UPSTREAM DRILLING FRONTIERS

WORLD WIDE DRILLING OVERVIEW

If all the upstream drilling & production innovations of the last decade were added up, they would perhaps match NASA’s space program or the Industrial Revolution. As oil and gas gets more difficult to find and costlier to develop, in the aging giant fields; the sure shot prospects in hostile environments (arctic areas) ultra-deep waters are getting drilling preference. This is despite the associated operational challenges (CBM, UCG, Shale Gas, BCG, EOR).

The industry’s move towards deep and ultra-deep water exploration over the last 10 years has led to the innovation of the floating drilling Vessels with many newer breakthroughs like Dynamic Geostationary Positioning, Drilling Risers and Flex Joints, Subsea & Subsurface Safety Valves and Safe Disconnecting Mechanism of floating vessel from the well in the case of a blowout.

The development of leaner, lighter drilling equipment; Robotics Based Drilling Efficiencies (MWD; LWD) hold the key to these operational challenges. In order to raise drilling efficiencies, major oil companies such as Mobil, Shell, BP, Conoco Phillips have been deploying integrated drilling tools in their E&P projects, thereby enabling smoother, faster & more efficient drilling operations.

Towards this end a Norway based company has innovated a Robotic based automatic drilling gear system for unmanned upstream drilling operations. The new device known as Robotic Drilling System (RDS) establishes new working criteria with other automated drilling-centric interventions and operations coupled with improved safety systems with increased drilling costs.

When we take a look at the global drilling outlook, the various industry analytical reports suggest that the global E&P spending will touch a record US$700 billion across the world (6.1% more than in 2013). North

America is expected to hit the spend growth by more than 7%, while the international markets (especially the Middle East, LATAM and Russia) are expected to see a continued spend growth rate of over 6%.

The overall spending mix is partially shifting from large infrastructure projects to well drilling and completion activities in the declining major fields, in order to meet the expected O&G consumption growth requirements and better revenue generation. About 83,000 development wells (onshore-80,000, off-shore-3,000) would be needed to be drilled and completed for meeting the production requirements. With an optimum 17% surge in consumption demand of oil and gas by 2020, at least 35% uptake in well completions would be required by 2020 (67,000 additional wells drilling and completion by 2020). With the completion of offshore platform development in the recent off shore discoveries, the offshore oil and gas production is set to increase by 22% up till 2020.

NEW DRILLING TECHNOLOGIES & VECTORS

In order to drill many wells from single locations especially in offshore drilling rigs with multilateral and extended reach technologies have delivered good efficiencies by drilling faster and farther in multiple directions. The recent innovation of Polycrystalline Diamond Drilling Bits (PCD) have increased drilling speed even in much harder sediments and in granitic basements. Horizontal drilling technologies (with reach of as far as 12 kms) and Staged Hydro-fracturing Technologies have revolutionized Shale gas, Tight gas, and even the conventional well completion industry in North America, Norway, and the UK.

The enabling of Digital Sensor Innovations for collating real time well data on the derrick (MWD), Automated Geosteering, and LWD Technologies have shortened the drilling span significantly. The Managed Pressure Drilling (MPD) technologies have revolutionized the high pressure regime & under-balanced mud drilling done in onshore and offshore exploratory wells. The innovative Robotic Drilling Technology being developed in Norway is likely to find many takers in remote terrains and ultra deep waters in the near future.

Intelligent drilling operations: Digital Remote Monitoring, virtual technologies and process control technologies in respect of data collation and sharing, smart collaboration, and tele-interventions will play dominant roles in efficient and cost effective drilling services. These smart technologies would significantly help in exploitation scenario building, extending field life, predict failures through real-time monitoring, as well as prevent down-time and potential operational disasters through proactive equipment and BOP maintenance. Application of Smart Fluids, Bio-microbes, Nanotechnologies, Improved Sensors, Time Elapsed Seismic etc. holds great promise in the field of Light Fraction Break-down, Corrosion Resistance, Precision Flow. These measures can leverage enhanced Oil Recoveries by around 2% and in many heavy oil regimes by more than 5%.

