Norway-based industrial sensors supplier

GE has acquired PRESENS, a provider of pressure, temperature and flow measurement solutions. The acquisition expands GE’s portfolio of sensing solutions and will be part of the company’s Measurement & Control business within GE Oil & Gas. Headquartered in Oslo, Norway, PRESENS provides sensors specializing in high-pressure measurements and severe environments.

Armada orders 3-D seismic survey for Niobrara

Armada Oil has entered into a geophysical data acquisition agreement with Geokinetics USA to conduct a 3-D seismic survey on Armada’s strategic acreage position in the developing Niobrara oil play.

The survey will cover approximately 41.05 sq miles (26,272 acres) in and around the Laramie and Hanna Basins in Southern Wyoming. “We plan to drill two wells by year-end in the Niobrara and are eager to be working in tandem with Geokinetics to record and interpret information that will enable us to identify high-potential drill targets,” Armada CEO James Cerna said.

Halliburton opens 3 command centers, expands services

To help operators optimize completions and reduce HSE exposure, Halliburton recently opened additional remote operations command and control centers serving operations in North Dakota, the Mid-Continent region, and the south Texas and southeast Texas/Louisiana areas. These new centers join the facility already serving operations in Wyoming.

Separately, Boots & Coots, a Halliburton business line, has enhanced its pressure control offerings with the acquisition of Old School Services. The acquisition gives Halliburton the resources to provide operators with the through-tubing equipment required to resolve production challenges faced by the growing unconventionals, horizontal drilling and multistage completions markets.

PRODUCTS

Non-stop driller system maintains constant BHP

The Non-Stop Driller Continuous Circulation system can be used in conventional overbalanced drilling, extended-reach drilling and HPHT wells, among other applications.

To maintain constant bottomhole pressure (BHP) and enable continuous hole cleaning during connections, Managed Pressure Operations International has developed the Non-Stop Driller (NSD) Continuous Circulation system to prevent wellbore ballooning, stuck pipe incidents and connection gas buildup to significantly reduce NPT. The NSD is being used in operations from the US to the Middle East to Asia.

The NSD sub consists of a ball valve and custom-designed, high-pressure side-entry connection valve and can be prepared to accommodate all drilling pipe connection sizes and types.

The system can be used in a wide range of applications, including conventional overbalanced drilling, deepwater operations, extended-reach drilling of long, high-angle or horizontal sections, HPHT wells, air and foam drilling, managed pressure drilling operations and underbalanced drilling operations.

Baker Hughes expands fluids solutions

SmartCare, Baker Hughes’ line of environmentally responsible solutions, now includes drilling and completion fluids, production chemicals and additives used in cementing and stimulation operations. SmartCare products are certified to meet or exceed global regulatory requirements, as well as Baker Hughes-specific product requirements and specifications.

The products includes 106 certified solutions and an additional 68 solutions are in the process assessment phase, Harold Brannon, Baker Hughes vice president of technology – pressure pumping, said.

Further, the LATIDRILL water-based drilling fluid system, which was modified according to SmartCare guidelines, was introduced last month. The system aims to enhance wellbore quality and increase drilling efficiency in extended lateral sections in unconventional shale plays. Laboratory and field testing shows the system can improve wellbore stability by controlling the clay hydration typically associated with the use of a conventional water-based fluid.

Aquaterra Energy delivers dewatering riser system

Aquaterra Energy has completed the design, supply and installation of a platform supported dewatering riser system for a Petrofac platform in the Southern North Sea.

The Aquaterra Energy dewatering riser system comprises four flanged riser sections, complete with integral centralizer fins and landing shoulders and allows for the controlled drainage of water from the unmanned platform’s degasser unit to the sea. A cellar deck assembly was also designed and manufactured to install the riser system joints.

Advanced temperature control for washers extends usage

Sioux Corp’s SCR Advanced Temperature Control for the EN-Series All-Electric line of hot water pressure washers and steam cleaners allows for regulation of the outlet water temperature.

By minimizing extreme fluctuations, which cause expansion and contraction of the element, the SCR extends the life of the heating element by up to 20 times.

Forum offers two subsea simulation modules

Forum Energy Technologies has released the VMAX Editor 1.0 and VMAX ROV Simulator 2.5.

VMAX Editor 1.0 allows the rapid creation of offshore simulation scenarios. The simulation-editing tool provides a preview of the scenario with complex tooling interactions and allows the user to modify and place items within a scene by dragging-and-dropping. The tool provides a classic 3D-view of the project field, as well as a free camera view that allows the developer to fly around the scene and validate their designs.

