Professional Documents
Culture Documents
Major Components
The well planning process requires the coordinated effort of many individuals
with various responsibilities. The well planning process flow chart (Figure 1,
Figure 1
Figure 2 ,
Figure 2
Figure 3 ,
Figure 3
Figure 4 ,
Figure 4
Figure 5 ,
Figure 5
Figure 6
Figure 7
Drilling Engineer;
Production Engineer;
Reservoir Engineer;
Drilling Manager;
Drilling Superintendent;
Drilling Supervisor;
Logistics Coordinator;
Loss Prevention and Safety Specialist;
Environmental and Regulatory Specialist;
Purchasing Specialist.
Geophysicist
The geophysicists role is to identify potential hydrocarbon-bearing structures
from seismic data. Responsibilities include:
processing and interpreting seismic data to identify potential reservoir
structures;
assisting in prospect evaluation, based on structure size and seismic
reflection interpretation;
reporting formation thickness, structure tops, and bed orientation to
engineers preparing the drilling program;
identifying critical anomalies that indicate potential drilling difficulties
( e.g. shallow gas hazards, bedded salt, abnormal pressures, and fault
crossings ); estimating depths for these anomalies;
assisting in development of a logging program;
working with operations personnel to select a rig location;
specifying velocity survey and checkshot intervals.
The geophysicists goals are to:
identify substantial hydrocarbon-bearing structures
interpret seismic data to help the drilling engineers anticipate potential
problems
Geologist
reviewing ( with regard to safety ) the layout of mud pits, choke and
blooey lines, high-pressure hoses and lines, BOP control panel location,
etc.;
reviewing the contractor's plans with regard to rig electrical safety
prior to spud to ensure compliance with applicable laws and standards;
reviewing all piping diagrams and equipment specifications for rig fire
protection;
reviewing material safety data bulletins (or equivalent) for all
chemicals to be used on the rig; and ensuring that (if acids and/or
caustics are to be used) an adequate clear water source is provided for
eyewash/emergency showers;
identifying specific hazards, and specifying personal protective
equipment to be provided (e.g., breathing apparatus in a potential H2S
atmosphere; survival suits in cold environments);
reviewing all contingency plans,
shutdown systems;
station bills,
and emergency
The environmental and regulatory advisor identifies, gathers, and submits the
necessary permits and reports required by state and/or federal agencies for
approval of a permit to drill the subject well. The responsibilities include
reviewing stipulations of lease sale and permit agreements and
preparing copies of these stipulations for drilling engineers and
operations personnel;
gather information from exploration and engineering groups for
preparation of the exploration plan (if necessary) and the application for
permit-to-drill documentation;
coordinating externally prepared documents such as the Rig Discharge
(NPDES) permit, the Environmental Report, the Oil Spill Containment
Plan, the Environmental Training Report, and the Hazard and Biological
Survey;
providing the drilling engineer with a timetable of permit application
and approval.
The goals of the environmental and regulatory advisor include:
providing support for timely preparation of required pre-spud permits
and reports;
assisting the drilling engineers and operations personnel in
identifying and complying with stipulations of lease and permit
agreements.
Purchasing/Materials Coordinator
The purchasing/materials coordinator's primary role during the planning stages
of a well is to give functional guidance with regard to obtaining critical
materials. Primary responsibilities include:
supplying drilling engineers with information regarding availability,
sourcing, lead time, and pricing of materials required for the well;
serving as a liaison between E&P groups to facilitate inventory and
stock sharing during material shortages;
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The relative importance of well cost to overall exploration and production costs
merits some discussion. Entering into a lease or drilling agreement may require
commitment of tens if not hundreds of millions of dollars. Discoveries in
remote areas could require additional hundreds of millions of dollars for
establishment of a platform, a gathering facility, or a pipeline to get the fluids
to market. How then should the cost of drilling the well, which may only total a
few million dollars, be weighed against these other huge sums of money? How
important is it to get the well cost estimates within 10% or even 25% of the
final well cost?
One answer (if not the answer) is that regardless of an estimates accuracy, a
well-cost commitment represents a real out-of-pocket expenditure. It depletes
the available budget regardless of immediate outcome. A cost estimate that is
too high could negate the chances for approval of a viable project. An
excessively high well-cost estimate could require additional partners to absorb
a portion of the risk at the cost of decreasing the operator's share of the
potential profit. A high well-cost estimate that is approved does, in fact,
withdraw available funds from other possible projects as well. The primary
danger of a low well-cost estimate is that an investment may be made into a
project that would not otherwise be undertaken, again misdirecting resources
from other worthwhile projects. Cost overruns, whether due to poor estimates,
poor performance, or unanticipated problems, could deplete available
resources at the expense of projects not yet begun.
