Critical issues in drilling & completions with Bojan Milković, CEO, INA Industrija
By Linda Hsieh, managing editor
What were INA’s main focus areas for drilling in 2010, and what will be your main focus areas for 2011?
In the first half of 2010, we focused on completing the North Adriatic project, where we are exploiting gas fields with a total of 19 gas-producing platforms. Then we focused on onshore exploration and field development in Syria, where we drilled four wells and completed our gas treatment plant, currently in test run. We’re also drilling in Egypt, where we have five concession areas, one of which is in the exploration phase. We have to drill at least one more well there.
We’ve also once again taken up our onshore exploration in Croatia, which had been somewhat neglected in past years, except one joint exploration project with MOL Group on the country border. We drilled one new exploration well in 2010 and tested it successfully. It will probably be completed for production in 2011. This success has encouraged us, and we will drill three additional exploration wells.
In terms of technology, what are the most critical issues you are facing?
We’ve had some tough times drilling in Syria, primarily with cementing. We have difficulties in reservoirs near salt layers. Sometimes they’re thicker and sometimes they’re shallower, but definitely they’re the trickiest part of the whole drilling process. If we don’t provide it well, we can get stuck there and lose the well. We’ve been facing this problem since we started operations in Syria in 1998; we’ve drilled more than 35 wells there.
We are now using enhanced casing liner hanger systems to help with that. It’s something new in Syria. At the moment, we are running this rather successfully. Of course, it’s still a threat, but we are handling it well.
We will also start horizontal and directional drilling in Syria this year. We are facing some problems with low permeability in this block. In the future we will probably consider fracturing technologies. But for sure in 2011 we’re going to drill one horizontal well on the new block and we’ll try to bring in all the new technologies of directional drilling available.
Has INA explored the potential for unconventional gas drilling?
The range of services available to decrease the cost of the well in Croatia is not as broad as in the United States.
Also, the unconventional reservoirs we found in Croatia are located at depths of more than 12,000 feet, which is much more complex, such as HPHT, than what we have with 3,000 feet or 4,000 feet.
INA operates within the MOL Group, and at the moment we are focused on the Derecske Basin in Hungary, where MOL is drilling one tight-gas well. Our experts are there as well. We’ll see how this project will be finalized. We’re also looking at other potential basins. After that, we’ll have more information to enable us to really go further with unconventional projects.
But, at the moment, we are considering. If unconventionals open up, it should be opened up with Hungary, or maybe Austria, where they’ve been drilling one well in the Vienna Basin targeting unconventional reservoirs.
But we would definitely need to bring in companies for technologies like fracturing, and they will certainly not come just for one well. We’re looking at our neighbors to see what’s going to happen. We need to reach a critical mass so we can go forward with a successful campaign. Of course, we are looking at Poland at the moment. Probably half of Europe is looking at Poland to see how successful their wells will be.
We know very well that unconventional gas has really changed the whole gas market in the United States. If unconventional reservoirs turn out to be good in the future, then yes, they can change the picture in Europe.
The people problem is one that industry continues to face. How should this critical issue be approached and how is INA approaching it?
Firstly, we are a cyclical industry, and that’s our problem. Secondly, we are a mature industry. Thirdly, we are not as attractive an industry as before. Everybody wants to go into IT, nobody wants to go into the oil business where the risk is higher even though the return might be better. That’s a fact. We started to bring fresh blood in after we realized the lack of young talents in 2006, 2007. But then this economic crisis came in 2009, 2010. That was an additional blow to our industry.
I’m quite sure that it will be a challenge to bring young people into the industry, but we have to do it. We have to make this business more attractive. The young people are a little bit different than the older ones. They want to stay home, they don’t want to go out and work in remote areas.
I think one important thing we have to do to attract people is education. That’s why in 2006 we helped with establishing a secondary school in Croatia for people for the oil industry. The aim was to get some new recruits carrying basic knowledge about the oil industry. We had this school 10 years ago, but at the time there were no jobs for them. In 2005, we realized we had to do something. We need students coming out that will support the Croatian oil industry. So we started the school again in 2006.
Of course, we are trying to promote energy, to promote our achievements in environmental standards to the public. We are trying our best. We have to really try to convince the people that everyone’s highly dependent on energy. You can’t choose whether you want energy or you do not want energy. It is a necessity.
The drilling industry has made great strides in the last decade to improve safety. How should we approach further improvements?
You can never be happy or satisfied with the level of your safety in the company. Worldwide safety standards are getting higher and higher every year, and, very importantly, our equipment is safe as well. Any budget problems you may be facing at the moment cannot in any way be an excuse not to fulfill safety standards. Having zero LTI is what we’re fighting for.
But of course, everything depends on people. Without people, you cannot do anything. People should be skilled, people should be aware, people should be trained. The philosophy of safety is something that should be introduced into every oil company in the world. The oil industry should be leading all other industries in safety.
How does rig automation fit into your view of today’s industry challenges?
Mechanization of rigs will definitely happen in the future. But I can tell you, from our perspective, from what we do in Croatia, how we work, the number of wells we drill per year, at the moment we do not see any huge benefit from investing in automatic rigs. We do not see any big cost benefit having them here. We would like to rely more on reliable equipment and skilled personnel.