VMAX ROV Simulator 2.5 is the latest version of Forum’s core simulation software.

InterMoor software shows GOM infrastructure

InterMoor, an Acteon company, has launched MoorVision, a software system that provides up-to-date photos of the infrastructure in any area in the Gulf of Mexico (GOM) using Google Earth.

The MoorVision system helps to cut time and effort required to gather information about well, pipeline and platform production data by accessing and presenting available information from the Bureau of Ocean Energy Management.

Although the sport of cricket and the drilling industry are vastly different, both fields do require individuals to be properly trained in order to perform effectively.

The world of cricket isn’t normally associated with the drilling industry, but there may be lessons from this sport to apply to well control training.

Cricket demands the mastery of skills in many different areas, just as controlling a well on a drilling rig does. In both fields, individuals need to be properly trained in order to perform effectively.

Top cricketers in the UK are developed using a five-stage training program:

• Fundamentals;
• Learn to Train;
• Train to Train;
• Train to Compete; and
• Train to Win.

During the Fundamentals stage, the ABCs are developed. These are agility, balance, coordination and speed. A variety of exercises are used to develop the ABCs, focusing on core skills instead of cricket itself. A coach will have kids chase a ball, pick it up, turn and throw it at a target to develop all four skills areas. He will introduce an element of competition into the exercises and ensure that every coaching session ends with a fun game of some kind. Variety, enjoyment and participation are key to developing the ABCs – get critical or boring at this stage and you have lost that kid forever.

The safe development of cricket-specific movements is worked on through the Learn to Train stage. Batting and bowling properly require specific techniques to be learned. During this stage, the coach will work with players to ensure they develop correct technique and that their technique will not cause them injury in the short or long term.

Once again, enjoyment and participation are key.

Throughout the Train to Train stage, there is an increased focus on technical skills, with an individual’s attitude and behavior toward the game also being addressed. The coach will work individually with them to enhance their basic technique.

In the Train to Compete stage, competitive awareness starts to come to the forefront. Players work on small variations and strategies that can make the difference between success and failure. Technique is improved through focused individual coaching sessions, and lessons are learned from previous matches played.

During the final stage – Train to Win – optimum performance is maintained and pressure is applied in the training process. By this stage, players will be playing a very high level of cricket. Coaching will be tailored to the individual, and many hours may be spent working on very detailed changes to technique.

Through the whole process, individuals have to master one stage before moving on to the next. Coaches also change the way they work with individuals from a “show and copy” style to an “explore, agree and stretch” style as players develop their abilities and understanding.

5 stages of cricket training
1: Fundamentals
2: Learn to Train
3: Train to Train
4: Train to Compete
5: Train to Win

5 stages of well control training
1: 123s
2: Introducing Well Control
3: First-line Well Control
4: Supervisory Well Control
5: Advanced Well Control

What can industry’s well control training programs take from this training approach? Cricket training takes 12 years before pressure is applied on the trainees. In many cases, well control training starts when an individual needs a certificate for his or her job and gets sent to well control school.

Perhaps a better approach would be to implement a five-stage program that takes someone “from the rig tongs to the remote choke” over a period of several years. The five stages could be:

• 123s;
• Introducing well control;
• First-line well control;
• Supervisor well control; and
• Advanced well control.

In place of the ABCs you would have the 123s, where the underpinning calculation skills could be mastered.  Calculations are the basis of key principles of well control. Individuals need to be able to manipulate numbers easily and confidently in order to understand many well control aspects.

Teaching math to adults is very different from teaching math to kids, however. You need to ensure they stay motivated and invested. To do this, the math training must relate to their world or where they are aiming to be. Make it well control-specific without being well control training. Get critical or boring at this stage and that crew member will struggle forever.

With the core calculation skills in place, the next step would be to apply these skills to understand the basics of well control. This must be done in a safe environment where the individual can concentrate on learning, not where they will feel pressured to pass a test. Develop an understanding of hydrostatic pressure concepts. Introduce the concepts of circulating pressures and formation strength. Filling out a kill sheet can be used to improve understanding of volumes and strokes, as well as the basic kill calculations. It may even be relevant to cover the basics of well kill operations and well control equipment.

An IADC Introductory Level WellCAP School, or self-study package, would be the perfect environment.

