Nov. 2000 Vol. 221 No. 11  Drilling

Robert E. Snyder,  Editor

IADC annual meeting; deepwater spill behavior

At the 2000 IADC Annual Meeting in late September, Reed-Hycalog’s President, John Deane, presented the 2000 Reed-Hycalog Rig Census, which was published in World Oil’s October issue. He said, depending on perspective, it’s mostly good news with some bad news. Rig activity is up, as is utilization, and rig rates are up and continue to improve. The bad news portion would be if you are looking for a rig – there aren’t many left in the fleet. Since the survey for the report was conducted during the May – June period, Deane had a few "update" opinions.

For example, today, U.S. fleet utilization would probably be close to a "healthy" 80%, up from the reported 74.3%. And he was a little more optimistic on the published 2001 forecast, noting that, "Active rigs as we measure them will be up 20% next year, or roughly 1,450 rigs – with prices at or near the contractors’ consensus of $27 oil and $3.50 gas." And with availability remaining relatively unchanged at "around 1,600," utilization rates will be "dangerously" close to 90% – the healthiest rate we have seen in many years.

Deane’s presentation was followed by three commentaries by: Randall Kubota, Int’l. Drilling Mgr., Texaco Worldwide E&P; James Linn, Exec. VP & COO, Parker Drilling; and John O’Leary, VP Worldwide Marketing, Pride International.

Kubota lamented the lack of a workable U.S. energy policy, noting that the one in effect now is, "Every American has two cars and wants to fill them for less than $20." Big oil, he says, is consolidating to combat under-performing stocks and poor ROCE (return on capital employed). This and downsizing will continue, he says, noting Marathon’s recent announcement of a major personnel cut and internal office consolidation – all in the face of $30 oil and $5 gas.

He says a prime issue for drilling contractors is safety, noting that IADC statistics show "international" outperforming the U.S. He pointed out four example deepwater rig downtimes ranging from 47% to 10%, and said this is unacceptable.

Parker’s Linn said HSE (health, safety, environment) is a top priority and many are involved in this global drilling safety leadership program. He cited the Internet and its capabilities as a major technology advance. About the Census’ ranking of important issues – which are: crew availability, rig rates, availability of parts, drill pipe replacement and aging rig equipment – Linn agreed that labor and aging equipment are major concerns. He says more newbuilds are on the way.

Pride’s O’Leary says commodity prices are the driver since 60% of the energy market is oil and gas. He agrees that consolidation is the trend, for capital return. And the prime targets for capital are megaprojects, with smaller oil companies’ activities as niche markets. The trend is to reduce in-house staff, and e-commerce will be a big player. Procurement of rigs over the Internet will increase operator awareness of contractors. Issues concerning contractors are: consolidations, newbuilds, people and a return to land business.

He sees 45 offshore contractors reduced to 17 by 2004. Age of jackups will be critical by then. The semi market is largest in the North Sea, and newbuilds will be for deep water, not 2nd- and 3rd-generation units. He predicts an 8 to 12-rig shortfall in deepwater rigs within a short time.

Deepwater oil spill behavior. Clarkson University (Potsdam, New York) Civil / Environmental Engineering Professor Poojitha D. Yapa is leading a team of academic researchers in developing a computer model which predicts the behavior of oil and gas in the event of a spill from a deepwater well. In such a spill, with low temperatures and high pressure, the gas forms a slushy mixture of solidified gas and water known as hydrate. The hydrates are buoyant and float toward surface with the oil.

As the pressure is reduced, the mixture returns to gaseous form, which may dissolve in the water; or it could come to surface and pose a hazard due to its toxicity and flammability. The computer model will predict how the oil / gas will behave. When data about a spill is entered into the model, the program will predict whether gases will come to surface, where the oil / gas will surface, and in what concentrations.

In 1998, the MMS and several industry groups formed the Deep Spills Task Force (DSTF). Using the competitive MMS research proposal solicitation process, DSTF selected a proposal from a team headed by Yapa. The current project will develop a deepwater oil and gas plume dynamics model to simulate the transport of oil and gas released from deep water.

Oil companies developed realistic scenarios for the researchers’ use. Several oil companies provided oil samples. In addition, Chevron is leading a JIP known as Project DeepSpill, which, in June, conducted a controlled, experimental release of oil / gas in deep water off the coast of Norway. Dr. Yapa and his team were involved in design of the experiment. Another model was developed recently by Sintef, a Norwegian group that participated in Project DeepSpill.

For more information, contact Anne M. Sibley, director of Public Relations, Tel: 1 315 268 3873, Email: Sibleyam@clarkson.edu.

Environmental regulatory newsletter. The Gas Technology Institute (GTI) – which now comprises the combined Institute of Gas Technology and the Gas Research Institute (GRI) – has introduced a new monthly online newsletter designed to keep the U.S. natural gas industry up to date on environmental and safety legislation and regulations. Environmental Reg UPDATE assembles, in one source, the latest developments in regulations, court decisions and legislative trends concerning the gas industry.

The report is designed to save time for companies trying to stay current on increasingly stringent national environmental and safety regulations, and state policies that vary across the country. It only presents information relevant to the gas industry. A new edition of UPDATE appears on the GTI website each month at: www.gastechnology.org/pub/news/envregupdate. Past issues are also archived on the site. GTI says the newsletter currently is free, but a subscription fee will be charged in the future.