OIL GAS DRILLING TECHNOLOGY UPDATES: 2011

Saturday, December 31, 2011

HAPPY NEW YEAR 2012

LET'S WELCOME THIS NEW YEAR WITH LOT OF EXPECTATIONS AND ACHIEVE THIS WITH OUR BEST EFFORTS.

BEST WISHES FOR A HAPPY NEW YEAR 2012.

Iran says crude will exceed $200 if its oil sanctioned

TEHRAN Dec 31 (Reuters) - Iran's oil minister said crude prices will rise to more than $200 per barrel if foreign sanctions are imposed on the country's oil exports over its disputed nuclear work, the Aseman weekly reported on Saturday.

"Undoubtedly the price of crude will increase dramatically if sanctions are imposed on our oil ... It will reach at least over $200 per barrel," Oil Minister Rostam Qasemi told the weekly. (Writing by Parisa Hafezi; editing by David Stamp)

Govt out of gas, mostly

Aminur Rahman Rasel
bdnews24.com Correspondent

Dhaka, Dec 31 (bdnews24.com) – If the decision to raise fuel prices -- for the fourth time this calendar year – barely two days before the year checks out had any deeper subtext, it showed the government's breakdown on the energy front in the outgoing year.

While energy is considered one of the main factors for a developing economy, Bangladesh was neck-deep in crisis on this front in 2011.

The government reasoned that oil prices had to be raised to adjust subsidies given to rental power plants, set up as a desperate move to boost electricity production.

Oil, however, was not the only energy source whose prices headed northward this year. CNG prices, too, were raised twice this year, raising criticism about the energy sector, which is under prime minister Sheikh Hasina's supervision.

The result: already hard pressed, the economy had to bow down further as the government borrowed more from banks to meet fuel import costs.

Meanwhile, the Awami League failed to fulfill its campaign pledge to enact a national coal policy even in the third year of the government's tenure.

Entrepreneurs in the housing and real estate sector were also up in arms after the government failed to meet their demand to roll back its decision to stop gas lines to residences from July 2009.

Further, the government has been criticised for a production-sharing contract (PSC) with US oil-gas giant ConocoPhillips to explore gas in two blocks in the Bay.

OIL-GAS PRICES

Following the last round of hike, effective Thursday midnight every litre of diesel, octane, petrol, kerosene and furnace oil was dearer by a further Tk 5.

In a statement issued on Thursday, the government cited hefty subsidies to the fuel sector, rise in international oil prices and depreciation of dollar against taka as reasons for the price hike.

"The government will face a huge loss due to the import of fuel oil," the statement read. "Therefore, it is tough for the government to further subsidise the fuel sector from the current earnings."

Following the hike, price of diesel per litre works out to be Tk 61, octane would cost Tk 94 per litre, petrol Tk 91, kerosene Tk 61, while furnace oil can be had for Tk 60 per litre.

The fuel prices were raised by Tk 5 per litre only last month -- Nov 10 to be precise -- for the third time this year, and the second in the current fiscal.

Before that, prices were raised on Sep 18 -- furnace oil went dearer by Tk 8 per litre while it was Tk 5 for all other fuel. That round of hike was preceded by one on May 5.

Price of CNG, meanwhile were raised twice, on May 12 and Sep 19: it zoomed from Tk 17 per cubic metre to Tk 30 per cubic metre.

The hikes in fuel and gas prices led to further increase in transport fares and prices of essentials.

The effect in the transport sector was almost immediate: bus fare was raised by Tk 0.5 per kilometre in October following discussions with transport owners, while CNG-run autorickshaw fare was raised by Tk 0.14 per kilometre.

Fare of long distance buses went up from Tk 1.15 per kilometre to Tk 1.2. In Dhaka and Chittagong, revised bus fares were up to Tk 1.6 per km and Tk 1.5 for the equal distance for minibus.

Fare for the first 2 km in CNG-run autorickshaws was kept at Tk 25 but for further travel, commuters had to shell out between Tk 7.5 and Tk 7.64 each extra kilometre. Fare for recesses was, meanwhile, raised from Tk 1.3 to Tk 1.4.

Quick to read public mind and grasp the issue, opposition BNP and its allies enforced a dawn-to-dusk shutdown across the country recently to protest the price hikes.

DEAL WITH CONOCOPHILLIPS

The government signed a PSC with ConocoPhillips on June 16 to explore oil and gas in deep-sea blocks number 11 and 12 with an area of 5,158 square kilometres.

According to the National Committee on Protection of Oil and Gas, Mineral Resources, Power and Ports, the deal authorised the US firm to sell 80 percent of gas it would lift from the deep-sea blocks to Bangladesh while the country will face a loss to carry inland the rest of it.

The contract authorizes the US firm to export gas if Bangladesh fails to buy it.

The wells in the country supply 2 billion cubic feet gas every day -- against daily demand of 2.5 billion cubic feet.

COAL POLICY

One of the major pre-election pledges of the Awami League was to enact a national coal policy to safeguard national interest. But three years on, the policy is yet to be finalised.

Amid debates, a 15-member committee led by former chairman of Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) Mosharraf Hossain was formed on Sep 8 to give proposals to finalise the policy. The panel had been asked to submit proposals within four months but its activities so far has been only one meeting on Oct 12.

Tawfiq-e-Elahi Chowdhury, the energy advisor to prime minister Sheikh Hasina, and state minister for power, energy and mineral resources Muhammad Enamul Huq have, meanwhile, announced at several programmes that the policy will be declared soon.

LIMITED SUCCESS OF BAPEX

In the midst of the raging gas crises, Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) brought some cheers by exploring gas.

It started supply from a new well in Semutang Gas Field from Dec 4. The well supplies 15 million to 18 million cubic feet gas to Chittagong daily.

On Dec 10, Salda Gas Field started supplying 25 million cubic feet gas daily, while the development of Fenchuganj Gas Field is on.

International firms, though, failed to show any major achievement.

Chevron Bangladesh dug three wells in Moulvibazar Gas Field but no gas was found from two of the wells, while the third well is still uncertain.

Santos Bangladesh started digging a well in deep-sea block no. 16 but abandoned the well later due to heavy pressure of water.

bdnews24.com/arr/ost/std/bd/1140h

Only Iran can save Iraq

The government of Iraq's Prime Minister Nuri al-Maliki is dependent on Iran's support, says Mohammed Ayoob.

Editor's note: Mohammed Ayoob is University Distinguished Professor of international relations at Michigan State University and adjunct scholar at the Institute for Social Policy and Understanding.

(CNN) -- Iraq is on the edge of the precipice as a consequence of the standoff between Shia Prime Minister Nuri al-Maliki and Sunni Vice President Tariq al-Hashimi, with the former accusing the latter of engaging in terrorism and the latter accusing the former of dictatorial ambitions. This crisis involves all three major sectarian and ethnic groups in Iraq, with al-Hashimi taking refuge in the autonomous Kurdish region of Iraq as a guest of Iraq's Kurdish President Jalal Talabani.

What happens over the next couple of weeks will determine whether Iraq will continue to exist as a unified state or begin to irretrievably unravel in sectarian strife.

Two realities stand out in the midst of all the noise and fury currently surrounding the debate in and over Iraq.

Mohammed Ayoob

First, it is clear that the American venture in Iraq has ended in abject failure at the cost of 4,500 American lives and between 100,000 and 200,000 Iraqi lives. No weapons of mass destruction were found in Iraq, nor was any link established between the Saddam Hussein regime and al Qaeda. Furthermore, as the events of the past few days demonstrate, the United States has been largely unsuccessful in establishing an inclusive, democratic order in Iraq, another objective touted by Washington to justify the invasion of Iraq in 2003.

What the American invasion ended up doing was creating unprecedented sectarian strife and totally debilitating Iraqi capabilities, thus tilting the regional balance of power in the energy-rich Persian Gulf substantially in favor of Iran.

