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May/June

Drilling to the Limit—the ghost of Hyman G. Rickover

The new normal of lower oil prices has led to a simple conclusion—drilling costs must be lowered in order for many projects to be economic. It is not enough to slash big-ticket expenses like cement, mud, and casing, which often lead to potential problems, now and in the future. Operational expenses must be systematically lowered and become much more predictable and repeatable. This requires an approach not dissimilar from LEAN methodologies which are widely used in other industries.

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People, Companies & Products

Schlumberger has closed its merger with Cameron. As previously announced, each Cameron stockholder is entitled to receive 0.716 shares of Schlumberger common stock and $14.44 in cash, in exchange for each Cameron share. Schlumberger has issued approximately 138 million shares pursuant to the merger. As a result, former Cameron stockholders own approximately 10% of Schlumberger’s outstanding shares of common stock.

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Mexico’s CNH looks to flexibility, transparency ahead of deepwater auction planned for December

Low oil prices will not derail the Mexican government’s plans to hold its deepwater auction on 5 December, said Juan Carlos Zepeda Molina, President Commissioner for the National Hydrocarbon Commission (CNH). Ten deepwater blocks in the Mexican Gulf of Mexico will be on offer. “The government is going to carry out these biddings regardless of the oil price movements. That’s what a reliable and predictable government does,” Mr Zepeda said during a visit to IADC’s Houston headquarters on 9 March. “It’s up to the industry to decide whether it’s in their interest to invest in these blocks. It is not on the regulators to decide when to open or close the market,” he added.

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Horizontal drilling optimization, high build rates lead to ‘mile-a-day’ record wells in Marcellus Shale

For CONSOL Energy and Baker Hughes, two recent “mile-a-day” wells in the Marcellus Shale were the results of a team approach to horizontal drilling optimization. The wells not only substantially reduced drilling time but also stayed 100% in the target zone despite a challenging physical location. This multi-well pad extended under the Pittsburgh International Airport in Allegheny County, Pennsylvania. It was one of the first in the area to be drilled using a high-buildup-rate rotary steerable system (HBRSS).

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Study looks at emissions, economic characteristics of dual-fuel, high-horsepower engine used in hydraulic fracturing application

As the reality of America’s natural gas age comes into view, more of the equipment used to produce that gas will also be powered by it. As a cleaner fuel, natural gas offers the promise of reducing emissions, site footprint and cost. Natural gas is displacing diesel fuel in reciprocating engines and firing turbines, providing power for upstream development. The potential for gas fuel to power drilling and hydraulic fracturing brings with it a number of technical and operational challenges.

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Drilling to the limit: Operators Group for Data Quality aims to create common specifications

The new normal of lower oil prices has led to a simple conclusion – drilling costs must be lowered in order for many projects to be economic. It is not enough to slash costs through supplier price reductions; operational costs must be systematically lowered and become much more predictable and repeatable. Many have spent considerable time and energy pursuing analysis and improvement, under the assumption that the measurements being used are sufficient. However, recent evidence demonstrates the majority of data provided by drilling and completions systems is neither complete nor of sufficient quality for these purposes.

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GOM future unclear in face of Well Control Rule, falling rig count

Operators seeking to reduce their capital and operating expenditures in the face of sustained low oil prices are facing difficult choices. When it comes to either greenlighting or scrapping drilling projects – particularly those in the prolific but expensive Gulf of Mexico (GOM) Lower Tertiary – many are choosing deferment or cancellation. In its Q4 2015 earnings call, held on 29 January, Chevron announced that it was canceling the Buckskin-Moccasin deepwater project, citing difficult economic conditions. Anadarko is also delaying final investment decisions on its Yeti and Shenandoah prospects, located in Walker Ridge and Middle Miocene areas. The company had drilled appraisal wells for both projects in 2015.

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Wirelines

OSHA announced on 24 March a final rule to improve protections for workers exposed to respirable silica dust. OSHA estimates that when the final rule becomes fully effective, it will save more than 600 lives annually and prevent more than 900 new cases of silicosis each year.

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