Ultra deep offshore areas: Many promising innovations in MWD, MPD, Bore Hole Imaging, and sampling while drilling have revolutionized operational efficiencies in the ultra-deep water drilling and well completions. Another emerging and path-breaking technology in the recent years has been the application of Radio Frequency Identification Chips (RFID). This revolutionary innovation finds its application in the entire drilling and production value chain. Each tagged element of the Drill String or Drill Bit, joint or associated valves could be fully tracked in terms of its entire service life, including information’s like Down-hole Operating Time, Pressure, Temperature and Corrosion Exposure Span along with Shop Maintenance Tracking.

RFID chips have been developed to determine fluid interfaces and opening or closing of smart valves as well. In fact, each and every component of the drilling value chain including all sensors and valves can be tagged and monitored to the desired extent by this path-breaking upstream technology.

Robotics Submarine Technologies and equipment is now lending huge support in visual communication, retrieval and other underwater operations in deep waters.

CHALLENGES SPECIFIC TO EXPLORATORY DRILLING:

As the easy-to-access O&G reserves are depleting very fast, more wells will need to be drilled every year for less and less production per well. The oil & gas industry will need to drill 6,70,000 wells through 2020 to meet the global consumption demand growth of 17%. Traditionally giant fields are seeing a global production decline. Apart from designing the redevelopment plans for the matured oil fields, the planning of infill exploratory wells in alignment with the field’s structural trend would be required in a big way to accrete add on production within the giant field peripherals.

Simultaneously, drilling and completion operations in newer plays like Shale Gas, Tight Reservoirs (HPHT) & CBM would need to be escalated along the giant field structural trends. Exploratory well drilling in offshore shallow waters and the productive deep waters should contribute 22% globally by 2020 in order to offset the matured field production decline. All these opportunities are expected to provide a surge of deep water well drilling and completion reaching 476 by 2018; up from 185 in 2013. In order to seek long-term growth, North America, China, Russia, and Saudi Arabia would continue to be major players in exploratory drilling. Brazil, Angola, and Nigeria will soon join these deep water driven players. In Asia pacific, the deep water expenditure is all set to double by the turn of 2017 to offset the shrinking production and demand surge globally.

The biggest challenge lies in drilling deep exploratory wells under abnormally high pressure conditions in remote locations and in ultra-deep water found in Conventional ultra-deep and HPHT plays. Newer Generation Seismic Innovations (Controlled Source Electromagnetics (CSEM); AVO’s for fluid lithology studies, Neural Network Inversion (NNI) using artificially intelligent algorithms) are now capable of delineating high pressure zones prior to drilling. These identified zones with predicted pressure and temperature anomalies are brought into GTO frame for lithology, casing, cementation and mud policy understanding & formulations in the wells. The recent MPD technologies & tools have made necessary ‘during drilling’ interventions easier, while drilling abnormal pressure well conditions. As a result, blow out numbers have gone down significantly in exploratory wells all over the world.

The subsurface geology modeling and future field development are greatly aided by geological, reservoir and petro physical information and insights generated by new generation well logging tools like-High Resolution Array Induction (HRAI); Nuclear magnetic resonance (NMR), Dipole Array Sonic ; Reservoir Description Tool (RDT ) .

CHALLENGES SPECIFIC TO DEVELOPMENT DRILLING AND PRODUCTION

On a global basis, much of the drilling is attributed to the continued growth in the North American Market, which accounted for 62% of the worldwide development of wells’ drilling & completions in 2013. The Global Production Decline in mature O&G fields is driving Hydrocarbon search in far remote and ultra-deep offshore areas. Surge in the global Hydrocarbon consumption demand (>17%) is also driving the massive increase in a number of development wells and completions every year.

In 2014 about 80,000 development wells are required in onshore and 3,000 wells in offshore areas. Drilling of annual onshore wells (dominantly development wells) set to increase to 35% by the turn of 2020. North America, Middle East, China and Russia would stand to be the major contributors apart from contributions by LATAM, Norway & UK. Such a scenario throws up a big challenge as well as an opportunity for development drilling operators and the associated service segment.