Second, it is only Iran that can now prevent Iraq from sliding into the abyss of chaos and disintegration. This argument has a simple logic. Iran is the country with the greatest leverage with the Shia-dominated al-Maliki government. In fact, al-Maliki would not have been able to put together a coalition after haggling for nine months, and become prime minister for a second time after the last elections, had Iran not weighed in on his behalf. Iran is also the state with the greatest stake in keeping Iraq unified and ensuring its sovereignty, because Iraq's disintegration could adversely affect Iran's national integrity and its aspirations to become a regional leader in the Middle East.

While the major Shia parties in Iraq -- the Dawa Party, the Sadrists, and the Islamic Supreme Council of Iraq -- are not Iranian creations per se, all of them are beholden to Iran in multiple ways. Their leaders lived in exile in Iran during Hussein's rule, and the Islamic Revolutionary Guard Corps trained their militias. Their links with the IRGC and the militias' dependence on Iranian training and weaponry continue to exist. Whenever the going gets tough for any Iraqi Shia faction, its leaders take refuge in Iran, as Muqtada al-Sadr did time and again over the past few years.

Iraqi dependence on Iran is bound to grow now that the Americans -- who had tended to favor the Shia over the Sunni in Iraq -- have departed the shores. The al-Maliki government, its current bombast notwithstanding, will soon realize -- if it has not done so already -- that it is surrounded by a host of latently hostile Sunni Arab neighbors, from Saudi Arabia and Jordan to Egypt and potentially Syria. Iran is its only dependable ally and one which it cannot afford to alienate.

Iran also forms the lifeline of the Iraqi economy, especially in the predominantly Shia south. Iranian pilgrims flock to the Shia holy cities of Najaf and Karbala, providing livelihood to thousands of Iraqi citizens. Cheap Iranian manufactured products flood the Iraqi market, and Iranian contractors are involved in infrastructure projects such as power, health and housing.

Iran is now Iraq's second largest trading partner after Turkey, which has a near monopoly on trade with Iraqi Kurdistan. Additionally, Iranian financial support keeps many Iraqi Shia institutions, parties, and leaders afloat.

In short, the Iraqi government's dependence on Iran in political and economic terms is of a very high order. This provides Tehran with enormous leverage that it can use, if it so desires, to compel the al-Maliki government to undertake a radical course correction and return to the model of a more inclusive political system rather than one based simply on Shia demographic strength. Shiites constitute approximately 60% of the Iraqi population, with Sunni Arabs and predominantly Sunni Kurds each accounting for about 20%.

There is every reason to believe that such a course correction is in Iran's long-term interest for a number of reasons. First, if the Iraqi state disintegrates as a result of al-Maliki's policies, Iraqi Kurdistan, currently an autonomous entity, will be emboldened to declare itself a sovereign, independent state. This would run contrary to Iranian state interests, since Iran is also home to a restive Kurdish minority whose demands for autonomy border on independence.

An independent Kurdish state next to Iranian Kurdistan would not only be a bad example (from the perspective of the Iranian state) for Iranian Kurds, it would also become a center for Kurdish irredentism, stoking demands for pan-Kurdish unity that would have deleterious consequences for both Iran and Turkey.

Second, Iran has regional ambitions not only in the Persian Gulf, but also in the broader Middle East region. The Iranian regime is fully aware of the fact that one of the major hurdles in its path toward regional pre-eminence is its Shia character. Much of the rest of the Middle East is predominantly Sunni Muslim. This was a major, if not the primary, reason that Iran's post-revolution leaders emphasized the "Islamic" rather than the Shia nature of the Iranian revolution, thus enhancing its appeal among the Sunni majority in the Middle East.

Iran's support to Muslim causes -- the Palestinian cause foremost among them -- regardless of the sectarian composition of the affected Muslim populations has added greatly to the popularity of the Islamic Republic, particularly among the Arab public.

Al-Maliki's sectarian policy is bound to hurt not only Iraqi interests, but also the image of Iran in the Middle East, and adversely affect its ambitions to act as a major player in the region, especially since Iran is perceived as the principal supporter of the al-Maliki government.

It is, therefore, in Iran's interest to rein in al-Maliki's sectarian proclivities and to maneuver to have him replaced as Iraq's leader if he is not amenable to Tehran's advice. Muqtada al-Sadr can be used by Iran to pull the rug from under al-Maliki's feet, since al-Maliki is now dependent upon the 40-member Sadrist group in Parliament to keep him in office. (The Iraqiya -- the coalition of Sunni and secular Shia groups to which al-Hashimi belongs -- withdrew its support from the governing coalition.) That the Sadrists, one of the three main Shia groups in the Iraqi Parliament, may be contemplating such a move themselves is indicated by their demand on Monday that Parliament be dissolved and new elections held.

The Sadrist agenda may, in fact, coincide better with the Iranian one, given al-Sadr's visceral anti-Americanism, which stands in sharp contrast to al-Maliki's ambivalence toward the United States. But regardless of this fact, it is becoming increasingly evident that al-Maliki's current policy runs contrary to Iran's interests. It is also clear that only Iran is in a position to force him to reverse course and thus to save Iraq from disintegration and civil war.

The opinions expressed in this commentary are solely those of Mohammed Ayoob.

Bottom Hole Pressure Relationship

This post will show you Lean about bottom hole pressure relationship because this concept is very important for well control concept.
The bottom hole pressure is sum of all the pressure acting on the bottom hole. We can describe the statement before as the following equation;

Bottom Hole Pressure (BHP) = Surface Pressure (SP) + Hydrostatic Pressure (HP)

The image below demonstrates the relationship of bottom hole pressure.

Note: BHP created by hydrostatic column of drilling fluid is the primary well control in drilling.

Looking more into details,

If BHP is more than FP (formation pressure), this situation is called "Overbalance".

If BHP is equal to FP (formation pressure), this situation is called "Balance".

If BHP is less than FP (formation pressure), this situation is called "Underbalance".

For more understanding, please follow this example below demonstrating the relationship of BHP, SP and HP.

Bottom Hole Pressure (BHP) = Surface Pressure (SP) + Hydrostatic Pressure (HP)

We assume that formation pressure is normal pressure gradient of water gradient (0.465 psi/ft) so formation pressure at 8000' TVD = 8000 ft x 0.465 psi/ft = 3720 psi. We need to learn how to calculate hydrostatic pressure in oilfield.

The first case: Hydrostatic column is water which is equal to formation pressure gradient so SP is equal to 0 psi

The second case: BHP is still be water gradient but fluid column is oil (0.35 psi/ft) which is lower density than water gradient (0.465 psi/ft). Therefore, in order to balance BHP, we need Surface Pressure (SP) of 920 psi (SP = 3720 – (0.35 x 8000)).

The third case: BHP is still be water gradient but fluid column is gas (0.1 psi/ft) which is even lower density than water gradient (0.465 psi/ft). Therefore, in order to balance BHP, we need Surface Pressure (SP) of 2,920 psi (SP = 3720 – (0.1 x 8000)).

According to the example, Surface Pressure (SP) will compensate the lack of hydrostatic pressure (HP) in order to balance formation pressure (FP).

Let’s apply U-Tube concept

After learning about U-tube concept, let's get a example in order to understand clearly about physical meaning of U-tube. This is very important concept so you need to clear about it.

Mud weight inside drill pipe is 9.8 PPG is all the way to bit and mud weight in the annulus is 9.2 PPG all the way to surface. Hole depth is 10,000'MD/8500'TVD. The well is shut in and drill pipe pressure is equal to 0 psi. Determine casing pressure.