The next stage is to train drillers. At this stage, we need to further develop their understanding of well control basics, then move on to look at why kicks happen, how to prevent kicks, how to recognize kicks and what to do in the event of a kick. Kill methods need to be discussed along with the equipment available to the driller. The equipment section should cover what equipment is needed to secure a well, how the driller operates the equipment, how to know it has worked properly or when it hasn’t worked properly, and what are the next steps to secure the well. This should be done in a classroom environment, with practical elements covered on a simulator. It should also be backed up with relevant on-the-job training (OJT) in the form of regular drills and exercises at the rig site. This is where an IADC WellCAP Fundamental Level or IWCF Driller Level Well Control School should come in. Well control schools can only cover so much, and drilling contractor competency programs need to ensure they incorporate the OJT element.

By the time an employee has reached toolpusher level, the crew member needs to be trained to take control of a kill operation. Once we have confirmed the basics are understood, we need to develop a deeper understanding of managing well control from a site supervisor perspective. How do we ensure drillers know what to do and how do we check this? How do we know our equipment is fit for purpose and how to we check this? What do we do when our driller has shut the well in on a kick? How do we kill a well? How do we know when it is going well and, perhaps more importantly, how do we know when things are not going well, and what do we do if they are not?

Once again, theory, simulators and OTJ all play a part. IADC WellCAP and IWCF Supervisor Well Control Schools have their place, but company-specific competency programs must also play their part.

Once someone has mastered all of these stages – and this will take place over a period of several years throughout their career – they will be ready to be challenged in the training environment by undergoing scenario-based advanced well control where their understanding, problem-solving and decision-making skills can be put to the test.

At this stage, candidates should be challenged on the specific drilling environments in which they work. WellCAP Plus or company-specific advanced well control training is relevant. By this stage, organizations need to be speaking individually with the certifying authorities and regulators to ensure training is not only relevant but also recognized.

Well control is so important to the safety of our operations and to the image of our industry that it should be treated as more than just “tick-in-the-box” training. International cricketers are trained over a period of time, following a logical progression that allows an individual to master one set of skills before moving on to the next.

We should respect our drill crews by affording them the same set of opportunities. Firstly, ensure the basic calculation skills are in place. Then look to teaching the basics of well control. Next, send your crews to driller-level well control school followed by supervisor-level well control school. When they demonstrate competence at this level, go on to challenge them with some relevant advanced well control training.

Dan Rabun, 2012 IADC chairman, Ensco chairman, president, CEO

IADC’s key focus should be helping members improve performance. But first, we need to improve our own. Those are the conclusions of the research that IADC staff conducted during the first half of the year at the direction of the Executive Committee.

IADC has a long history of evolving and growing to support the industry’s evolution. We’ve made great strides in the past 20 years in becoming more internationally visible, offering a strong suite of conferences and producing valued resources – including this magazine. The research showed that IADC is a highly respected organization that is a source of industry expertise and tools members see as essential.

That’s the good news. The other good news – and the challenge – is that members want and expect us to do more: to provide leadership and a voice on critical issues, to recognize and serve an increasingly global and diverse membership, and to seize the initiative instead of reacting to issues.

We have started on the path to achieve these goals, and I am confident that we will be successful.

A key step in the process has been bringing Stephen Colville on board as IADC president and CEO. He brings both broad energy industry expertise and a great deal of strategic clarity to the task. It has also been great to see the high degree of input from members, as well as from operators, service and equipment providers, and other industry groups.

We identified five areas where members want IADC to support performance: attraction/retention/competency of personnel; operational integrity, including both process safety and human factors; the balance and allocation of risk between contractors and operators; ownership and reliability of critical equipment; and appropriate advocacy on legislation and regulation.

Our strategy, our “way forward,” is in the detailed planning phase now, and we will be making key decisions at the November Executive Committee meeting. But you are already seeing one forward step in the initiation of the KSA project. As we announced in June and described in the July/August issue of Drilling Contractor, the KSA project is an ambitious initiative to develop worldwide competency guidelines for virtually every rig position, building from our existing Knowledge, Skills and Abilities template. These guidelines will help members evaluate rig workers’ competency using a consistent industrywide benchmark.

As we detail and begin to implement the specific steps toward our goals, you will hear more about them, and I hope you will be part of making them happen.

The five-year vision is of an organization that is regarded by members and key stakeholders as the “go-to” organization for the drilling and completions industry, and recognized by members as having been a catalyst for improved performance of the industry as a whole, as well as companies and individuals within the industry.

We want to be able to look back five years from now and realize that we have truly contributed to resolving members’ critical issues and advocated effectively on their behalf. We also want to be seen as a truly international organization and the preeminent body for accreditation and certification in the industry.

We have set an ambitious agenda. With our strong and dedicated staff and the support and involvement of our members, IADC will successfully accomplish this agenda for the benefit of our industry and all our stakeholders. I encourage you to help us make it happen. Join a committee, share your ideas and be part of taking IADC to the next level.