The need for accurate well-cost estimates is critical for budgetary planning.
Exploration personnel may be frustrated when their efforts in developing a
prospect are defeated by pessimistic well-cost estimates prepared by the
drilling engineers. The only solution addressing both of these situations is to
improve the working communication of the team members involved in a well
program, and improve both the cost-estimation process and the preparation of
drilling programs.
Prospect Selection
Production Wells
Production wells are usually identified by the need to maintain or increase
production from an existing field. Also in this category are the secondaryrecovery, water- or gas-injection, workover, and recompletion efforts that team
preparing the well program for these wells usually includes the drilling
Exploration Wells
Exploration wells usually require a great deal of geological and geophysical
data gathering, processing, and evaluation. Detailed offset well data often is
unavailable. The search for exploration well prospects can include the following
general activities.
Topology Study Surface geological structures that indicate the tectonic or
depositional activity necessary for formation of potential hydrocarbon-bearing
reservoirs must be identified. These structures include:
anticlines;
fault traps;
salt domes;
reef carbonates;
sand-body lenses;
Unconformities.
a trapping mechanism that has allowed formation fluids to accumulate but not
allowed them to dissipate into other formations.
Although interpretation of seismic data is the job of the geophysicist, the
drilling engineers preparing the well plans often can benefit from studying the
seismic maps. Shallow seismic or shallow "bright spots" on normal seismic
could represent a shallow gas hazard. Other features could indicate formation
type, abnormal pressures, faults, steep formation dips, caprocks, etc.
Surface Geology Study: In addition to the large-scale photographic studies of
an area, local geological study can play an important role in identifying an
exploration prospect. Local surface indications, such as oil or gas seepage, may
identify a prospect. In cases where photographic study of topography gives
broad indications of potential, local surface geology study contributes to the
body of knowledge available by identifying possible lithology sequences.
Surface outcrops of formations that should be penetrated as the well is drilled
can give clues about rock characteristics such as porosity, composition, and
density.
Actual drilling prospects will be selected by management after evaluation of
profit potential. This simplified description of prospect identification is intended
to give some background on the data generated by the geosciences group in
the development of a well prospect.
Reservoir Potential Evaluation
The estimated reserves of the reservoir must be weighed against the estimated
cost to produce those reserves. The calculated rate of return and degree of
confidence in these estimated figures determine the economic viability of
drilling the reservoir.
One critical feature of reserve estimation is the quality of available control
data. Production fields have good control by way of section cores, sidewall
cores, logs, and production tests. Production wells intended for optimum
depletion of the reservoir can be targeted to specified sections and depths of
the structure with confidence of expected production.
Exploration wells must rely on offset well information for reservoir
characteristics that might be similar to those of the structure in question.
Basically, the reservoir engineer must take the structure data from the
geologists and geophysicists and prepare a reserve estimate based on
assumed values for porosity, permeability, and volume of the structure
containing hydrocarbons. Reservoir estimates are prepared by varying these
Prospect Acquisition
The drilling engineer coordinating the well plan usually is not involved in the
prospect acquisition process. It is essential that commitments be made clear, in
writing, at the initial planning meeting by someone knowledgeable of the
agreements. The drilling engineer should follow up on this aspect of well
planning in the event that these commitments are not identified at the initial
planning meeting. Compliance with the stipulations in these agreements in
regard to program review, data copies, etc. are the responsibility of the project
coordinator.
Acquisition of rights to drill a property follow no specific formula. Methods
include:
bidding on leases open to all comers;
individual arrangements made with private property owners;
oint venture agreement to share in a new or existing operation;
arm-in agreements with existing lease holders;
rading of properties for cash, other properties, share of potential
reserves, etc.;
outright purchase of property, including mineral rights.
As signified by the dotted line on the well planning process flow chart (Figure
1), the timing or position of the prospect acquisition in regard to the other
sections could be variable.
Figure 1
Agreements with private property owners may involve any or all of the
following:
Location Selection
Location Selection is an event rather than a task. The prospective well is given
a designation and a specific location at this time. Management has accepted
the objectives and projected rate of return at the initial estimated gross costs.
The next step involves preparing an official request for funds to drill the well.
AUTHORIZATION FOR EXPENDITURE (APE) PREPARATION
Introduction
AFE preparation requires a thorough geological and geophysical report, a cost
estimate for drilling and completing the well, and an economic analysis of the
proposal. The primary topics of cost-estimate preparation include:
The quality of cost estimates and subsequent well plans can be improved if the
following basic ideas are applied:
The supporting data must be as complete and accurate as possible, and
must be available when it is needed;
The work effort must be organized for optimum efficiency;
Available technology must be used to its full advantage.