According to U-tube concept, both sides (casing and drill pipe) have the same bottom hole pressure so we can write the equation to describe the U-tube concept as shown below;

SP (casing) + HP (casing) = BHP = SP (drill pipe) + HP (drill pipe)

At drill pipe side: BHP = 0 psi (Drill pipe Pressure) + 0.052×9.8×8,500 (Hydrostatic Pressure at drill pipe side) = 4,331 psi

At casing side: BHP = 4,331 psi = (Casing Pressure) + 0.052×9.2×8,500 (Hydrostatic Pressure at casing)

With this relationship (SP (casing) + HP (casing) = BHP = SP (drill pipe) + HP (drill pipe) ),we can solve casing pressure.

4331 = Casing Pressure + 4066

Casing Pressure = 4331 – 4066 = 265 psi

U tube

Boyle’s Gas Law and Its Application in Drilling

Understand Boyle's Gas Law

Boyle's law states that at constant temperature, the absolute pressure and the volume of a gas are inversely proportional in case of constant temperature within a closed system. It may sound pretty hard to understand what it is.

Well, we can describe the statement above into simple mathematics as following formula:

Boyle's Gas Law: P x V = constant

Or express Boyle's law in another term: P1 x V1 = P2 x V2

Where; P = Pressure and V = Volume

It sounds easy a little bit to understand.

Let's apply Boyle's law into our drilling business

Calculate the volume of gas you will have on the surface, 14.7 psi for atmospheric pressure, when 1 bbl of gas kick is circulated out from reservoir where has formation pressure of 3,000 psi.

Boyle's Gas Law: P1 x V1 = P2 x V2

P1= 3000 psi (reservoir pressure)

V1 = 1 bbl (volume at bottom hole)

P2 = 14.7 psi (atmosphere pressure)

V2 = ? (volume at surface)

P1 x V1 = P2 x V2

3000 x 1 = 14.7 x V2

V2 = 204 bbl

A Wind of Change at Russian Oil Companies in 2011

The year, which began with the Jan. 14 announcement of a landmark deal between Rosneft and BP, promised to be eventful to the very end. And it met expectations, as we were witness to the creation and collapse of strategic alliances, approval of new strategies, relocations and major projects. Much of what happened this year will set the stage for the future development not only of individual companies, but the entire sector as a whole.

Every Cloud Has a Silver Lining

Immediately after the New Year celebrations, state oil major Rosneft and Britain's BP surprised the whole oil community with the announcement of a strategic alliance that not only called for cooperation on the development of offshore fields on Russia's Arctic shelf, but also a share swap. Rosneft was supposed to get 5 percent of BP in exchange for 9.5 percent of its own shares.

But the companies did not even manage to begin discussing the details of the deal before BP's Russian partner in oil company TNK-BP (RTS: TNBP), the AAR consortium, challenged the deal. As a result of court injunctions prohibiting BP from holding any negotiations on cooperation with Rosneft, the deal was paralyzed and a few months later the companies had to call it off.

Nature abhors a vacuum, so Rosneft fairly quickly found a new foreign partner in U.S. major ExxonMobil, with which it concluded a strategic agreement at the end of the summer. However, the parameters of the alliance changed, with the companies agreeing on the joint development of offshore fields in the Arctic with resources of 4.5 million tonnes of oil and 11 trillion cubic meters of gas, but refraining from a share swap. In addition, Rosneft gained potential access to ExxonMobil deepwater exploration projects in the Gulf of Mexico and the development of fields with difficult to recover reserves in Texas.

Four months have passed since the deal was signed, but the companies have not disclosed any new details. Rosneft expects to decide what ExxonMobil projects it might be interested in by the first quarter of 2012. If the partners are unable to decide by March, the process might be delayed due to a reshuffle after the Russian presidential elections.

A New Take on Life

Despite the continued ban on access to Russia's continental shelf, drilling delays in Iraq and so far unimpressive exploration results in West Africa, Lukoil (RTS: LKOH) is optimistic about the future and its new long-term strategy is set on increasing production. Oil and gas production is targeted to grow by an annual average of at least 3.5 percent over the next ten years.

The company plans to be producing 110 million tonnes of oil and over 40 bcm of gas per year in ten years. Most of this growth is expected to come from prospective projects in Iraq, Central Asia, the Caspian and the Yamalo-Nenets Autonomous District. The company will focus on new technologies that will enable it to increase the oil recovery rate from 32 percent to 40 percent, adding 9 billion barrels to its resource base. The company plans to invest more than $100 billion over ten years, including $24 billion in its downstream business.

The company also plans to increase dividends over this period and in future they could amount to about 30 percent of net profit to US GAAP.

Being a significant player not only on the Russian, but also the international oil and gas market, Lukoil has been unable to get a fair valuation of its shares, which it thinks are considerably undervalued. Perhaps the presentation and subsequent implementation of the new strategy will bring Lukoil closer to the prized market capitalization threshold of $100 billion.

Grass is Grenner ...

The most significant event in the corporate life of Gazprom Neft (RTS: SIBN) in 2011 was the relocation of the company's head office from Moscow to St. Petersburg. It's not often that a major company moves from the capital to another city with one sweep. The move was the conclusion of the company's "relocation" - back in 2005, when Gazprom (RTS: GAZP) bought Sibneft and later renamed its Gazprom Neft, it was announced that the oil company would be reregistered from Omsk to St. Petersburg.

The move was accompanied by a management reshuffle and general intra-company stress. There was even talk that Gazprom Neft head Alexander Dyukov, though himself a native of St. Petersburg, was in no hurry to move there permanently. The intrigue around Dyukov intensified as his contract expired late in the year. However, Gazprom Neft's board will discuss the contract with the chief executive on December 29, and the only candidate is Dyukov.

Hard-Won Refining

The past year was a mixed bag for Tatneft (RTS: TATN). On one hand, the company had to suspend operations in Libya and Syria, but on the other it brought its first oil refinery on line commercially. However, the refinery project did not go quite as smoothly as the company had hoped.

Refining has long been a missing link in Tatneft's production chain. The company exports most of its oil and buys oil products to supply its filling stations.

The Taneco refinery project was launched at the end of 2007, and in October 2010 the company announced it had completed construction and installation work at the primarily refining facility and launched the plant. But as it turned out, only on a testing and commissioning basis. It took Tatneft another year in order to obtain all the necessary licenses and put the refinery into commercial operation.

The refinery was initially expected to have capacity of 7 million tonnes of crude per year, but later the company announced plans to build a second phase with the same capacity.

However, by the time the first phase of the refinery came on line commercially, the Russian government sprang an unpleasant surprise on Tatneft - the 60/66 tax regime, which dramatically reduces the profitability of exporting dark oil products, while Taneco at this point can only produce raw gasoline, fuel oil and heating oil.

The company's expectation that it would begin the second phase of the refinery this year in order to increase production of dark oil products and accelerate the recovery of investment was disappointed and it is now betting on deepening refining. The company expects to produce its first gasoline in 18 months.

Tatneft estimated it would lose 34 billion rubles in revenue as a result of the new tax regime and received corresponding compensation from the government. But Tatneft itself will not get the compensation - the concession will be transmitted to the TAIF-NK oil refinery, a member of the TAIF Group, by lowering the cost of the crude shipped to the refinery. Furthermore, the reduction of export duties on crude oil under the 60/66 regime benefits Tatneft, which exports most of its crude.

In 2011 Tatneft finally became a full-fledged vertically integrated company. But at what price? Since the launch of the Taneco project, Tatneft's long-term and short-term debt has grown nearly ten-fold. In the coming year the company will need to repay or refinance more than 80 billion rubles, plus invest about 20 billion rubles in Taneco.

How Tatneft will raise the cash - by selling production assets, a stake in Taneco or new borrowing - will become evident in 2012.