During that visit, our guests sought a creative partnership with Western drilling contractors. It was a simple, if unworkable, concept. Western companies would supply the rigs. China would supply the workers. Well, there was no way that was going to work.

Since then, the Chinese oilfield has grown increasingly more sophisticated, if in fits and starts. Step two on the Chinese march toward modernization was to study technology. I organized a couple of expeditions to US rig sites, notably in the Austin Chalk, during the chalk heyday of the 1990s.

I was even invited during 1999 to visit China National Offshore Oil Corp to discuss trends in technology. (One could hear the bottoms of barrels being scraped.) IADC also organized workshops on underbalanced operations.

Having a firmer grasp on technical nuances, the next step was understanding business relationships in the capitalistic economy, which led directly to the study of contracts. The concept of agreements between privately owned entities was alien to Chinese industrialists accustomed to centrally planned markets. But they caught on quickly, rapidly expanding their geographic scope ‑ sometimes controversially.

Still, within China, drilling problems are legion, particularly hole stability and low ROPs. As recently as five years ago, I visited a working land rig that had been making hole for so long the crews had planted and groomed flower gardens around their living quarters.

CNPC is improving its performance, top officials say. “CNPC’s overall drilling speed has increased 10% per annum over the past couple of years,” CNPC vice president Liao Yongyuan told me in an interview for DC published earlier this year.

With 20 years of hindsight as a guide, it’s obvious that the global Chinese drilling business has made enormous strides. My colleagues and I in July had the opportunity to observe the China oilfield scene first hand, visiting with a host of land and offshore operators and contractors, service companies and manufacturers in Sichuan, Beijing and Tianjin.

A centerpiece of our recent trip was  the 2012 IADC/SPE Asia Pacific Drilling Technology Conference in Tianjin, which was officially supported by CNPC. One of the many papers presented is reprised in this issue. The theme of the event was “Catching the Unconventional Tide: Winning the Future Through Innovation.”

It was an apt title. Innovation is the watchword in China these days, not only in technology but in business partnerships. The Shell/CNPC joint venture to advance drilling technology for shale development is a key example.

Chinese oil companies face intense pressure to efficiently increase reserves, both domestically and internationally. As Mr Liao explained, CNPC has been working for more than a decade internationally to build its “overseas Daqing oilfield.” This is to develop international reserves equal to that of Daqing, China’s oldest field. The goal, he said, is to acquire for CNPC’s share alone 50 million tons equivalent. “That should be equivalent to the highest one-year production of Daqing during its peak time.”

We’ve seen Chinese efforts to develop oilfield equipment transform from cheap copies of Western gear to increasingly sophisticated machinery, albeit sometimes with ideas “borrowed” from the West.

Today, Sichuan-based Honghua Group is one of the world’s leading rig manufacturers. Its rig-up yard in Guanghan, Sichuan, is the largest in Asia, we learned during a tour of the sprawling complex. And it is reaping the rewards of a bustling rig market.

“The market has been very good this year,” Honghua chairman and president Zhang Mi told me. “We’ve been averaging eight rigs per month.” The yard’s capacity is half as much, officials said.

The company is introducing an ambitious, minimial-footprint shale drilling system powered not by diesel, but from the grid or from natural gas.

Even more daringly, Honghua is preparing to enter the offshore-rig building business in a huge way. A 20,000-ton crane will be the centerpiece of Honghua’s new yard near Shanghai. The crane will lift whole platforms assembled onshore.

“Ultimately this will allow us to achieve mass production of offshore rigs,” Mr Zhang said.

China’s long history is marked by reticence and isolationism. The oilfield is among those forces transforming China into a global player. The impact is reverberating for all.

Click here to view exclusive video with Honghua’s Zhang Mi and tour of its Sichuan rig-up yard.

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

IADC, BROA detail MLC implementation issues

IADC and the British Rig Owners Association (BROA) recently jointly responded to the Maritime Labour Convention (MLC), 2006. IADC and BROA, the trade association for British owned and managed rigs operating on the UK Continental Shelf, wrote in support of prior comments submitted by the UK Chamber of Shipping and addressed potential impacts of MLC ratification and implementation within the UK. The joint letter included annexes that addressed:

• Crew accommodation regulations;

• Food and catering regulations;

• Medical care regulations;

• Shipowner liability; and

• Other comments on MLC and MODU operations.

The groups’ concerns are derived from the fact that MODUs are subject not only to their flag State’s maritime regulations and maritime enforcement but also to the laws of the nation on the continental shelf of which they operate. These regulations can create conflict between requirements of local land-based regulators and those of the MLC/flag State.

