Drilling Procedures

Before Drilling

Before you can begin drilling for hydrocarbons, there are a couple of issues that need to be resolved. For example, where will the drill rig be placed? On whose land? Do you have permission? Do you own the mineral rights to remove the hydrocarbons once they are discovered? Have you obtained the proper permits from a myriad of governmental agencies? How do you know that oil and gas are present beneath the drill rig? There are a number of considerations before the drill rig begins operations. These activities generally fall into the broad categories of mapping, leasing, and permitting.

Mapping

Mapping deals with land surface determinations and measurements. It is the methodology by which we describe where things are located. In a world where individual property ownership is practiced, such a description has legal application. A legal description for a parcel of land is analogous to what a street number and street name, city, state, and zip code are to a mail carrier. The legal description gives surveyors and property owners a mechanism by which to precisely locate tracts of real estate. It also allows property to be transferred, leased, and mortgaged.

The concept is simple, but most people do not understand what the system is or how it works. But it is utilized to establish well locations, to determine land ownership, to assign mineral rights, and to accurately plot property lines and boundaries. Drill rigs are very large pieces of equipment. When combined with the support equipment, supplies, work force, and access roads, the total area needed for a drilling operation can easily exceed 40 acres in size.

An accurate surface map also facilitates determining land ownership above the hydrocarbons and who owns the minerals beneath the surface; seldom are the mineral and surface owners the same. Drilling and production companies must know ownership before they can proceed with their plans. Permission to conduct operations must be obtained from both parties. This job is usually that of a Landman, a person whose job it is to seek out the owners of both estates and negotiate leases and contract with them on behalf of the production company for the right to drill and withdraw the hydrocarbons.

Leases

Surface owners can not prohibit the exploration of minerals owned by another party. For example: if you own the surface, but someone else owns the minerals, you CAN NOT stop a well from being drilled on your property. Payments are made to the property owner for user privileges, loss of crops by the property owner, use of water, rights of way for roads and pipelines, and for damages to the land and surrounding property. Production companies may also be required to install (at their cost) cattle guards, fences, and other specified items.

Mineral ownership refers to the owner of the minerals at depth. Mineral ownership has become very complex over the years. For example: if you sell land, you may retain ownership of the minerals beneath it. Or you as the original land owner may have sold a portion of the mineral rights to someone or given some to heirs who may have split up their interest, and retained a portion for them self. It can get very complicated with a large group of people owning a small fraction of the original 100%. Transfers of mineral ownership are accomplished by a legal instrument called a mineral deed.

A mineral lease is a legal document; it conveys to the lessee from the mineral owner who is called the lessor, the right to drill for and produce hydrocarbons. Leases are written to cover a specific period of time called the primary term and is a time frame agreed upon by both parties, but is generally for a period of years such as 1, 2, or 3. Upon signing the lease, the mineral owner grants the production company certain rights. The owner of the mineral rights, by signing the lease, can receive: a bonus payment, agreed upon, for signing the lease; delay rentals if drilling is delayed or the well is shut-in for any length of time; and royalties which are expressed as a fraction of total production. Royalties are negotiable, but generally fall between 1/8 and 1/4.

The landman's role to the process is critical. This person is the field agent that locates mineral owners, verifies their ownership (through a legal description), and negotiates the terms of the lease. Landmen may be women, they are generally independent business people representing an unnamed third party, or they may work for the drilling company. Their success often rests with their personal image strategy and on their ability to relate to a variety of people. Landmen use their ability to get the best deal for themselves and the company they represent. There are no laws limiting the amount of royalties. One eighth(1/8) was common for years, but now one-fifth (1/5) is more common. A mineral owner may reject the first offer in order to buy time to determine what other mineral owners in the region have received.

Most mineral leases start out pretty standard. They generally begin as a preprinted, fill-in-the-blank form, but many complex add-ons (such as fencing requirements, roadway locations, material criteria, time-of-year drilling based on hunting restrictions, etc.) find their way into the agreement. There are many types of leases, each designed for a different purpose. It is always wise to have an attorney skilled in petroleum leases to review any legal documents before they are signed.