Friday, December 30, 2011

U.S. Raises Alarm Over Oil Lanes

By JULIAN E. BARNES and TENNILLE TRACY

WASHINGTON—Iran said it will launch missiles and torpedoes as part of an ongoing naval drill in the Persian Gulf, an Iranian news agency reported, following a week of saber-rattling in which Tehran threatened to close some of the world's most vital oil-shipping lanes.

Tehran said this week it could easlily block oil deliveries through the Strait of Hormuz in the Gulf if the U.S. and other nations impose further sanctions on it.

Such threats could be largely bluster. But they also speak to the degree to which Iran has chafed at recent U.S. and European Union threats to impose sanctions on Iran's central bank to punish Tehran for its alleged pursuit of nuclear weapons. Iran denies such allegations.

Underscoring the stakes, the U.S. Energy Information Administration said Friday that more oil passed through the Persian Gulf's Strait of Hormuz in 2011 than in previous years and that any blockage could lead to "substantial increases" in energy costs.

In data released Friday, EIA officials said an average of nearly 17 million barrels of oil moved daily through the strait this year, up from around 15.5 million barrels in 2009 and 2010. The strait, which the agency called "the world's most important oil chokepoint," carried about 20% of all oil traded world-wide and about 35% of all seaborne-traded oil, it said.

Tehran's threats over the Strait is one factor behind the recent rise of oil prices to around $99 a barrel Friday, from a low of around $76 a barrel in October.

Contributing to the friction between Washington and Tehran, Iran is conducting 10 days of war games in the southern Persian Gulf. On Friday, the semiofficial Fars News Agency quoted an Iranian Navy deputy commander as saying forces will "launch advanced short-range, mid-range and long-range missiles and also smart torpedoes." The agency highlighted several new weapons displayed by Iran in recent months including the Qader anti-ship cruise missile, which Iran claims has a range of 124 miles, and Valfajr torpedoes, a 485-pound weapon that Iran says can be launched by its subs and can destroy large warships.

Pentagon officials declined Friday to comment on the threatened tests. U.S. defense officials said Iran had a right to conduct military exercises in the international waters of the Gulf.

U.S. military officers view Iran's current long-range missile capability skeptically. An explosion at a missile facility in November was a major setback to Iran's long-range missile program, according to U.S. officials. A test of the long-range missiles could be an attempt by Tehran to assert that it retains the ability to deploy such weapons.

U.S. officials see Iran's short- and medium-range missiles as a greater immediate threat. Such missiles could be used to target American naval forces. U.S. ships approaching Iran would be forced to proceed carefully.

U.S. officials have made clear that any move by Iran to close the Strait of Hormuz would be countered vigorously, including through the use of military force to keep the chokepoint open to commercial traffic. Much of the oil produced in Saudi Arabia and other Persian Gulf nations must pass through the strait to reach overseas markets.

At its narrowest point, the Strait of Hormuz is 21 miles wide and deep enough to handle the largest oil tankers. In 2011, an average of 14 oil tankers moved through every day, with a corresponding number of empty tankers entering to pick up new shipments, the EIA said.

The U.S. Navy has one battle group in the Persian Gulf, led by the USS John C. Stennis aircraft carrier. The Air Force has fighter planes in Kuwait and Qatar. While U.S. forces have pulled out of Iraq, thousands of service members are in Kuwait, Qatar and the United Arab Emirates, as well as Bahrain, the headquarters of the U.S. Fifth Fleet.

The National Defense Authorization Act, which President Barack Obama is expected to sign soon, penalizes foreign financial institutions that do business with Iran's central bank, a measure aimed at making it more difficult for Tehran to sell its oil.

Some U.S. officials believe that Iran will view any attempt to sanction its central bank as an act of war, and they warn of a possible conflict breaking out in the Persian Gulf. Other analysts say Iran is unlikely to try to close the strait, largely because that would damage its own already-struggling economy.

On Thursday, State Department spokeswoman Victoria Nuland said "the ratcheting up of pressure" on Iran with sanctions "is pinching in a way that is causing them to lash out."

The majority of shipments moving through the strait are bound for Asian markets. If the Strait of Hormuz were to close, oil deliveries could be rerouted via pipelines to the Red Sea and Mediterranean Sea, said the Energy Information Administration, which is part of the U.S. Department of Energy. That would raise transportation costs, it said.

Write to Tennille Tracy at tennille.tracy@dowjones.com

Lag Time for Drilling Business and How to Calculate Theoretical Lag Time

I got an email from Sanan asking me about how to calculate lag time. First of all, you need to know what the lag time is.

Lag time is traveling time interval required for pumping cuttings from each particular depth to surface. It can be expressed in terms of time (minutes) and pump strokes.

The lag time always changes when a well becomes deeper and/or pumping speed change. Two factors, affecting lag time calculation, are annulus volume of drilling fluid in and drilling mud flow rate.

With certain annular volume, the lag time, normally expressed in minutes, can be determined by dividing the annular volume (bbls) by the flow rate (bbl/min).

If there are changes in mud flow rate, the lag time figure will be changed as well. In order compensate for any changes, the lag time is transformed into pump strokes too; therefore, a change in speed of pump will not affect the lag time.

How to Calculate Theoretical Lag Time

There are 3 steps to do in order to calculate lag time as listed below;

1. Calculate pump output
2. Calculate annular volume at certain depth of hole
3. Calculate the theoretical lag time

Example – Determine lag time from bottom to surface with the following information;

Bit depth = 9500' MD
Pump rate = 300 GPM
Annular volume at 9500' MD = 250 bbl
Pump details: Triplex pump, 97% efficiency, liner size 6" and stroke length 12"

Solution;

Triplex Pump Output Formula is listed below;

Triplex Pump Output in bbl/stk = efficiency x 0.000243 x (liner diameter in inch) ² X (stroke length in inch)

Triplex Pump Output in bbl/stk = 0.97x 0.000243 x (6) ² X (12)
Triplex pump output = 0.102 bbl/stroke

Pump rate = 300 GPM ÷ 42 = 7.14 bbl / minute

Lag time in minutes = 250 bbl ÷ 7.14 bbl / minute = 35 minutes
Lag time in strokes = 250 bbl ÷ 0.102 bbl/stroke = 2451 strokes

Please find the lag time calculation sheet

Pressure Loss and Equivalent Circulating Density Review

This example that I got from my junior member is very simple but it helps you a lot to understand about how to determine pressure loss during normal circulation.

Information given is listed below;

Circulate at 3 bottom up through open end tubing (Down tubing and up annulus) with 12.7 ppg mud.

Pump pressure = 1000 psi

Annulus friction loss = 50 psi

Inside tubing friction loss = 925 psi

Surface line friction loss = 25 psi

Calculate the pressure in the well at 10,000' (tubing tail). What would ECD at 10,000' TVD be?

The concept of calculation that you should know : total pressure at bottom = pumping pressure + hydrostatic pressure – pressure loss in the opposite way of fluid flowing.

Then,

If I reference to tubing site, I will get the equation like this.

Pressure at bottom hole= Hydrostatic Pressure at bottom hole + Pressure from pump- Pressure Loss in surface line – Pressure loss in tubing

Pressure in the well at 10,000' = 0.052×12.7×10000 + 1000 – 25 – 925 = 6654 psi

If I reference to annulus site, I will get the equation like this.

Pressure at bottom hole= Hydrostatic Pressure at bottom hole +Annular pressure loss

Note: Hydrostatic pressure and annular pressure loss force downward.

Pressure in the well at 10,000' = 0.052×12.7×10000+ 50 = 6654 psi

Note: It doesn't matter which site of u-tube you refer to the bottom hole pressure is still the same.
ECD (Equivalent Circulating Density) is calculated by this following equation:

ECD = Current mud weight in PPG + (annular pressure loss /(0.052xTVD))

ECD = 12.7 + (50/(0.052 x 10000))

ECD = 12.8 ppg

Pressure Loss and Equivalent Circulating Density Review – Reverse Circulation

We still have the same question as the previous post, Pressure Loss and Equivalent Circulating Density Review, but this case we will do reverser circulation, circulating from annulus to tubing , and see how much pressure and equivalent circulating density at bottom hole.