IADC was among 22 organizations that wrote to US Trade Rep. Ron Kirk in June in strong support for a Trans-Pacific Partnership (TPP) agreement that would aim to liberalize cross-border trade and investment in services.

The benefits of raising the level of trade and investment in services across the Pacific has the potential to ripple through the manufacturing and agricultural sectors as well, given the “TPP includes disciplines and market-access commitments that support the services sector, building upon high standards achieved through existing bilateral and plurilateral free trade agreements (FTAs) between the US and its trading partners,” the letter stated. The services sector accounts for 70% of world economic output and 70% of employment.

The organizations suggest the TPP should address:

• High standards achieved in services, financial services, investment and intellectual property in recent FTAs;

• New and increasing challenges in the international economy, which have the potential to distort trade and investment and undermine the competitive opportunities for US enterprises;

• Express delivery services to strengthen and improve previous FTAs, maintaining standards and not diluting them;

• Cross-border information flows that do not mandate the use of local computing infrastructure and that digital products are not subject to customs duties and fees; and

• Rules to prohibit regulations requiring local content for service providers, as well as prohibit requirement that business services be provided locally.

TPP members accounted for more than $823 billion in worldwide services exports in 2010.

Petrobras confirmed in August the presence of quality oil and gas in the BM-SEAL-10 block, in ultra-deepwaters in the Sergipe-Alagoas Basin. The block is part of the SEAL-M-499 concession.

The discovery occurred during the drilling of 1-BRSA-1088-SES (1-SES-168) well, commonly known as Moita Bonita, in a water depth of 2,775 meters. Located 85 km off the coast of Aracaju, Brazil, the well is 35 km southwest of the Barra accumulation, where the 1-SES-158 well was drilled, which revealed the first meaningful gas discovery in Sergipe-Alagoas ultra-deepwaters.

Also in this basin, Petrobras completed drilling of the extension exploratory well of Barra, the 3-SES-165 (Barra 1), located 30 km off the Moita Bonita well.

Petrobras recently collected new oil samples from the Carcará prospect, on Block BM-S-8 in the ultra-deep waters of the pre-salt in the Santos Basin, which have proven a good 31° API oil quality. The well has also proven that the carbonate reservoirs carry outstanding porosity and permeability characteristics.

Petrobras has also signed contracts with Sete Brasil, Odebrecht and Etesco to charter and operate nine drillships. They are to be built in Brazil with between 55% to 65% of Brazilian goods and services content. After construction, the rigs will be chartered by Petrobras for 15 years. This is the final phase in the process for ordering a total of 21 rigs from Sete Brasil.

Delivery of the nine drillships is scheduled to commence in 2016, and they will be used mainly for drilling wells in the Santos Basin pre-salt region. The rigs will be capable of operating in water depths up to 3,000 meters and drill wells up to 10,000 meters deep.

Previously, Petrobras signed chartering and operation contracts with Sete Brasil, Queiroz Galvão, Petroserv, Odebrecht, Odfjell and Seadrill for six drillships and six semisubmersible platforms.

Keppel to build 5 more DSS 38E semis for Sete Brasil

Keppel Offshore & Marine, through its subsidiary Fernvale, has secured contracts with Sete Brasil Participações SA for the design and construction of five semisubmersibles for approximately US $4.1 billion. The semis will be based on Keppel’s DSS 38E design targeted for the deepwater “Golden Triangle” regions of Brazil, Africa and the Gulf of Mexico. Deliveries are scheduled for Q4 2016, Q3 2017, Q2 2018, Q4 2018 and Q3 2019.

Keppel O&M secured a contract in December 2011 from Sete Brasil to build one semi to the DSS 38E design, scheduled for delivery in Q4 2015.

The rigs will be chartered to Petrobras for 15 years in the pre-salt areas offshore the southeast coast of Brazil. Three rigs will be operated by Queiroz Galvão Óleo e Gás SA, two by Petroserv SA and one by Odebrecht Óleo e Gás SA.

Seadrill secures commitment for 3 ultra-deepwater units

Seadrill’s West Auriga

A major oil company has committed to contracts for Seadrill’s ultra-deepwater newbuild drillships West Auriga, West Vela and a third unit to be named later. The three-rig package involves a combined 19 rig years and a potential contract value of US$4 billion, including mobilization fees.

West Auriga and West Vela are under construction at the Samsung Heavy Industries shipyard in South Korea. The newbuilds will mobilize to the Gulf of Mexico upon delivery, which is scheduled for late February 2013 and May 2013. Each rig will be equipped with 1,250-ton load capacity, an active heave-compensated subsea construction crane and two 7-ram blowout preventers.

