May 2000 Vol. 221 No. 5  Drilling

Robert E. Snyder,  Editor

People shortage, horizontal drilling play, new drillship

HADCO International’s Oilfield Appraiser offers some comments on its recent survey for the top five concerns of its readers and clients for drilling in 2000. The first concern is a shortage of trained people, as you probably know by now. "With few exceptions, this was the top concern for every drilling or well service company in the U.S.," the report says. In continuing comments, it notes that, at this time, drilling / service contractors are approaching maximum rig utilization based on the availability of trained (or trainable) people.

The massive layoffs of late 1998 and early 1999 had a definite impact on the current labor availability. What if the government decided to offer attractive incentives to produce more oil? Could the U.S. put enough rigs in the field to produce at least half of our internal needs? Domestic oil fields are past the point of ever being able to supply even half our daily consumption. Add the problem of people, and we are probably operating at near maximum utilization now, the survey report speculates.

This concern was expressed in several ways by those responding to the survey. The message was that there is not a rig shortage but a serious "people problem" – again. Finding and keeping good people is easily the greatest concern in 2000; and contractors are concerned with both short-term and long-term implications.

In communications with numerous drilling / service contractors concerning possible solutions, most said they have no good plans other than try to hire and train more people. One contractor told the Appraiser that half of his applicants failed the drug test and half of the ones hired lasted less than two weeks. Some positive actions being taken include: increasing pay and training, providing steady work schedules, and better bonus, insurance, retirement and overtime packages.

Beyond the people problem, the remaining top five concerns for 2000 are: low rig rates and dayrates; cost of rig components; cost of drill pipe and collars; and stability of higher oil / gas prices.

Top U.S. driller increases activity. Before the announcement about Anadarko buying Union Pacific Resources Group, Inc., UPR described an aggressive domestic drilling program it has underway. The company has been the No. 1 domestic driller for the past seven years.

Three previously announced E&D programs in the U.S. onshore and Canada’s British Columbia are continuing, with encouraging results. UPR has 25 rigs now running in the U.S., compared to 11 at this time last year and 17 at the end of 1999. Drilling in Canada has also picked up, with 11 rigs running now, compared to 13 in March 1999 and four at year-end. The company has budgeted $750 million for capital spending in 2000, which includes $100 million for potential property purchases.

The overpressured Frontier play in Wyoming’s Green River basin has drawn considerable industry interest because of its enormous potential. The play is proving to be typical of deep horizontal exploration programs, UPR says, in that the four wells drilled into the Frontier formation in its brief history have delivered "mixed" results.

"We have learned, over more than a dozen years of horizontal drilling, that success requires patience," CEO George Lindahl III said. "We know from experience with the Austin Chalk that there is a steep learning curve to these plays. They are complex and it takes time to understand them. UPR and other operators will be drilling additional Frontier wells in 2000 to learn more about the play. The reservoir is extensive – over 160,000 acres, and the target is enormous – several trillion net cubic feet of potential gas," he added.

Two wells in South Louisiana’s Etouffee discovery, located in Terrebone Parish, about 15 miles SE of Morgan City, should have been producing 50 MMcfd by April 1. And in British Columbia, a second Klua well – the follow-up to the successful Klua D-27-J drilled in northern British Columbia – is now being completed, and a third well is being drilled. UPR says its rig count should continue to increase during the year. "Development drilling is one of our strengths and we are hard at it onshore North America, in the Gulf of Mexico and in Latin America," Lindahl said.

New drillship delivered. In mid-March, Global Marine Inc. took delivery of the Glomar C.R. Luigs ultra-deepwater drillship. The state-of-the-art DP drillship was constructed at the Harland and Wolff shipyard in Belfast, Northern Ireland. Designed for an ultimate drilling capability of 35,000-ft wells in water depths up to l2,000 ft, the vessel is initially outfitted for water as deep as 9,000 ft.

The ship completed sea trials in the North Sea and moved to the Gulf of Mexico for final commissioning. Global’s CEO Bob Rose said, "Sea trials went very well. Designed by a talented team of Global Marine engineers, she incorporates the best technology available." The 759-ft vessel is under contract for 36 months and began drilling in mid-April for BHP Petroleum in the Gulf.

Global will now turn its full attention to completion of the Glomar Jack Ryan, a sister vessel also being constructed in Northern Ireland. It was 77% complete in March and is expected to be delivered and begin a three-year contract for ExxonMobil in third-quarter 2000. The combined net cost of the two new drillships is estimated at $730 million. They are the culmination of a $1.7-billion investment program which began in 1996, to expand the company’s deepwater fleet.

Correction. In the March issue of World Oil, within the article "What’s new in artificial lift," page 72, Flexbar, Inc.’s swivel sucker rod coupling was erroneously labeled in the copy and the illustration. The off-center deflection for the tool is 3°, not 3 in., as shown. Also, the name Swivelbar is not now associated with the two swivel and rigid couplings discussed.