Data Given

Reverse circulate total of 3 time bottom up from annulus to tubing with 12.7 ppg mud at 10,000′MD/10,000 TVD.

Pump pressure = 1000 psi

Annulus friction loss = 50 psi

Inside tubing friction loss = 925 psi

Surface line friction loss = 25 psi

Determine pressure at bottom hole.

We still apply the concept of frictional pressure so reverse circulation is calculated by this following equation:

Pressure at bottom hole (reference at annulus side) = Hydrostatic Pressure + Pressure from pump- Annular Pressure Loss

Note: Hydrostatic pressure and pressure from pump force downward to bottom hole but annulus pressure forces upward direction.

Pressure in the well at 10,000' = 1000 + (0.052×10,000×12.7) – 50 = 7554 psi

OR you can referrence to the tubing side as well.

Pressure at bottom hole (reference at tubing) = Hydrostatic Pressure + Annular Pressure Loss in tubing + surface line pressure loss
Note: All pressure force downward to bottom hole so all pressure term must be sum together.

Pressure at bottom hole (reference at tubing) = (0.052×10,000×12.7) + 925+25 = 7554 psi.

Determine Equivalent Circulating Density at bottom hole.

ECD = Current mud weight in PPG + (annular pressure loss /(0.052xTVD)) = Total Pressure at Bottom Hole /(0.052xTVD)

ECD =7554 / (0.052 x 10,000) = 14.53 PPG.

The point that I want you to think of between this example and the previous example, Pressure Loss and Equivalent Circulating Density Review, is about the different of bottom hole pressure and ECD between forward circulation and reverse circulation.

You will see that reverse circulation results in a lot of pressure at bottom hole. Hence, you must keep in mind this concept and try to figure out how much pressure at bottom hole should be for both forward circulation and reverse circulation. Otherwise, you can accidentally break wellbore due to high ECD.

Large Natural Gas Find 'An Historic Day for Cyprus'

President Demetris Christofias said Wednesday was an historic day for Cyprus after announcing that Block 12 contained an estimated 5 to 8 trillion cubic feet (tcf) of natural gas.

Based on the exploratory drill by U.S. based Noble Energy the prospect, which lies south of the island, contains a gross mean of 7 tcf of gas, Christofias said in a statement live on television.

"The discovery of natural gas in the exclusive economic zone of our country opens great potential for Cyprus and its people, which with prudence and in a spirit of collectiveness, we will utilize in the service of public interest," Christofias said.

"New favourable economic prospects have opened for the future of the country," Christofias added. "Both the present as well as the next generations will benefit."

In its own statement, issued simultaneously with Christofias, Noble Energy said it was "excited" by the find, which it described as "significant".

Charles D Davidson, Noble Energy's Chairman and CEO, said: "We are excited to announce the discovery of significant natural gas resources in Cyprus on Block 12. This is the fifth consecutive natural gas field discovery for Noble Energy and our partners in the greater Levant basin, with total gross mean resources for the five discoveries currently estimated to be over 33 Tcf. This latest discovery in Cyprus further highlights the quality and significance of this world-class basin."

Davidson went on to say, "We would like to thank the Government of Cyprus for their productive cooperation and support in achieving an important outcome for the people of Cyprus and Noble Energy. We look forward to working closely with the Government of Cyprus to develop this discovery in a manner that maximizes value for all stakeholders."

Noble Energy operates the well with a 70 percent working interest. Delek Drilling and Avner Oil Exploration will each have 15 percent, subject to final approval by the government of Cyprus.

Christofias said the discovery held a net natural gas pay of approximately 310 feet. The depth of the drill reached 19,229 feet (5,861 meters) into the seabed at a depth of 5,541 feet (1689 meters), he said. The specific field of hydrocarbons is estimated to extend in an area that covers 103,6 square kilometers.

It will be necessary to undertake one more drilling for a final evaluation before the exploitation of the reserves, Christofias said.

He said that addition to the investments entailed in the gradual development of the necessary infrastructure for the exploitation of natural gas, many foreign investors had already expressed interest in undertaking activities in Cyprus.

"The discovery of natural gas can and should become a tool to promote peace and cooperation in the region. The exploitation of hydrocarbons can become an incentive for a solution to the Cyprus problem, a solution that will terminate the illegal occupation and the illegal colonisation, that will reunify our country and our people, and will restore the human rights and the basic freedoms of our people, Greek Cypriots and Turkish Cypriots alike," said Christofias.

"We appeal to Turkey and we call on her to show a spirit of peace and cooperation, to avoid any adventurous actions and provocations that cause problems in the negotiations as well as tension in the Eastern Mediterranean region"

He said the discovery of hydrocarbons constituted a historic development, which "fills all of us with a sense of optimism for the future."

Turkey has challenged Cyprus's bid to search for hydrocarbons, saying the island has no jurisdiction.

Turkey says it plans to conduct its own hydrocarbon surveys off Cyprus. When Noble started its exploratory drilling in September, it sent its own survey vessel to the area.

Turkish Cypriots reacted coolly to the announcement yesterday. "In our view, the Greek Cypriots should be investing more in the negotiations, and not in things that cause further disputes," said Kudret Ozersay, chief aide to Turkish Cypriot leader Dervis Eroglu.

The gross mean resource range of 5-8 tcf could be a conservative estimate, US based brokerage Sterne Agee said, according to Reuters.

"If we use prior news releases on the Tamar and Leviathan discoveries as a guide, we believe that today's initial resource report by Noble is likely to be conservative, and we would not be surprised to see significant upward revisions in the next couple of years as the project nears production," Sterne Agee analyst Michael McAllister said in a note. Leviathan and Tamar are two fields off Israel.

Proven discoveries could make Cyprus, which now relies almost exclusively on imported and expensive fuel oil to fire its energy grids, self sufficient for decades. The island has estimated needs in gas of 1 billion cubic metres (bcm) per year.

Cyprus Gas Find Worth 'Tens of Billions'

Cyprus has approximately $129 billion (EUR 100 billion) worth of natural gas that will satisfy its electricity production needs for 210 years, said Commerce Minister Praxoulla Antoniadou yesterday.

Antoniadou was speaking only hours after President Demetris Christofias officially announced that Noble Energy had discovered between 5 trillion and 8 trillion cubic feet (tcf) of natural gas in the Block 12 Aphrodite field.

Christofias called the find "historic", while Noble said it was "excited" about the "significant" find.

Speaking to the state broadcaster CyBC later Wednesday night, Antoniadou highlighted that the most important aspect of Noble's findings was that "there is now certainty on the existence of natural gas in Cyprus, because until now we spoke about possibilities".

Investors had shown interest even before any confirmation of the existence of hydrocarbons in block 12 of Cyprus' Exclusive Economic Zone (EEZ). But now that Noble has confirmed the existence of a natural gas reservoir of between 5 trillion and 8 trillion cubic feet (tcf) with a gross mean of 7tcf, this interest will manifest in much more concrete terms, with regard to infrastructure investments and the provision of additional services.

"Another important issue is the quantities confirmed... it's a significant quantity," she said, noting that every trillion cubic feet of natural gas covers Cyprus' electricity production needs for 30 years, meaning 7tcf will keep Cyprus satisfied for 210 years.

Asked to quantify the results in terms of value, Antoniadou confirmed that "we're talking about tens of billions".

"If you want an indication, if you consider that 6,000 cubic feet is equal to one barrel of oil, then approximately 7 tcf is equivalent to one billion barrels, and to give an indicative value of these deposits based on the barrel analogy, the deposits in one of the 13 blocks are worth around EUR 100 billion ($129 billion) in value," she said.