Permits

Each state and country has a regulatory body that oversees petroleum operations. The regulatory body requires a number of permits for such things as drilling on public land, off shore (within the three-mile limit), and along the coastline. In Texas, the governmental agency responsible is the Texas Railroad Commission. It regulates location and construction of prospect wells, requirements for fresh water protection in vicinity of drilling, formation drainage allocation, and well to well spacing requirements.

Prospects

While all of the parameters mentioned above must be met before drilling for hydrocarbons can begin, a key element that has to be determined before leases and permits are obtained is deciding WHERE to drill. Anyone can drill an oil well anywhere if there is enough money, but the primary purpose is to locate hydrocarbons. Thus finding the right location, one where there is a propensity of information supporting the idea that oil exists beneath it, is of paramount importance. Oil sites have been sought using a variety of different techniques. For example, in the early days oil was found by wandering about the countryside with an open flame, a little optimism, and a lot of adventure. Others have used exploration philosophies ranging from drilling old Indian graves to putting on an old hat and galloping about the prairie until the hat comes off and drilling where it lands.

One of the earliest exploration tools was referred to as Creekology. Early drillers recognized a connection between river bottoms and the occurrence of hydrocarbons but didn't understand why. It wasn't until later that the anticlinal theory was developed which explained the phenomenon.

This random approach to hydrocarbon exploration has resulted in locating oil, but, more often than not, the culmination has been a dry hole. The application of geology to hydrocarbon exploration is a recent development.

Evaluating a prospect (a location where a well could be located to discover hydrocarbons in commercial quantities) relies upon the answers to two questions: What is the likelihood of finding hydrocarbons at this site, and are the economics such that it will create a sufficient profit margin to justify the expense of drilling? Geology is used to help answer the first question while economic projections and market analysis help answer the second. Even though geological methods are utilized in the hunt for hydrocarbons, it doesn't always provide all of the answers to all of the questions. While the scientific method is a valid approach, the results are only as good as the information that was used. And the same holds for the economic analysis. World demand for oil and gas is in a constant state of unrest. Political stability, weather (cold winters in the northeastern United States), consumer demands (increased travel during holiday periods), and supply drastically affect prices. The objective of an oil company is to return a profit to its shareholders/program investors. Therefore the financial risk versus potential profitability must be established, and this requires the probability of geological success (discussed earlier) and three commercial parameters:

1. Potential profitability of venture,
2. Available risk to investment funds, and
3. Aversion to risk.

The interplay of all three criteria produce a subjective evaluation of the economics of the prospect.

But one other aspect of the prospect is also important and that is whether the well in question will be drilled in an existing field (where producing wells currently exist) or is a new prospect (an area where no oil or gas wells exist). Each type carries with it a different degree of risk, but also a different degree of potential reward. So defining the prospect is a difficult and an inexact science. Exploration techniques utilizing geological methods are the primary means used to locate prospects.

Techniques

Deciding where to drill is the most in-depth part of exploring for oil and gas. The modern exploration geologist (a person who explores for petroleum) must rely on many techniques to find profitable oil and gas reserves. There are three primary methods used to find hydrocarbons in the subsurface:

1. Sub-surface mapping
2. Geophysical surveys
3. Wildcatting

Sub-Surface Mapping

The search for hydrocarbons frequently begins with analysis of sub-surface terrain, well production, and previous well test data. These types of programs normally focus on finding undeveloped reserves in older fields. These reserves may stem from overlooked producing intervals or residual oil and gas left in proven formations. Many oil and gas fields were abandoned in times where oil or gas prices were substantially lower than today. When wells cost more to operate than they generate in sales they are plugged and abandoned. The recent demand increase for natural gas and oil has caused market prices to rise to an all time high.

This market condition has brought about tremendous potential for developmental oil and gas programs. Some older fields that were abandoned at low oil and gas prices can now be reactivated and profitable. The data from the previous wells can be used to help pinpoint the optimum location for new wells to extract the remaining reserves. These programs generally offer a lesser degree of risk, but also suffer smaller production numbers due to depletion within the reservior. Although field production may be greatly diminished, the dramatic increase in the price of the commodity can make these types of programs extremely viable.