Statoil strikes oil, gas in North Sea, hires Maersk jackup

Statoil and its partners Petoro, Det Norske Oljeselskap and Lundin have discovered oil in the Geitungen prospect on Utsira High in the North Sea.

Exploration well 16/2-12 drilled by Diamond Offshore’s Ocean Vanguard semi has proven a 35-meter oil column in a high-quality reservoir dating from the Jurassic period. Statoil estimates the volumes in Geitungen to be between 140 million and 270 million barrels of recoverable oil equivalents.

Separately Statoil has made a significant gas and condensate discovery in the King Lear prospect in the southern part of the Norwegian North Sea, along with partner Total E&P Norge.

Exploration well 2/4-21, drilled by Maersk Drilling’s Mærsk Gallant, an ultra-harsh environment jackup, in production licenses 146 and 333, has proven a 48-meter gas/condensate column in the main bore 2/4-21 and an additional 70-meter gas/condensate column in the sidetrack 2/4-21A. Statoil estimates the total volumes in King Lear to be between 70 million and 200 million barrels of recoverable oil equivalent.

As King Lear is a high-pressure, high-temperature well, special attention is given to ensuring safe drilling operations.

Following the discovery in the King Lear Prospect, Maersk Drilling signed a contract with Statoil for the Mærsk Gallant for work in the Norwegian North Sea for two years, with an option for one additional year. The value of the firm contract is US $284 million. Commencement of operations will be in direct continuation of the present contract with ConocoPhillips, which ends in Q2 2014 or Q2 2015, depending on whether ConocoPhillips declares a one-year option.

Anadarko contracts Noble ultra-deepwater drillship for GOM

The Noble Bob Douglas

Noble Corp has entered into a three-year drilling contract with Anadarko Petroleum Corp for the Noble Bob Douglas, one of Noble’s new ultra-deepwater drillships under construction at the Hyundai Heavy Industries (HHI) shipyard in Ulsan, South Korea.

The drillship, which is being constructed on a fixed-price basis, is expected to be utilized primarily in the Gulf of Mexico. Delivery is expected in Q4 2013.

The contract is expected to commence following mobilization to an initial operating location and client acceptance. Revenues to be generated over the three-year term are expected to total approximately US$677 million.

With the award of this contract, two of the company’s four ultra-deepwater drillships under construction at HHI are under contract. The remaining two uncontracted drillships are scheduled to be delivered from the shipyard in 2014.

Eni enters Kenya with 3 exploration blocks

Eni has signed three production-sharing contracts, awarded by the government of Kenya, for the acquisition of exploration blocks L-21, L-23 and L-24, marking the company’s entry the country. The blocks are located in the deep and ultra-deepwaters of the Lamu Basin, off the coast of Kenya.

The initial exploration phase of the three blocks, which will be operated by Eni and cover an area of more than 35,000 sq km, will consist of the execution of a seismic acquisition program.

Eni’s entry into Kenya reinforces its presence in the exploration of the frontier basins of East Africa, which has recently led to the discovery of significant volumes of natural gas in the deep waters of Mozambique.

Esso Angola starts production at Kizomba Satellites Project

ExxonMobil Corp’s subsidiary, Esso Exploration Angola, recently started production from the Kizomba Satellites Phase 1 project offshore Angola.

The initial phase is expected to produce 100,000 bbls of oil per day and recover a total of approximately 250 million bbls from the Mavacola and Clochas fields, 95 miles offshore Angola in water depths of approximately 4,500 ft.

Phase 1 of the project includes 18 wells with subsea tiebacks to the existing Kizomba A and B floating, production, storage and offloading (FPSO) vessels, optimizing the capabilities of on-block facilities to increase production levels without requiring an additional FPSO vessel.

Approximately $1.5 billion has been invested in local goods and services, including contracts for fabrication, logistics support and training and development of Angolan personnel.

“Nearly 100% of the topsides and subsea equipment were fabricated in Angola,” said Stéphane de Mahieu, Esso Angola managing director.

Tullow’s Wawa-1 exploration well finds oil, gas condensate

Tullow Oil recently intersected oil and gas condensate in a Turonian turbidite channel system of the Wawa-1 exploration well in the Deepwater Tano license offshore Ghana.

Wawa-1 encountered 20 meters of gas-condensate pay and 13 meters of oil pay in turbidite sands. Samples show the oil to be good quality between 38° and 44° API. The well was drilled 10 km north of the Enyenra-3A well, testing the previously undrilled, updip portion of the license. Pressure data shows that it is a separate accumulation from the Tweneboa, Enyenra and Ntomme fields.