The minister highlighted that Noble has the right to carry out exploratory drilling in a second part of block 12, while Cyprus has a total of 13 blocks in its EEZ.

Asked when gas could reach the island the earliest, Antoniadou replied the gas could arrive in Cyprus in three to four years for domestic consumption.

If there are enough quantities for export, then this would require more years and long-term strategic planning.

She noted the government was being advised by a panel of experts and consultants on all aspects, including licencing for the remaining blocks and possible long-term export strategies.

The minister added that some sort of national company needed to be created to manage the existence of hydrocarbons in Cyprus' EEZ, giving the state a "decisive role" in wealth management.

Antoniadou skirted a question on possible collaboration with Israel on gas export, instead highlighting the need for all countries of the region to work together to create prosperity in the region.

She also highlighted the strategic importance of the results for Europe's energy needs, given the fact nuclear energy has fallen from grace.

"Cyprus is in a position to strengthen the energy security of the EU as we are the only country in the region that belongs to the EU, and at a time when the EU seeks new sources of natural gas," she said.

Finance Minister Kikis Kazamias remained somewhat more reserved in his celebratory response.

"The times we are facing are not the easiest and even announcements like the one we've heard does not permit us to have our head in the clouds," Kazamias said. "We need to remain grounded, serious and prove that we are prepared to manage this properly. Problems are not overcome on their own. We continue to live in a difficult economic environment, not so much domestically as internationally."

Asked if he expects upgrades from the credit rating agencies following the announcement, he said: "I would hope so."

Communications Minister Efthymios Flourentzos struck a note of optimism, saying that as a public listed company, Noble would always announce a more conservative estimate of the quantities of natural gas, so as not to run afoul of the New York Securities and Exchange Commission.

University of Cyprus professor and member of the group of experts appointed to advise the government, Panos Papanastasiou agreed, saying the find was "possibly the second largest offshore gas find in the last decade".

"Companies are usually conservative. They don't announce figures and then downgrade them because they run the risk of being penalized," Papanastasiou said.

Professor of Chemical and Biomolecular Engineering at the University of Houston, Michael Economides, said the total quantity of all deposits in Cyprus' EEZ could reach 75 tcf.

Economides called on the government to set up a national petroleum company, which could then go 30 percent public, raising "at least" $10 billion for the state.

Energy Service head Solon Kassinis said Wednesday was "particularly moving" for him as he had estimated last year block 12 had between 8 and 10 tcf. He said announcements for a second round of licencing for the remaining blocks could be expected by the end of next month.

Goldman Sachs published a research report Wednesday stating that the Cyprus success may help fast-track EU-based liquefied natural gas development.

"We view this as significant because we believe there are fewer political hurdles for consumers to take gas from an EU country," it said.

Opposition party DISY's Haris Georgiades said the announcement was "without doubt a very significant and positive development". He called on the government to formulate a comprehensive energy strategy, create a credible institutional framework and establish procedures of "full transparency".

AKEL, DIKO, EDEK and the Greens also welcomed the "historic" findings.

Leak Off Test (Procedures and Calculation)

Leak Off Test is conducted in order to find the fracture gradient of certain formation. The results of the leak off test also dictate the maximum equivalent mud weight that should be applied to the well during drilling operations.

Leak Off Test (LOT) guide line procedures are as follows (note: this is just only guide line. You may need to follow your standard procedure in order to perform leak off test):

1.Drill out new formation few feet, circulate bottom up and collect sample to confirm that new formation is drilled to and then pull string into the casing.

2.Close annular preventer or pipe rams, line up a pump, normally a cement pump, and circulate through an open choke line to ensure that surface line is fully filled with drilling fluid.

3.Stop the pump and close a choke valve.

4.Gradually pump small amount of drilling fluid into well with constant pump stroke. Record total pump strokes, drill pipe pressure and casing pressure. Drill pipe pressure and casing pressure will increase continually while pumping mud in hole. When plot a graph between strokes pumped and pressure, if formation is not broken, a graph will demonstrate straight line relationship. When pressure exceeds formation strength, formation will be broken and let drilling fluid permeate into formation, therefore a trend of drill pipe/casing pressure will deviate from straight line that mean formation is broken and is injected by drilling fluid. We may call pressure when deviated from straight line as leak off test pressure.

Note: the way people call leak off test pressure depends on each company standard practices.

Leak off test pressure can be calculated into equivalent mud weight in ppg as formula below:

Leak off test in equivalent mud weight (ppg) = (Leak off test pressure in psi) ÷ 0.052 ÷ (Casing Shoe TVD in ft) + (current mud weight in ppg)

Pressure gradient in psi/ft = (Leak off test pressure in psi) ÷ (Casing Shoe TVD in ft)

Example:

Leak off test pressure = 1600 psi
Casing shoe TVD = 4000 ft
Mud weight = 9.2 ppg

Leak off test in equivalent mud weight (ppg) = 1600 psi ÷ 0.052 ÷ 4000 ft + 9.2ppg ppg = 16.9

Pressure gradient = 1600 ÷ 4000 = 0.4 psi/ft

4.Bleed off pressure and open up the well. Then proceed drilling operation.

Please find the Excel sheet to calculate leak off test

Formation Integrity Test (FIT) Procedure and Calcualtion

Formation Integrity Test is the method to test strength of formation and shoe by increasing Bottom Hole Pressure (BHP) to designed pressure. FIT is normally conducted to ensure that formation below show will not be broken while drilling the next section with higher BHP. Normally, engineers in town will design how much formation integrity test pressure required mostly in ppg.

Before forming formation integrity test, you should know pressure required for Formation Integrity Test. The formula showed below demonstrates you how to calculate required FIT pressure.

Pressure required for FIT (psi) = (Required FIT in ppg – Current Mud Weight in ppg) x 0.052 x True Vertical Depth of shoe in ft

Example:
Required FIT (ppg) = 14.5
Current mud weight (ppg) = 9.2
Shoe depth TVD (ft) = 4000 TVD
Pressure required for FIT = (14.5-9.2) x 0.052 x 4000 = 1102 psi

Formation Integrity Test (FIT) guideline is listed below: (note: this is just only guide line. You may need to follow your standard procedure in order to perform formation integrity test):

1. Drill out new formation few feet, circulate bottom up and collect sample to confirm that new formation is drilled to and then pull string into the casing.

2. Close annular preventer or pipe rams, line up a pump, normally a cement pump, and circulate through an open choke line to ensure that surface line is fully filled with drilling fluid.

3.Stop the pump and close a choke valve.

4. Gradually pump small amount of drilling fluid into well with constant pump stroke. Record total pump strokes, drill pipe pressure and casing pressure. Pump until casing pressure reaches the pressure required for formatin integrity test. Hold pressure for few minutes to confirm pressure.

5. Bleed off pressure and open up the well. Then proceed drilling operation.

Please find the Excel sheet to calculate pressure required for formation integrity test.

What are the differences between Formation Integrity Test (FIT) and Leak Off Test (LOT).?

You may confuse between Formation Integrity Test (FIT) and Leak Off Test (LOT).

They are different in this following aspect.

Leak Off Test – you pressure test shoe and formation until formation break down.

Let's I explain more about it: Leak off Test is conducted in order to find the fracture pressure (fracture gradient) of formation and shoe. When conducting the LOT, you will pump drilling fluid to until you see the fracture trend of formation. Once formation is fractured, the first pressure that deviated from a trend is typically called Leak Off Pressure. We use the leak off pressure to calculate LOT.

Formation Integrity Test – you test strength of shoe and formation to designed pressure.