OPPORTUNITY, CHALLENGES AND NEW TECHNOLOGIES FOR SUPPORT SERVICES IN DRILLING

E&P technology has grown by leaps and bounds with reference to the development of intelligent core E&P activities and facilities for speedier development of well drilling and completions. The next technology wave would be driven by Nanotechnology-based Oil field services. Seismic, logging, MWD, LWD, intelligent field monitoring requires Nano-material technologies for lighter drilling tools, drilling materials, well heads and bottom hole sensors. To have integrated and efficient drilling completion and production operations many technology solutions have entered the market for their deployment by O&G services providers. Some of the newer technology solutions (driven by challenges) in drilling, well completions, reservoir management & production life cycle are included in annexure- 1.

Digital Technologies: These integrated technologies have enabled new modes of E&P operations. Monitoring of drilling and production operations in remote areas is extremely complex, and access to experts has been extremely painful in the past because of location and communication constraints. However, high-speed data links to operating bases, combined with real time data sharing and video-enabled tele-interventions and visualizations, have enabled the operating base to become a virtual extension of the on field control room (with ready access to remote experts around the world).

In recent years, the use of RFID technologies carrying programmed commands for sensors and smart valve operations monitoring in the field, have provided further ammunition. The digital field project implemented in North Sea by British Petroleum in its major oil field and by Chevron in Tengiz (Kazakhstan) was completed in 2010. The mercury Project provided improvements in drilling efficiency, collaborative monitoring and production enhancements. Other benefits accrued included performance improvement due to remote expertise, process monitoring in real time, provision of remote support during operational emergencies, technical support enhancement, remote monitoring of project efficiency, monitoring equipment condition, improvement in the preventive maintenance efficiency.

Three similar DOF deployments have been done in the Gulf of Mexico and two in the North Sea are in progress. Globally DOF market stands close to US$25 billion till 2024, as per the recent estimates.

FUTURE TRENDS FORECAST:

Techno Commercial

The aforementioned technology options shall witness path-breaking trends in drilling ecosystem where ‘techno-commercial dashboards’, ‘remote and virtual control of operations’ will bring this activity almost online. All these interactive tools are likely to directly affect the ‘business and data intelligence’ scenario, it’s security, Farm- in and out enterprise value equations and opportunity funding among competing ventures of operators under strain.

The industry would predominantly focus on onshore drilling i.e. infill development and exploratory wells within existing major fields (around 90%) in order to meet the annual production deficits caused by aging fields and annual increase in demand. The remaining 10% drilling activities would cover the offshore exploratory & development wells along with unconventionals.

Massive development drilling (35% growth every year) should match the production decline in giant fields as well as compensate the ever increasing global O&G consumption growth (17% global demand growth every year).

Innovations in Designing of automated drilling systems: Geological/well-modeling and production data sensors in Robotic drilling and initial production testing systems to cater to the ultra-deep and unconventionals requirement for integrated work flows and analysis.

StatOil, Norway is carrying out a pilot in this direction including integration with RFID technologies.

Abnormally High Pressure Conditions: encountered in BCG on shore and offshore exploratory wells drilling and production testing operations. Further innovations in MPD tools (including BOP’s & Christmas tree) in terms of advance alarm systems and auto hole plugging is anticipated.
Micro & Nanotechnologies: contributed significantly in Electronics, Biomedical Materials & Manufacturing, Aerospace, photography so far. Have path breaking potential to produce much lighter, leaner tools and devices with a massive cost advantage and ease of operability; for the entire upstream drilling industry segment as follows:
Nano-sensors and micro-sensors should enable providing more detailed and accurate reservoir parameters and behavior.
Specially designed Nano-particles could provide scale inhibition in Drilling operations
Structural Nano-materials would help developing lighter, leaner, robust and more durable and smarter tools, sensors, micro-sensors and components for logging, seismic, drilling, reservoir and production verticals, thereby enabling cost effective, integrated and intelligent drilling / E&P operations
Nano-membranes & materials once commercialized would provide smart fluids for drilling & EOR’s
Unconventional Plays: The key trends include modifications in geo-steering , fit-for-purpose flexible rigs with lesser footprints, and high order mud-handling and drilling capabilities; higher volume multistage fracturing along with three-dimensional fracture treatment simulators and micro seismic technologies. Hydro fracturing in unconventional gas plays provides an estimated 10% to 20% add on recovery factor. Another innovative idea is to focus the “shattering” fracture process allowing the rock matrix than on creating planar flow paths. This could greatly boost the Shale gas recovery factors in the near future.