Atwood Oceanic’s Atwood Hunter semisubmersible drilled the Wawa-1 well to a final depth of 3,322 meters in water depths of 587 meters.

BP Egypt discovers gas in Taurt North and Seth South

BP Egypt has made gas discoveries in August in the Taurt North and Seth South in the North El Burg Offshore Concession, Nile Delta.

These are the fourth and fifth discoveries made by BP in the concession, following Satis-1 and Satis-3 Oligocene deep discoveries and Salmon-1 shallow Pleistocene discovery.

The two wells were drilled by International Egyptian Oil Company on behalf of BP, using Saipem’s Scarabeo IV rig in water depths of 110 and 78 meters, respectively. Wireline logs, fluid samples and pressure data confirmed the presence of gas.

Chevron finds gas in Greater Gorgon Area offshore Australia

Chevron’s Australian subsidiary has discovered natural gas in the Greater Gorgon Area of the Carnarvon Basin, offshore Western Australia.

The Pontus-1 exploration well encountered approximately 97 ft (30 meters) of net gas pay. The well is in the WA-37-L permit area in the Greater Gorgon Area gas fields, approximately 40 miles (65 km) northwest of Barrow Island. The well was drilled in 690 ft (210 meters) of water to a TD of 16,581 ft (5,054 meters).

“This discovery represents our 14th discovery offshore northwestern Australia since 2009 and will support potential future expansion opportunities for the Gorgon Project,” Melody Meyer, president, Chevron Asia Pacific Exploration and Production, said.

MWCC operations superintendent Chip Ledbetter provides BSEE director James A. Watson and BSEE lead inspector Kelly Bouzigard with an overview of the capping stack in Houston during pre-deployment testing prior to a containment exercise.

The US Bureau of Safety and Environmental Enforcement (BSEE) completed the first full-scale deployment of critical well control equipment over the summer to exercise the oil and gas industry’s response to a potential subsea blowout in the deepwater Gulf of Mexico (GOM). BSEE director James A. Watson confirmed that the capping stack system passed a pressurization test according to the requirements in the scenario, marking the end of the exercise.

The unannounced deployment drill, undertaken at BSEE’s direction, began 24 July to test Marine Well Containment Company’s (MWCC) capping stack system, a 30-ft tall, 100-ton piece of equipment similar to the one that stopped the flow of oil from the Macondo well in 2010. During the exercise, the capping stack was deployed from its storage location near Houston to an area in the GOM nearly 200 miles offshore. The system was lowered to a simulated wellhead on the ocean floor in nearly 7,000 ft of water, connected to the wellhead and then pressurized to 10,000 lbs/sq in.

In the Arctic, BSEE also oversaw capping stack tests. BSEE Alaska region director Mark Fesmire oversaw comprehensive testing of Shell’s proposed Arctic-ready capping stack system in Puget Sound to ensure compliance with standards established since 2010. The capping stack was deployed from the icebreaker Fennica into Puget Sound near Everett, Wash. The total exercise took approximately two hours.

During the tests in June, Shell successfully deployed the capping stack to 200 ft of water, deeper than their proposed well sites in the Arctic, and confirmed that the capping stack would function under pressures exceeding the maximum expected pressures.

Similar pressure tests will be conducted regularly in the Arctic if Shell receives permits from BSEE for exploratory drilling offshore Alaska. In late August, Shell received approval for limited preparatory activities in the Chukchi Sea, including creating a mudline cellar and drilling and setting the first two strings of casing into shallow non-oil-bearing zones.

Mapping tool for emergencies expanded to Arctic

A new federal interactive online mapping tool used by emergency responders during the Macondo incident has been expanded to include the Arctic and will help address challenges in the Arctic posed by increasing ship traffic and proposed energy development.

The US National Oceanic and Atmospheric Association (NOAA) and the Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) called the Environmental Response Management Application (ERMA) an important step forward for the Arctic region.

ERMA brings together information needed for an effective emergency response in the Arctic. The tool is equipped with near real-time oceanographic observations and weather data from NOAA and critical environmental, commercial and industrial data information from BSEE. Responders can further customize the tool with environmental, logistical and operational data, such as fishery closure areas, resources at risk maps and mariner notices, depending on the need.

AGR, Statoil to develop MPD for floating rigs

AGR and Statoil are joining to develop a new-generation managed pressure drilling (MPD) solution for floating rigs. This phase of the project is worth US $5.1 million.

The development project will build on two technologies: AGR’s EC-Drill system and Ocean Riser Systems’ Low Riser Return System (LRRS).