Let's I explain more about it: Formation Integrity Test is typically used for testing strength of formation and shoe by increasing Bottom Hole Pressure (BHP) to designed pressure. When you do the FIT test, you will increase surface pressure until it reaches the required pressure only. There is no intention to break the formation with FIT. You will do FIT to ensure that you will be able to drill to section target depth and will be able to control the well in case of well control situation without underground blow out.

In term of a calculation, both FIT and LOT have the same formulas. You can read more detailed calculations about Formation Integrity Test (FIT) and Leak Off Test (LOT).

Abnormal Pressure from Anticline Gas Cap

I got a question about how an anticline gas cap can create the abnormal pressure. The anticline with gas cap can be the potential high pressurized zone. Because of reservoir connectivity between fluid underneath gas and gas reservoir, it can generate abnormal pressure. This example below demonstrates you how this situation could happen.

Well#1 was already drilled into oil reservoir at 6500'MD/6000' TVD and its formation pressure is 0.52 psi/ft.

The second well, well#2, is planned to drill into the gas cap, which has reservoir connectivity to the well#1, at 5400'MD/4800' TVD and a geologist estimates gas cap thickness of 950 ft and pressure gradient is 0.1 psi/ft.

What is minimum mud weight to be able to successfully drill well#2?

Firstly, I would like to share which basic concepts I will use for this case .

Hydrostatic Pressure
Pressure gradient
Convert pressure to equivalent mud weight
Equivalent Mud Weight

You need to determine formation pressure of well#1.

Well#1: Well depth: 6,500'MD/6,000'TVD and Pressure gradient: 0.52 psi/ft

Formation pressure of well#1 = 0.52 x 6000 = 3120 psi

Convert pressure to equivalent mud weight = 3120 ÷ (0.052 x 6000) = 10.0 ppg

You may think that 10.0 ppg should be good mud weight to drill well#2. –> Wrong answer.

Let's take a look at the well#2.

Abnormal Pressure - Anticline Gas Cap 2

Pressure at the bottom of gas cap = formation pressure of well 1 @ 6000'TVD – hydrostatic pressure of reservoir fluid

Pressure at the bottom of gas cap = 3120 psi – 0.52 x (6000 – 5750) = 2990 psi

Determine the reservoir pressure at the top of gas cap:

Pressure at the top of gas cap = Pressure at the bottom of gas cap – hydrostatic of gas gradient

Pressure at the top of gas cap = 2990 – (0.1×950) = 2895 psi

Since we know the formation pressure, we can calculate to equivalent mud weight (EMW).

EMW of well#2 = 2895 ÷ (0.052 x 4800) = 11.6 ppg

You need mud weight at least 11.6 ppg to drill well#2 successfully.

Conclusion: This case clearly shows you that the anticline gas cap can be high pressurized zone and you may not be able to drill the well with the same mud weight as the adjacent drilled into the same reservoir.

Maximum Initial Shut-In Casing Pressure (MISICP)

Maximum Initial Shut-In Casing Pressure (MISICP) or Maximum allowable shut in casing pressure is the initial shut-in casing pressure that will exceed formation strength at the casing shoe resulting in broken formation at the shoe.
How can we know and calculate the MISICP?
Leak Off Test (LOT) will tell you the maximum pressure which the shoe can withstand without breaking formation at the shoe. The LOT is the combination of surface pressure and hydrostatic pressure therefore you can apply this principle to calculate the MISICP.

The MISICP formula is listed below:
MISICP, psi = (LOT, ppg – Current Mud Weight, ppg) x 0.052 x TVD of shoe, ft
Please see the example demonstrating how to calculate the MISCIP by using the following information:
LOT = 15.0 ppg
Current mud weight = 10.0 ppg
Casing shoe depth = 4526'MD/4200'TVD
MISICP, psi = (15 – 10) x 0.052 x 4200
MISICP = 1,092 psi
Note: Please ensure that you use the TVD for calculating the MISICP.
Click Here !!! The excel sheet for calculating the Maximum Initial Shut-In Casing Pressure (MISICP)

Thursday, December 29, 2011

Report: Offshore Drillers Should Take 'System Safety' Approach

To reduce the risk of another accident as catastrophic as the Deepwater Horizon explosion and oil spill, a new report from the National Academy of Engineering and National Research Council says companies involved in offshore drilling should take a "system safety" approach to anticipating and managing possible dangers at every level of operation - from ensuring the integrity of wells to designing blowout preventers that function "under all foreseeable conditions."

In addition, an enhanced regulatory approach should combine strong industry safety goals with mandatory oversight at critical points during drilling operations.

The report says the lack of effective safety management among the companies involved in the Macondo Well-Deepwater Horizon disaster is evident in the multiple flawed decisions that led to the blowout and explosion, which killed 11 workers and produced the biggest accidental oil spill in U.S. history. Regulators also failed to exercise effective oversight.

"The need to maintain domestic sources of oil is great, but so is the need to protect the lives of those who work in the offshore drilling industry as well as protect the viability of the Gulf of Mexico region," said Donald C. Winter, former secretary of the Navy, professor of engineering practice at the University of Michigan, and chair of the committee that wrote the report.

"Industry and regulators need to include a factual assessment of all the risks in deepwater drilling operations in their decisions and make the overall safety of the many complex systems involved a top priority."

Despite challenging geological conditions, alternative techniques and processes were available that could have been used to prepare the exploratory Macondo well safely for "temporary abandonment" - sealing it until the necessary infrastructure could be installed to support hydrocarbon production, the report says.

In addition, several signs of an impending blowout were missed by management and crew, resulting in a failure to take action in a timely manner.

And despite numerous past warnings of potential failures of blowout preventer (BOP) systems, both industry and regulators had a "misplaced trust" in the ability of these systems to act as fail-safe mechanisms in the event of a well blowout.

BOP systems commonly in use - including the system used by the Deepwater Horizon - are neither designed nor tested to operate in the dynamic conditions that occurred during the accident.

BOP systems should be redesigned, rigorously tested, and maintained to operate reliably, the report says.

Proper training in the use of these systems in the event of an emergency is also essential.

And while BOP systems are being improved, industry should ensure timely access to demonstrated capping and containment systems that can be rapidly deployed during a future blowout.

Operating companies should have ultimate responsibility and accountability for well integrity, the report says, because only they possess the ability to view all aspects of well design and operation.

The drilling contractor should be held responsible and accountable for the operation and safety of the offshore equipment.

Both industry and regulators should significantly expand the formal education and training of personnel engaged in offshore drilling to ensure that they can properly implement system safety.

Guidelines should be established so that well designs incorporate protection against the various credible risks associated with the drilling and abandonment process.

In addition, cemented and mechanical barriers designed to contain the flow of hydrocarbons in wells should be tested to make sure they are effective, and those tests should be subject to independent, near real-time review by a competent authority.

The U.S. Department of the Interior's recent establishment of a Safety and Environmental Management Systems (SEMS) program - which requires companies to demonstrate procedures for meeting explicit goals related to health, safety, and environmental protection - is a "good first step" toward an enhanced regulatory approach.

Regulators should identify and enforce safety-critical points that warrant explicit regulatory review and approval before operations can proceed.

Offshore drilling operations are currently governed by a number of agencies, sometimes with overlapping authorities.

The U.S. should make a single government agency responsible for integrating system safety for all offshore drilling activities.

Reporting of safety-related incidents should be improved to enable anonymous input, and corporations should investigate all such reports and disseminate lessons learned to personnel and the industry as a whole.

The study was sponsored by the U.S. Department of the Interior.

The National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies.

They are private, nonprofit institutions that provide science, technology, and health policy advice under a congressional charter.

The Research Council is the principal operating agency of the National Academy of Sciences and the National Academy of Engineering.

Formation Pressure from Kick Analysis

Once you shut in the well in and obtain shut in drill pipe pressure, you can estimate formation pressure by applying the hydrostatic pressure concept.