Geophysical Surveys

Geophysical techniques used for exploration utilize equipment to measure the following: electrical currents, gravitational and magnetic anomalies, heat flow, geochemical relationships, and density variations from deep within the earth. Each technique records a different set of characteristics, which can be used to locate hydrocarbons beneath the surface of the earth.

Seismic surveys use vibration (induced by an explosive charge or sound generating equipment) to provide a picture of subterranean rock formations at depth, often as deep as 30,000 feet below ground level (BGL). This is accomplished by generating sound waves downward, which reflect off various boundaries between different rock strata. The sound waves are generated by small explosive charges embedded in the ground or by vibrator trucks, sometimes referred to as thumpers, which shake the ground with hydraulically driven metal pads.

The human ear can barely hear the thump, but the frequency generated penetrates the earth's crust. The echoes are detected by electronic devices called geophones which receive the reflected sound waves. The data is recorded on magnetic tape which is printed to produce a two-dimensional graphic illustrating the subsurface geology.

In this type of survey, sound waves are sent into the earth where they are reflected by the different layers of rock. The time taken for them to return to the surface is measured as a function of time. This measurement reveals how deep the reflecting layers are; the greater the time interval, the deeper the rock layer. Moreover, this technique also can determine what type of rock is present because different rocks transmit different sound waves.

Wildcat

A true wildcat well is one that is drilled in a new area where no other wells exist and generally with little information. It is drilled in an effort to locate undiscovered hydrocarbons. About 1 in 10 wildcat wells strike oil or gas, but reserves can be extremely profitable when these programs are successful. Many wildcat wells are drilled on a hunch, intuition, or a small amount of speculative geology. Many times they are based on surface trends, photography, and experience in a particular area.

Drilling Rigs

The drilling process is a very in-depth process. A well site must first be selected then all the legal documents obtained. Drilling operations can begin only after the site has been prepared, ground has been leveled, roads have been built, a derrick has been erected, and other equipment that comprises the drill rig has been put in place. Water is a vital component in the drilling process for mixing drilling mud (lubricant). Water can be hauled into the location by trucks or pumped from a nearby lake, pond, or water well. If no source is available, a new water well must be drilled before the drilling process can begin.

The most common drill rigs are of the rotary rig type (see image). Today's rotary drill rig consists of multiple engines that supply power, hoisting equipment that raises and lowers the drill string (drill pipe), and rotating equipment that turns the drill string and the drill bit. These engines also drive the circulating equipment that pumps liquids (mud) down the hole to lubricate the drill string and drill bit which are rotating in the hole. These liquids remove cuttings (loose bits of rock), and controls downhole pressure to prevent blowouts (unexpected pressure, which overcomes the weight of the drilling mud and explodes to the surface).

The conventional drill bit has three movable cones containing teeth made of tungsten carbide steel and sometimes industrial diamonds (see image). The rotating cones are the cutting heads. The downward force on the drill bit is the result of the weight of the overhead drill stem (steel pipe, pipe joints called collars) and drilling equipment on the derrick all of which can amount to thousands of pounds. Keep in mind that the entire pipe and bit assembly rotate together in the hole.

While the bit cuts the rock at the bottom of the hole, surface pumps are forcing drilling fluids down the hole through the inside of the drill pipe and out the bit. This fluid lubricates and removes cuttings. The fluid (with the cuttings) then flows out the center of the drill bit and is forced back up the outside of the drill pipe onto the surface of the ground where it is cleaned of debris and pumped back down the hole. This is an endless cycle that is maintained as long as the drill bit is turning in the hole. The drilling crew is under the supervision of the Driller. The person who works on a platform high in the derrick is called a Derrickman; he has the very dangerous job of handling the upper part of the drill stem as it is raised and lowered. Roughnecks are the workers on the derrick floor; their job is to add new pipe joints as the well depth increases. The entire crew and operation of the rig is under the supervision of the Tool Pusher. A typical drill rig will operate 24 hours per day, 7 days per week. It never shuts down for holidays.

A drilling operation produces waste material that includes drilling mud, rock cuttings, and salt water brine (highly concentrated salt water) which flows out of a reservoir trap and up the well to the surface. These materials must be disposed of properly. The reserve pond is often dug to temporarily hold the brine and drilling mud. Neither the drill mud nor the salt water brine is allowed to remain at the drilling site. All waste materials must be removed off site and sent to a properly licensed landfill for disposal.