The EC-Drill has been used on two deepwater wells in the Gulf of Mexico since its introduction earlier this year, and a shallow-water version of EC-Drill has been used previously offshore Brazil, Egypt and in the Caspian Sea.

Baker Hughes’ AutoTrak Curve rotary steerable system.

Ocean Riser Systems and Enhanced Drilling Solutions, part of AGR, recently merged to form EDS-ORS. “EC-Drill gives our clients a far greater degree of control, enhances safety and enables them to cost-effectively hit deep targets that are simply impractical to reach with more traditional techniques,” David Hine, executive vice president at EDS-ORS, said.

Rotary steerables eliminate 2 rig days in Eagle Ford

Baker Hughes’ AutoTrak Curve rotary steerable system recently eliminated two rig days compared with average offset wells for a client in the Eagle Ford. The well consisted of vertical, curve and lateral sections exceeding 10,400 ft of total footage.

The AutoTrak Curve system allowed the client to drill out the 9 ^5/8-in. surface casing and subsequently drilled from 2,631 ft to 13,188 ft in one run for a total footage of 10,462 ft. The system drilled the vertical section of the well and was able to kick off in the correct direction, building to 88° inclination with an 8°/100-ft buildup rate. Once the curve was landed, the system drilled the entire lateral section.

The system maintained an average ROP of 90 ft/hr through all sections.

Aluminum drill pipe helps navigate complex well offshore Brunei

An iron roughneck positions a string of Alcoa Aluminum Alloy Drill Pipe (AADP) to be run. The pipe helped BSP to drill a complex well with three S curves and a long horizontal section to 7,485-meters TD in 60 meters of water offshore Brunei.

Alcoa Oil & Gas has deployed 1,800 meters (5,905 ft) of aluminum alloy drill pipe (AADP) in the Iron Duke Well C offshore Seria, Brunei. The Brunei Shell Petroleum (BSP) well is considered among the most complex and deviated in the BSP system, with three S curves and a long horizontal section of approximately 5,000 meters (3 miles). It was drilled to a total depth of 7,485 meters (4.6 miles) in about 60 meters (197 ft) of water.

“The AADP, which is produced in 30-ft (9.1-meter) aluminum tube sections and joined together using standard steel connections, is about 40% lighter than all steel pipes and has the potential to significantly reduce drill string hook load and related drilling torque and drag,” Jay Grissom, marketing director of Alcoa Oil & Gas, said.

The pipe starts with a tapered, high-strength, aluminum alloy tube that is coupled with a steel tooljoint using aproprietary thermal connection technology that allows steel tooljoints to be attached to the aluminum pipebody.  Alcoa produces the aluminum tubes at its Lafayette, Ind., facility and assembles the finished drill pipe at its facility in Houston.

The AADP starts with a high-strength aluminum alloy tube that is coupled with a steel tooljoint using a proprietary thermal connection technology.

BSP plans to use AADP on additional wells in Brunei. Shell is also planning a drilling project using AADP in New Zealand.

AMRTUR, Alcoa’s service partner in the project, led the staging, inspection, maintenance and deployment of the aluminum drill string.

RFID helps Anadarko track valves for inspection

Xerafy, together with Protech Sales, USA Corp and idsTag, have implemented an integrated RFID technology solution for valve maintenance and inspections for Anadarko Petroleum.

The Ontrase system supports valve maintenance and inspection operations at Anadarko’s oil and natural gas production locations in Brighton, Colo., and Salt Creek, Wyo.

The Ontrase system is an end-to-end valve management system including a full line of valves, installation, servicing and greasing, as well as the recording and maintaining of all the data. The system provides real-time, actionable valve history to ensure on-time maintenance and compliance verification to reduce valve costs and audit penalties and avoid shutdowns and spills.

Anadarko has deployed an integrated RFID system to support maintenance and inspection operations for thousands of valves.

Anadarko is using RFID to track thousands of valves for valve servicing and inspection. The goal is to lengthen valve life and streamline EPA and OSHA compliance.

Lifeboat with capacity for 70 people sets freefall record

Schat-Harding has set a freefall lifeboat record with its new-generation FF1200 boat. The boat was successfully dropped from a freefall height of 60 meters. The world record drop was conducted as part of the certification tests of the boat.

The boat was loaded with seven tons to simulate the full capacity of 70 people weighing 100 kg each. The engine was started immediately and was left running for four hours along with different maneuvering tests.

The FF1200 has completed the full-scale tests set by the new requirements for freefall lifeboats on the Norwegian Continental Shelf, DNV-OS-E406 standard.