These ideas should be used to make the most of the limited time available in
preparing an abbreviated well plan and calculating estimated expenditures.
Geological Input
The geologists' clearly established and communicated objectives for the well
can assist the drilling engineer in preparing the AFE cost estimate. Well Cost
Request Forms should summarize the available geological data and specify
expected coring, testing, and logging intervals. In addition to well identification
and surface location, the following subsurface features and well planning
requirements could assist the drilling engineer in his preparation of the well
plan:
Lithology data
Prognosis of stratigraphic column with formation names and
type of formation rock
Expected formation tops
Expected formation dip ranges
Abnormal pressure
Sour or acid gases
Plastic salt beds
Geothermal intervals
Sloughing shales
Other
the estimated number of days, and the day rate, for operation;
the type of completion (single, double, commingled, etc.);
the tubing design (size, grade, connections, etc.);
the expected method of stimulation (acidizing, fracturing, etc.);
the formation consolidation (gravel packing) requirements;
the need for remedial cementing for zonal isolation;
tangible well costs for tubulars, equipment, and the wellhead;
As with drilling costs, completion costs are usually estimated without the
benefit of a comprehensive design. The actual completion program should be
tailored to respond to the information gathered during drilling, testing, and
logging.
Production engineers designing a wildcat testing and completion program must
decide whether the well is to be made into a production well if a discovery is
made. If so, plans must be made and costs estimated for the completion
equipment, tubing, and wellhead. Quite often, an adequate design cannot be
made until formation pressures, fluids, production rates, stimulation
requirements, and other variables are evaluated. In these cases, the wildcat
well is often designed as a testing conduit only, intended to evaluate the
prospect and be abandoned.
If the wildcat has a substantial likelihood of success, and the formation
characteristics are predicted with confidence, the wildcat may be planned like a
production well.
In production wells, the production engineers have access to the reservoir data
necessary to plan future completion programs. In wildcat applications, they
need to have data from the geologist to plan the evaluation program. They in
turn must provide the drilling engineers with information that affects the
drilling design. Specifically, the drilling engineers require tentative plans
concerning:
Drilling Considerations
Drilling engineers often must provide an AFE well-cost estimate without having
the time to prepare a complete well plan. The request for the cost estimate is
Cost Estimates
Preparation of well-cost estimates requires research of offset well performance
to review the problems encountered, the materials used, and the effectiveness
of the well programs (mud, cementing, casing, etc.) attempted. Insufficient
offset data will necessitate heavy reliance on assumptions made from the
geological prognosis, which also suffers from the lack of support data.
Offset data sources include:
commercial well data services that can supply drilling curves, bit records, casing
setting depths, and mud type used; major hole problems are also listed;
service companies (mud, cementing, bit), which can provide cost information and
general history for wells they serviced in the area;
in-house well histories for wells drilled in the area.
Once the general sources of information are researched, preliminary decisions are made
by the drilling engineers regarding casing setting depths, tentative mud program, tangible
equipment requirements, and expected drilling time. The next step is to begin listing the
tangible and intangible cost items and assigning estimated costs to these.
There are two techniques that can assist in estimating costs once the
preliminary design decisions are made. Both require substantial detail on the
AFE cost listing. The basic reason for providing greater detail is that individual
activities can be considered separately, which is more accurate than relying on
"contingency" percentages or padded estimates to cover unestimated but
anticipated well costs. The two techniques involve the use of graphs or
computers to select the cost-per-well section for each of the major items. As
long as the data generating the curve or the computer data input relate to well
sections similar to that anticipated on the planned well, an average
performance can be generated.
A system of coding items in the AFE and coding invoices to fit these categories
is necessary to begin saving this data for in-house wells. Once implemented,
this can also provide easy access to information concerning specific operation
performance, problems, and services. The wells must also be categorized
according to depth and type of well. Another potential benefit of this approach
to cost estimating is that if engineers prepare the curves, review the data, and
establish the comparison sections, a technician or clerk may be able to read off
the curves or computer listings and do some of the manual data manipulation,
allowing the engineers to review the generated costs and spend more time on
the actual design of the program.
AFE Approval
Management approval of a project's AFE represents approval of the stated
objectives and the cost to meet those objectives. Major changes to the project
after the AFE has been approved may seriously affect the chances of meeting
the new objectives with the allocated funds. Serious changes, such as a deeper
total depth, additional testing or coring, or target relocation requiring serious
directional control, should be documented and explained, as later AFE
supplements to the original approved cost allowance may need to be justified.
After an AFE has been approved, the project takes on a new perspective. The
change in status is marked by a change in project coordinator. The exploration
or production geologists or engineers who defined the prospect, documented
its potential worth, and prepared a package for management approval must
turn the project over to the drilling engineers for preparation of a drilling plan.