September 1999 Vol. 220 No. 9  Drilling

Robert E. Snyder,  Editor

Drilling successes, causes of the oil price drop

Three drilling projects of note have been recently reported by three companies. Schlumberger has played a major role as contractor for directional drilling, MWD and LWD services in BP Amoco’s (operator) Wytch Farm extended-reach drilling project, where the world’s longest stepout has been drilled in the M-16SPZ well. The 35,196-ft (10,728-m) stepout exceeded the previous record by 469 ft (143 m). The well, which took 123 days to drill and case, reached a TD of 37,001 ft (11,278 m) MD, a world record in itself for the oil / gas industry. TVD was 5,371 ft (1,637 m).

As directional drilling and MWD contractor, the company provided Anadrill downhole tools and services, including the PowerDrive rotary steerable system and PowerPak steerable motors. Real-time information was provided by CDR tools with annulus pressure measurements, ADN tools and PowerPulse MWD telemetry systems with continuous inclination and azimuth, downhole weight-on-bit, and torque measurements.

Other Schlumberger technologies helping make this well a success were Reed-Hycalog bits, Wireline & Testing formation testers and perforating guns, Dowell acid mixing and pumping services, and REDA Production Services completion engineering services.

Offshore Abu Dhabi, Sperry Sun, a division of Halliburton Energy Services, in conjunction with Abu Dhabi National Oil Co. (ADNOC), Japan Oil Development Co. (JODCO), and Japan National Oil Corp. Technology Research Center, successfully completed a multi-lateral well with a Level-5 Technology Assessment Multi-Laterals (TAML) completion utilizing Level-4 TAML hydraulic isolation.

The lateral junction was created in 95D8-in. casing in an existing offshore well. Production tubing was run into each bore and dually completed to surface. The re-entry well was drilled offshore for the Zakum Development Co. (ZADCO) jointly owned by ADNOC and JODCO.

Five primary objectives were identified: 1) re-establish water-free oil production with a horizontal lateral in an optimum position; 2) utilize an existing wellbore to conserve platform slots; 3) establish ability to effectively stimulate and monitor each reservoir through final completing; 4) ensure selective production / re-entry capability; and 5) provide for selective water shut off in each lateral, if required.

The multi-lateral application was a first step in evaluating methods to increase recovery from ZADCO’s offshore reserves. Sperry-Sun used its RDS, RMLS and MSCS systems, as well as its directional drilling and MWD/LWD services in the project.

And in the Norwegian North Sea, Saipem’s Scarabeo 5 semisubmersible successfully completed drilling operations of the Gjallar Ridge well, in the Voring Plateau, in water depths of 1,351 m (4,431 ft). Operations were conducted in the DP mode. The revised final TD of 4,097 m (13,438 ft) was reached in 35 days.

The vessel is equipped with two fully-independent DP, power-generation and thruster systems, as well as three position-keeping reference systems, allowing the rig to maintain its position and operate safely — considering the possibility of failure of one of the mentioned systems — with wind forces up to 32 mps and currents of 1 mps. The logistic challenges of these operations, on a drill site located 400 km (250 mi) from shore, were eased by the variable deckload capacity of 4,300 mt.

Drilling data handbook updated. The 7th edition of Editions Technip’s concise "Drilling data handbook" was recently published. IADC says the handbook is the first with both metric and U.S. units, and it is fully updated to reflect changes to API specs, equipment advances and achievements in extended reach, coiled tubing, bits, etc.

The 552-page reference contains tables and information on tubulars and equipment data, pressure / well control and other drilling-related operations. The handbook can be ordered through IADC, Houston, tel: 281 578 7171, ext. 215. Cost is U.S. $89 for members, $115 list.

Market factors behind 1998 oil price fall. The Petroleum Industry Research Foundation, Inc. (PIRINC) has published an informative, 11-page review of the cause of the 1998 oil price collapse, which says market factors, not price "dumping" caused the problem. The report says that several separate events, with virtually a once in "never" chance of occurring simultaneously, happened in 1998. And this was on top of the fact that the general climate existing in late fourth quarter of 1997 called for substantial and continuing growth in world petroleum demand.

PIRINC’s six separate events — many interconnected and nearly all unexpected — which drove down oil prices are:

1. The financial crisis and recession in Asia
2. OPEC’s decision to raise production by 700,000 bopd in response to late-1997 indications that more output was needed to meet demand growth
3. Unusually warm weather through the 1997–1998 winter in North America, Europe and Asia
4. The Russian bond default which cut internal demand and increased its 1998 exports
5. The decision by China to cut imports in fourth quarter 1998, and
6. Sustained large increase in U.S.-authorized Iraqi exports in 1998, into 1999.

The second part of the report concludes that, if the petition by the domestic producers on dumping were successful and large punitive tariffs were assessed on crude imports from the four countries — Iraq, Mexico, Saudi Arabia and Venezuela — there would be little impact on domestic crude prices since there are sufficient international supply alternatives.

Other negative effects, include losses for U.S. refiners, increased product imports and higher average transportation costs of imports, as Venezuela and Mexico divert their crude elsewhere. In broader policy implications, restricting imports from three of the countries, excepting Iraq, would disrupt major efforts to build stable long-term relationships with the U.S. In effect, the actions would rupture ties with our two largest, short-haul sources of oil and with Saudi Arabia, the world’s most important source of current and future oil exports. PIRINC can be contacted at tel: 212 686 6470, fax: 212 686 6558.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company