This following equation demonstrates you how to figure out formation pressure from the kick analysis.

Formation Pressure = SIDDP + (0.052 x Hole TVD x Current Mud Weight)

Unit of each parameter is listed below:

Formation Pressure in psi

SIDDP (shut in drill pipe pressure) in psi

Hole TVD (true vertical depth) in ft

Current Mud Weight in ppg

For more understanding, please use the following example to determine formation pressure from this following information.

Shut in drill pipe pressure after bumping the float is 550 psi.

Shut in casing pressure is 700 psi.

Current depth of the well is 7,500'MD/6,000'TVD.

Current mud weight in hole is 10.2 ppg.

According to the formation, you will be able to get the formation pressure like this.

Formation Pressure = 550+ (0.052 x 6000 x 10.2)

Formation Pressure = 3732 psi

Please find the Excel sheet > Formation Pressure from Kick Analysis

Estimated mud weight required to safely drill the well

I have an interesting question to share with you about how to estimate minimum mud weight required to safely TD the well. The question is shown below.

7" casing shoe was set at 6,500'MD/5,000' TVD. The geologist team in town expects 2 hydrocarbon reservoirs and information is listed below;

Target sand A: Expected depth 5500' TVD, pressure gradient is 0.48 psi/ft

Target sand B: Expected depth 8800' TVD, pressure gradient is 0.49 psi/ft

The planned TD is 9200'MD/9000'TVD and the drilling team requires 250 psi overbalance while drilling.

What is the mud weight required to drill the well with 250 psi overbalance?

I draw a simple diagram like this.

Knowledge required:

Calculate formation pressure from pressure gradient

Convert pressure in to equivalent mud weight

Let's take a look at each point.

Formation pressure of sand A = 0.48 x 5500 = 2640 psi

Over balance 250 psi so the hydrostatic pressure required is 2,890 (2640 + 250) psi.

Convert pressure into mud weight = 2890 ÷ (0.052 x 5500) = 10.2 ppg.

Formation pressure of sand B = 0.49 x 8800 = 4,312 psi

Over balance 250 psi so the hydrostatic pressure required is 4,562 (4312 + 250) psi.

Convert pressure into mud weight = 4562 ÷ (0.052 x 8800) = 10.0 ppg

Please always use round up number for the mud weight.

For this case, you must use 10.2 ppg mud weight in order to drill to TD safely. The point that I would like to emphasize on this topic is that you need to calculate how much pressure required for all sands. Please do not use only the sand that has the maximum pressure gradient.

Total Flow Area (TFA)

Total Flow Area (TFA) is summation of nozzle areas which fluid can pass through. When you consider about the TFA, you need to count all nozzles that you have in a bit or a reamer.

Basically, you can determine flow area with a simple circle area formula.

Where;

Area in square inch

? is a constant which approximately equates to 3.1429.

D is diameter in inch

Let's make it easier for our life. Normally, a diameter of nozzle is reported in xx/32 inch. For example, a bit has 3 nozzles and each one of them has size of 20/32 inch.

The formula above can be simplified like this.

Where;

Area in square inch

N is nozzle size in number/32 inch.

In order to find the total flow area of each bit or reamer, you must add all area of each nozzle.

For instant, you use a bit that has a total of 5 nozzles. Three nozzles have a diameter of 10/32 inch and other 2 nozzles are 12/32 inch diameter. Determine the total flow area (TFA) of the bit.

By the definition, you must sum every nozzle together in order to get the TFA; therefore, you can apply the formula above into this form.

Total flow area = 0.451 square inch

Wednesday, December 28, 2011

BSEE conducts first-ever unannounced 'oil spill drill'

12/23/2011

The Bureau of Safety and Environmental Enforcement (BSEE) has completed the first unannounced oil spill drill since the reorganization of the former Minerals Management Service was completed on Oct. 1.

The table-top drill, which took place last week, was led jointly by BSEE in conjunction with the U.S. Coast Guard and the State of Louisiana and tested Stone Energy Corporation's ability to assess a subsea well control situation and mobilize the proper subsea containment/intervention equipment in a timely manner. A final evaluation will follow when analysis of all documentation is completed.

"The Unannounced Spill Drill Program provides an effective tool that helps us ensure operators are appropriately trained in effective containment deployment and that the necessary equipment and resources are truly in place to implement the approved response plan," said BSEE Director James Watson. "This program is one of many diverse activities we employ within our agency to ensure operators are able to fully execute their oil spill response plans."

The Unannounced Spill Drill Program, initiated in 1989, tests an operator's ability to notify the appropriate entities and personnel in the event of a spill, including federal regulatory agencies, affected state and local agencies, internal response coordinators, and response contractors, and to take appropriate action to implement their response plan. If the decisions made during the drill do not align with the approved oil spill response plan, it provides an opportunity to determine what needs to change in the response process.

Last week's drill tested Stone Energy Corp. with a scenario that was premised on a hypothetical blowout experienced by one of its deepwater exploratory wells.

The selection of an operator to participate in an unannounced drill is based on such factors as the number of oil producing facilities, the volume of oil production, and proximity to sensitive areas. With an eye to the operator's current activities, a location is chosen and a spill scenario is developed. Simulated weather conditions provided to the operator during the drill are used to produce a hypothetical trajectory of the spill.

For more information on BSEE's Unannounced Spill Drill Program, go to: http://www.bsee.gov/Inspection-and-Enforcement/Inspection-Programs/Inspection-Programs.aspx

Petro-Scholarships and Grants Proliferate

Students seeking scholarships to study oil and gas-related disciplines have an almost-dizzying range of options from which to choose.

Professional associations, colleges and universities and academic foundations are among the sponsors of hundreds of scholarship programs./p>

Those who have a technical discipline in mind – such as petroleum engineering or geosciences –can try professional association programs to start./p>

For example, the Society for Petroleum Engineers (SPE) offers the following scholarship programs:/p>

SPE Foundation Gus Archie Scholarship
Awards an outstanding student who plans to enter a university and pursue an undergraduate degree in petroleum engineering up to $6,000 per year.
SPE Foundation Nico van Wingen Graduate Fellowship
This fellowship in petroleum engineering provides up to two awards per year of $5,000 each for PhD-level studies.
SPE Star Scholarship and Fellowship
This large fund divides some $1 million between 15 regions to provide scholarships for undergraduates and fellowships for graduate students for up to a maximum of 4 years.
Henry DeWitt Smith Fellowship
This fellowship is for graduate students who can demonstrate other income sources.
SPE Section Scholarships
Many sections offer funding for scholarships, student travel, purchasing of books and computer software, and other forms of educational outreach.
Additional Scholarships
Numerous scholarships are available for degrees in the energy industry worldwide. View details on the various organizations and the funds they have available.

Another example of a professional association that is active on the scholarship front is the Society of Exploration Geophysicists (SEG.)

SEG Foundation

In addition, many companies sponsor scholarships. A small sampling of those available includes:

ExxonMobil Hispanic Scholarship Fund (HSF)
This program provides up to $2,500 per academic year for sophomores to seniors of Latino origin for a wide range of engineering majors.
Marathon Oil (HSF)
This program provides up to $15,000 per year for up to two academic years to students from a variety of ethnic backgrounds in a wide range of majors.
Chevron Society of Women Engineers (SWE)
This fund offers up to $2,000 per year for female college sophomores and juniors in engineering.

The free Web site EduInReview.com provides a wide array of scholarship listings and details, many of which are available through specific colleges and universities. Examples of petroleum-related scholarships, by typical award categories, include:

Saturday, December 31, 2011

Every Cloud Has a Silver Lining

A New Take on Life

Grass is Grenner ...

Hard-Won Refining

Friday, December 30, 2011

By JULIAN E. BARNES and TENNILLE TRACY

Thursday, December 29, 2011

Wednesday, December 28, 2011

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