1999 Vol. 220 No. 1
|J. John Grow,
Super-majors result from oil price crunch
Remember reading about John D. Rockefellers Standard Oil, the giant oil trust broken
up by the 1890 Sherman Antitrust Act? Todays $850-billion integrated petroleum
industry was commanded by Standards 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
wont 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 companys 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
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 EEXs 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. Globals 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
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1999 Gulf Publishing Company