January 1999 Vol. 220 No. 1  Drilling

J. John Grow,  Engineering Editor

Super-majors result from oil price crunch

Remember reading about John D. Rockefeller’s Standard Oil, the giant oil trust broken up by the 1890 Sherman Antitrust Act? Today’s $850-billion integrated petroleum industry was commanded by Standard’s former subsidiaries, including Exxon, Mobil, Chevron and Amoco.

British Petroleum (BP) joined ranks of the super-majors when it merged with Amoco, and now Exxon and Mobil are reuniting.

Companies are merging to compete in a tougher business environment. There are about 20 major U.S. oil producers and refiners, and about 40 major worldwide petroleum companies, with hundreds of small, independent E&P firms.

Oil prices have dropped to 1986 levels after two years of rising inventory and a general worldwide economic slowdown. OPEC, led by Saudi Arabia, has cut production, but other top oil-producing countries such as Venezuela and Mexico — both with weakened economies — won’t curtail production further. Meanwhile, domestic and foreign oil companies are slowing their push into promising new territories, including Alaska, the North Sea, Russia and South America.

This column addresses some recent mega-merger results, a system which attempts to optimize drill bit selection and a recent deepwater drilling commitment.

Some Amoco/BP merger results. Amoco is consolidating its U.S. E&P management offices to Houston for reduced costs and increased competitiveness. About 660 E&P management, technical and administrative jobs in Denver and New Orleans are affected. Although many jobs are to be relocated to Houston, there will be jobs eliminated as well. Consolidation does not affect field production offices in either Colorado or Louisiana or petroleum products marketing operations.

Employees who relocate from Denver or New Orleans will have offices on the west side of Houston at the company’s West Lake complex. The complex currently houses about 3,000 Amoco employees responsible for managing and supporting worldwide E&P activities, including other domestic O&G-producing business units.

Drill bit optimization system. An analysis method brings together a collection of drill bit application methods to determine optimum cutting structure and other bit design features including hydraulic requirements and gauge protection in both roller-cone and fixed-cutter drill bits. The system is not intended to prove or disprove any particular drilling technology over another. It is an analysis of the most effective / minimum cost-per-foot drilling tool option.

In well planning, standard practice for drill bit selection involves pulling bit records from offset wells, observing bit types used and penetration rates achieved, and planning on-location days around those ROPs. Unfortunately, bit records rarely contain formation data and can propagate erroneous bit choice conclusions. Drill bit optimization system (DBOS) analysis attempts to get behind the offset bit record to determine formation characteristics for more effective rock failing. The system pulls together offset well data from various sources — including wireline logs [GR, DT (delta time), Npor (neutron porosity), RhoB (bulk density)], mud logs, bit records, formation tops, directional surveys, well locations and RKB elevations from one or more offset wells — to thoroughly characterize drilling applications.

Once available data is loaded, bit selector models evaluate case-by-case arguments for gauge protection, hydraulic nozzle configurations, IADC bit class for both milled tooth and tungsten carbide insert (TCI) roller cone bits. Similarly — for fixed-cutter polycrystalline diamond compact (man-made diamond) (PDC) bits — abrasion, impact resistance, gauge protection, hydraulic architecture (fishtail, medium, shallow junk slots), optimal cutter size (ranging from 3/4-in. PDC to natural diamond impregnated), cutter density and bit profile are determined. These methods converge to final bit recommendations for the most cost-effective bit program.

Once the well is completed, the "as applied, as run" bit performance for bit-design improvement is feedback to design engineering and completes the cyclic loop of continual improvement for subsequent wells.

Analysis can be applied to optimize a drill bit program for a single well, based on the nearest offset well, or can be applied across a field, where data from multiple wells is used to evaluate variations.

DBOS trademarked by Smith International originating in early 1990, focused primarily on PDC and diamond bit applications. In 1992, the system incorporated roller cone bits, under-reaming and hole opening applications.

GOM deepwater, "turning to the right." Semisubmersibles are to be used in EEX’s drilling program. A definitive contract has been signed under which Global Marine will provide an offshore drilling rig to EEX for deepwater GOM operations. The contract is expected to produce about $144 million in revenue over its three-year term.

Global has a worldwide fleet of 31 mobile offshore rigs. Over the past three years, its deepwater fleet has increased to eight rigs from three. The company has extended water-depth capabilities of two deepwater rigs and begun construction of two additional ultra-deepwater drillships. Global’s deepwater drilling contracts and commitments for future work worldwide now total about 22 rig-years and $1.2 billion in revenues.

Glomar Arctic I, currently outfitted for drilling HTHP wells in water depths to 2,800 ft, will be upgraded to 3,400-ft capability. Upgrading will not require shipyard work, and operations for EEX should begin upon completion of current contract commitments in mid-1999. EEX can extend the contract by as much as two years after the initial three-year contract term. EEX activities are currently focused in Texas, the Gulf of Mexico and Indonesia.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company