Production

Primary Recovery Techniques

The drilling job is finished when the drill bit penetrates a reservoir trap and the trap is evaluated to see whether the well is a discovery or a dry hole. This evaluation is often started by examining the cuttings from the well bore. The cuttings are examined for traces of hydrocarbons while the drill bit passes through a reservoir trap. After the well is drilled the evaluation of these cuttings helps pinpoint the possible producing intervals in the well bore. At this time, an electric log is run; it is a special tool that is attached to a wire-line, lowered into the hole. It collects various data from the well bore. This data helps define possible producing intervals, presence of hydrocarbons, and detailed information about the different formations throughout the well bore. Well logging is not an exact science, comparison data from similar formations are essential in log evaluation. Further tests can also be run on individual formations within the well bore such as pressure tests, formation fluid recovery and sidewall core analysis. All are very effective tools to help evaluate the well, but by no means are any 100% precise.

If hydrocarbons are detected, the completion process begins. The only thing visible at the well head after the drill rig leaves the site is a series of valves and gauges connected vertically to each other and attached to the top of the well. This allows the amount of hydrocarbons to flow from the well and it prevents leakage at the surface. This structure is referred to as the Christmas Tree (see image).

If the hole is dry, it is plugged and abandoned. Production wells, also called Completion Wells, present their own set of problems. Hydrocarbons come in varying densities and viscosities; reservoir traps also have variations in porosity, permeability, pressures, and temperatures. All of these factors exert an influence on how easily hydrocarbons can be removed from a trap. Every reservoir has a certain volume of natural pressure associated with the hydrocarbons. When a producing well is established in a reservoir trap and the product is withdrawn, pressure drops (discussed earlier).

It is this differential pressure between the trap and the open hole that moves the hydrocarbons out of the reservoir, into the well, and up to the surface. The pressure may be the result of a number of forces. For example, water located below the oil layer may be pressing upward; when this occurs, it is referred to as a water drive system (see image). If the gas cap located above the oil is causing a downward pressure, it is referred to as a gas cap drive system (see image).

In most reservoir traps, initial pressure is sufficient to push the oil to the surface of the production well with only minimal help from a down hole pump. But, with declining well pressures, it becomes more difficult to get the hydrocarbon to the surface. Sometimes, artificial OIL lift is needed.

All of the techniques discussed thus far for removing the hydrocarbons from the reservoir and bringing them to the surface are referred to as Primary Recovery Techniques. Primary techniques rely entirely on natural forces within the reservoir trap. And primary recovery accounts for a large portion of the total volume of hydrocarbons in the trap, but not all of it. Less than 40% of hydrocarbons present are recoverable by means of Primary Recovery.

When production begins to drop off, it may be time for the well to receive a work-over (a major repairing and cleaning out of all pipes). Producing wells are like anything else; they require periodic maintenance. Corrosion can roughen pipe walls or cause failure, allowing product to leak onto the surface. Pieces of rock from the side of the well may break off and fall into the well clogging it. Natural gas pipes tend to accumulate paraffin (hydrate compounds that build up inside the pipe causing restrictions). Maintenance can result in everything from cleaning fluids being injected into the pipes to wire brushes being inserted to brush the pipes clean. Residues are flushed from the system before it is reconnected.

But work-over is not restricted only to the hardware; it may also be applied to the down-hole portion of the rock formation. Often, the formation through which the hydrocarbons are flowing becomes clogged which diminishes the volume of product reaching the well. Two processes used to improve formation characteristics are Acidizing and Fracturing. Acidizing involves injecting an acid into a soluble formation, such as a carbonate, where it dissolves rock. This process enlarges the existing voids and increases permeability.

Hydraulic Fracking involves injecting a fluid into the formation under significant pressure that makes existing small fractures larger and creates new fractures.

Drilling Costs

Leases

The right to enter and drill on a property owner's land is accomplished by obtaining a lease. The lease is subject to title search and proper recording in much the same way as real estate.