“Green” operations and environment: E&P operators have to increasingly develop newer ways of

curtailing the environmental footprint. The key focal segments to include the use of chemicals and additives in drilling mud, cement, and hydraulic fracturing water; produced water recycling; emissions and flaring; and noise pollution.

In addition, the use of solar and wind energy for steam and power applications is getting good attention. The need to remove pollutants could help the commercialization of more futuristic ideas like laser drilling.

Resulting Manpower, and Infrastructure challenges:
The significant E&P upsurge in the remote, ultra-deep, unconventional and existing hydrocarbon regimes would require tremendous infrastructural development (power, roads, rail heads, water, telecom, offshore platforms, subsea pipe line network & cabling etc.) and transportation up scaling support (pipelines, sea port,) with an expected average growth rate of 15-20 % per annum in Upstream infrastructure till 2030.
The expansion in E&P activities and resulting infrastructure and transport upscaling would significantly drive the requirement of vast pool of fresh and experienced manpower in these segments (E&P drilling, infrastructure and transport segments). This would require many more upstream Universities to cater to this vast O&G manpower requirement (Expected to be three times i.e. by 2030, in India alone).

In India alone, there would be a requirement of five Upstream Universities with the expert manpower requirement growth rate of 10% per annum till 2030 (40,000 per annum) and semi-skilled manpower requirement of about 1,60,000 per annum.

The E&P industries would also need to upscale their talent skilling/development programs, in all the E&P verticals in a big way to match the E&P technology explosion and tremendous expansion in Exploratory & Development Drilling projects & programs as discussed above.

With an expected E&P spending of US$ 700 billion in the year 2014, the global talent up-skilling market would be around US$21 billion on a conservative basis (3% of total global E&P spending).

ANNEXURE- 1 Recent E&P Technology Breakthroughs.

Well intervention tools – The Pulsonic TFA (Tuned Frequency and Amplitude) is the 3rdgeneration efficient tool for vertical horizontal and highly deviated bore holes, designed to stimulate the reservoirs for maximizing oil and gas production.

Reliable and faster drilling innovations (mega force TM) – key technology innovations in cutting structures, matrix materials, force balancing hydraulic and shank lengths deliver more than 20% improvement in drilling penetration rates- so crucial in drilling deeper and longer well bores especially in unconventional plays.
High pressure pumping solutions (Dura last TM, fluid end technology launched recently) is engineered to provide high pressure penetrations in Shale oil and gas drilling operations
Innovative Sub-sea processing systems – The technologies recently introduced in Total’s Pallor oil field and Petrobras Marlin field. The system will produce two grades of oil (light and heavy) simultaneously.

Another subsea processing system in Marlin field brings out first use case in the oil industry to separate heavy oil and water. The Marlin assembly also ensures the back use of separated water to boost heavy oil productions

Comprehensive reservoir modeling software (jewel suit 2012) – one of the latest innovations in reservoir modeling for potential sweet spot evaluation/analyzing thousands of wells at a time. It also provides a complete reservoir workflow for unconventional resources/plays
The rig-less intervention systems (Mastiff TM) – this offshore innovation eliminates the need for costly offshore rigs deployments during work over and abandonment and drive pipe pre-installation operations.
Remote drilling advisory service (well link-radar) – innovative service for drilling engineers. Identifies potential drilling issues before they occur at drill sites utilizing real time usage of global library of similar drilling scenarios/practices and provides expert advice beforehand for necessary interventions. It is an integrated solution that uses case-based reasoning and event detection.
Dual gradient drilling technology (DGD) in challenging deep water applications. The DGD technology significantly lessens the water column overburden impact in deep water drilling regimes and enables to reach the reservoirs that were inaccessible using conventional single gradient drilling
Renewed BOP (blowout preventers) stacking solutions-This system enables the rig with two BOPs greatly enhancing operators flexibility and high safety cushion with the option of having a fleets spare that can interface with other systems in case of blow outs.