Drilling developments

Jan. 2002 Vol. 223 No. 1  Drilling Developments

Robert E. Snyder,  Editor

Deepwater activity. As noted in the November 26, Gulf of Mexico Newsletter, the U.S. Minerals Management Service reports that Gulf of Mexico deepwater drilling is moving at a quick pace. According to MMS, a total 277 deepwater wells, of which 149 were exploratory, were spudded in the U.S. GOM during fiscal year 2001, which ended September 30.

During the previous year, 226 deepwater wells were drilled, of which 108 were exploratory. The numbers of wells drilled during 2001 and 2000 represent sharp up-ticks in deepwater drilling activity, as the total number of deepwater wells drilled in 1998 and 1999 were 179 and 150, respectively.

201 probe exempts drill pipe. In this column in November, we reported on the International Trade Commission’s request from President Bush to institute a "Section 201" investigation of the effect of steel imports on the U.S. steel industry. This could affect the availability of drill pipe to U.S. contractors due to a cut in raw materials, such as green drill pipe and tool joints, which are obtained from outside the country.

IADC notes in its November Drill Bits that the ITC ruled in favor of drilling contractors in the Section 201 steel investigation, thus excluding most drill pipe components from trade penalties. IADC and Grant Prideco are continuing work to have tool joints excluded. Grant Prideco reports that it was clear at the hearing that tool joints were not an issue, but they were included in the flanges and fittings classification.

Exemptions for tool joints will likely be achieved during the "remedy phase" of the investigation. Contact IADC’s Brian Petty at (202) 293-0670; brian.petty@iadc.org, for information.

Lease sale 182 proposal. The same issue of the Gulf of Mexico Newsletter noted above reported that the MMS has issued the Proposed Notice of Sale 182, covering offshore oil / gas leases in the Central Region of the Gulf of Mexico. The sale will contain several measures designed to increase domestic production. These incentives include deep-gas provisions for shallow-water leases, wherein the first 20 Bcf from a well drilled below 15,000 ft, in water depths less than 656 ft, will be subject to royalty suspension. In waters from 1,312 – 2,620 ft, the first 5 MMboe will be subject to deepwater royalty relief.

The MMS is continuing the previous deepwater royalty relief program, in which leases between 2,624-ft and 5,245-ft water depths, and those in greater than 5,248-ft waters, will be exempt from royalties on the first 9 MMboe, and 12 MMboe, respectively.

The proposed sale encompasses some 4,407 blocks. The area covers about 23.28 million acres, and ranges in water depth from 13 ft to more than 11,234 ft. MMS estimates that the sale area contains 150 – 440 MMbo and 1.53 – 4.39 Tcf gas.

Canadian coal-bed methane (CBM) program. PanCanadian Energy and MGV Energy, the Canadian subsidiary of Quicksilver Resources, announced that their CBM joint venture will be expanding into a large geographic area outside the southern-Alberta Palliser block, concentrating on additional coal-bed formations. The program outside the Palliser block comprises 25 exploration wells, to have been completed by year-end, with 12 to be drilled by end of first-quarter 2002.

These 25 wells are part of the previously announced 50-well exploration program planned for the JV. The partners have also drilled 24 of a planned 75 pilot wells within the Palliser block. These are being drilled to further delineate reservoir continuity of initial exploration wells. The remaining 51 pilot wells scheduled in the Palliser block should be drilled by first-quarter 2002.

With completion of this planned schedule, the JV should have a total 112 exploratory and pilot CBM wells drilled by the end of first-quarter 2002, 100 in the Palliser block and 12 outside. The JV’s capital program was previously increased to C$30 million, from C$15 million, in anticipation of this accelerated drilling schedule.

MGV Energy said its drilling in the Palliser block is the largest CBM exploration and pilot in Canadian history. The encouraging exploration results there have prompted it to accelerate its schedule and expand its exploration activity to other areas of Alberta.

Environmentally safe drill wastes. A Calgary-based waste handling / disposal company has solved the environmental problems of oil exploration by creating a complete detoxification system that converts harmful drilling waste into biodegradable, environmentally friendly matter. The bio-treatment process, recently designed and patented worldwide by Unique Oilfield Technology Services (UNOTEC) is already being used by operators such as BP Canada and Anderson Exploration, and is promising to "change the face of the energy sector by making oil exploration as environmentally friendly as possible."

UNOTEC’s announcement comes as the Alberta oil / gas industry approaches its busy winter season, a time which invariably brings protests from environmental groups. But UNOTEC says its system is just a start to bridging the gap between oil companies and the environmental movement. "It will allow Alberta and other regions highly dependent on oil / gas revenues to continue to operate, while minimizing harmful effects to the Earth," the company notes.

The detoxification process begins with replacement of traditional drilling fluids containing high levels of salt with a far less environmentally damaging oil-based, salt-free fluid. The company then uses specially designed tanks to extract and contain the harmful drilling waste, where it can be treated with predetermined amounts of canola meal and sawdust. These break down harmful hydrocarbons present in the oily drilling waste before it begins to biodegrade itself – leaving in its place a totally organic and environmentally friendly matter – safe enough to fertilize a lawn, the developer claims.

UNOTEC has researched the system for some four years and conducted 10 separate studies, independently and in conjunction with the University of Alberta, to ensure that it works in all kinds of conditions. The studies have shown that not only is the process successful in preventing contaminated waste from entering the ground, it is also effective in cleaning up already contaminated drill sites.