Site Selection

In some areas, geology is a factor. For most developmental fields, road access to the site and nearness to gas pipelines are the most important considerations. Ability to reach the site in bad weather can affect income from the sale of oil and gas.

Permits

A survey showing the exact well site selected and an application must be made to the appropriate government agencies. After review, a permit will be issued stating requirements and restrictions, if any. At that point, the operator is free to drill.

Site Preparation

Most times, a road must be built to the site. At the site, a level area is cleared about 2/3 the size of a football field. A bulldozer is used for this job.

Drilling

When the site is prepared, the drilling rig can be moved into position. A rotary rig is the modern equipment used. It is capable of drilling over 1,000 feet per day through use of a rotating bit driven by huge engines. Fluid or air is forced under pressure down the center of the drill stem to clean out the hole continuously during drilling.

Surface Casing

To prevent possible contamination to drinking water and the surface, steel pipe of 8-5/8" is placed in the upper section of the hole. Cement is forced around this casing to form a solid bond between the pipe and the drilled hole. This pipe or casing may go as deep as 1,200 feet. After setting the surface casing, drilling is resumed with a smaller bit until the final desired well depth is reached.

Open Hole Logging

Special electrical and radio-active instruments are lowered into the completed hole. While being raised back to the surface, these delicate, sensitive instruments send signals to a computer on the surface. The computer converts the signals into a series of lines on a graph which, for comparison, might remind you of an electrocardiogram. The petroleum engineer with his specialized training can now determine the commercial probability of the well and where the best pay or production zones are located.

Production Casing

After the pay or production zones have been determined, the inside of the well is completed by lowering 4-1/2" steel pipe from the end of the surface casing to the bottom of the well. This pipe is then cemented in place in the same manner as the surface casing.

Closed Hole Logging

Additional sensitive instruments are now lowered into the hole to check that a good cement job was obtained and to further pinpoint production zones.

Perforation

To allow the gas and oil to enter the well, holes must now be made through the pipe and cement into the selected production zones. An explosive charge surrounded by 1/2" steel balls is lowered to the precise depth selected. Upon detonation, these balls are driven through the casing and cement is driven into the formation which contains gas and oil. This process is sometimes called a "perf" or "perfing".

Acidizing

An acid solution is put into the well to a level above the perforations. This will dissolve the surrounding cement and eat into the surrounding rock formation.

Fracturing

After the acid has done its job, an inert gas is forced into the well under very high pressure to fracture the rock formation containing oil and gas. This process creates fissures (cracks) through which the gas and oil can flow into the well. Sand is also forced into the well during this process and performs the job of bracing these fissures to keep the gas and oil flowing. The operator knows the fracture has occurred and been successful when the pressure suddenly drops on the gauges at the surface. The inert gas is then "blown off" at the surface until natural gas and/or oil begin to appear. Now, the underground process is completed.

Surface Completion

Valves and pipes on the top of the well (called a Christmas Tree) are then connected to a gas line through a meter where it goes to market. If the well also produces oil, then a pump, separator, and oil storage tanks will be erected to extract and store the oil. Trucks periodically enter the site to pick up oil and carry it to the purchasing refinery.

Reclamation

After the well is completed, restoration of the site area ensues to re-establish original topographical condition.

Drilling Procedures

Drilling and Testing Procedure

• File permits
• Build location
• Move rig on location
• Drill surface hole and set surface casing
• Complete drilling the well
• Log the well and run any other test that may be needed (i.e. cores, drillstem test, etc.)
• Either plug the well as a non-producer or set and cement the casing

Completion and Equipment Procedure

• Move work-over rig on location and rig up
• Run a cased hole bond log, gamma ray log, and collar locator
• Run in the well bore with production tubing and set the packer above the production zone
• Run in the well bore with a perforating gun and perforate the well at the area of production
• At this time, stimulate the well if needed. Run in the hole with down hole pump, sucker rod, polish rod, pony rod, and hook up to the pump jack. (This is assuming that this well does not flow on its own and that it is an oil well instead of a gas well.)
• Set up storage tanks and stairwell, heater treater, separator, water tank, flow lines, and meter loop for production.
• Contract with gatherer for purchase of oil and gas.

SOURCE:

Tidal Petroleum
Oil & Gas Operator