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2005 PetroSkills LLC, All Rights Reserved

PLANNING

Proper planning is key to

optimizing operations and

minimizing expenditures

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2005 PetroSkills LLC, All Rights Reserved2

PLANNING

The drilling engineer's job is todevelop oil and gas reserves at

minimum cost

Oil companies are in the business to

make money

If we do not make money, we cannot

stay in business

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PLANNING

The drilling plan can be anythingfrom a single sheet of paper toseveral books

It depends upon the complexityof the well

Data acquisition

The first step in formulating anydrilling plan is to gather informationfor drilling the well

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PLANNING

Some information is always available

Geologic prognosis

The geologic prognosis contains

information about the formation to bedrilled

It should define the objectives of the well

It should indicate the types of logsrequired and whether cores and drill

stem tests will be required

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PLANNING

Example in bookName and Location:

Dry Hole No. 1-"A", 700' FNL & 660'

FEL Section 82, Block B-1, H&GNSurvey, Northwest Mendota Field,Roberts County, Texas.

Objective Horizon and Contract

Depth: Base of Upper Morrow Sandplus 100' (30m); Approved depth11,350' (3460m)

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PLANNING

Estimated Formation TopsEstimated Elevation, KB 2,857' 871m

Top Wichita-Albany Anhydrite 2,950' 899m

Top Wolfcamp Dolomite 4,150' 1,265m

Top Possible Lost Circulation 4,300' 1,311m

Top Douglas Sands 7,100' 2,164m

Top Granite Wash 9,950' 3,033m

Top 13 Finger Lime 10,910' 3,325m

Top Morrow Formation 11,100' 3,383m

Top Morrow Sand 11,165' 3,408m

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PLANNING

Possible Producing Zones:Douglas Sand 7,100-7,200' 2,164-2,194m

Stray Douglas Sand 7,400' 2,256m

Des Moines 9,050-9,900' 2,758-2,018m

Granite Wash 9,950-10,800' 3,033-3,292m

Upper Morrow Sand 11,165' 3,403m

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PLANNING

Samples:Catch 10' (3m) samples from 6,800' (2070m) to

TD. Wash thoroughly, air dry, and tie in 100'(30m) bundles. 10' (3m) drilling time from 3,350'(1020m) to TD.

Coring:One 50' (15m) oriented core of Upper Morrow

Sand 11,165 to 11,215, (3,403m to 3,418m)approximately. (Need core for dipmeter study and

environmental analysis.)

Drill Stem Testing:Possibly one test in Granite Wash

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PLANNING

Surveys:Dual Induction and Compensated Neutron

Formation Density logs

Remarks:Set surface casing at 3,350' (1021m); set

intermediate casing at 10,950' (3,338m) (5

1/2 139.7mm). Possible string of 2 1/2"

(64mm) tubing to be set outside of 5 1/2"

(139.7mm) casing in order to test Granite

Wash.

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Geologic mapProvides

information on

offset wells thatcan be used for a

reference

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Geologic mapsGeologic cross

section and

structure

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Control wellsControl wells should be geologically

similar to the well being planned

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Bit recordInformation from offset bit records

can show

Casing points

Mud weights

Deviation

Time to drill

Number of bits

Types of bits

Hydraulics

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Open hole logsInformation on formation types

Caliper log can indicate hole stability

Pore pressures from shale values

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Drilling mud recap and proposalRecommended mud program

Information on offset wells

Time required to drill offsets

Hole problems

Mud properties

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Scout ticketInformation on

productive

horizons andproduction rates

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Once all the information iscollected, it is the drilling

engineers responsibility to

develop a drilling plan

Improvements in drilling

practices are always possible

and expected in an area

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PLANNING

Local problems and drillingconditions must be analyzed

with respect to a broad, ever

changing expertise in order todevelop the best possible drilling

program

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PLANNING

Be a skepticIt is our responsibility as drilling

engineers to question drilling

practices which are inconsistent withsound judgment or other experiences

in similar areas

Can the well be drilled moreefficiently and at a lower cost

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PLANNING

Develop expertise in every phaseof drilling

Learn all you can

Spend time on the rig to become

familiar with operations

Don't close your mind to new

technology or the experience of

others

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Establish realistic objectivesStick to facts, data, and statistics

Don't do anything simply

because it's the established

routine

Time is the most important factorAll efforts should be directed at

reducing time

P ANNING

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Attack general practices in viewof new technology

For real savings, attack the

hazards

Attack the abnormal pressure

problems, the deviation, the lost

circulation, or the pipe sticking

problems

PLANNING

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Support conclusions andrecommendations with data,

analysis, and calculations

Follow up and honestly evaluate

your efforts

Report success and failures alike

Don't place blame; find solutions

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The Technical Limit (Drillingthe Limits) is defined as the

best possible well construction

performance for a given set ofdesign parameters

The technical limit is a well design

process by which drilling andcompletion costs are reduced

PLANNING

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The assumption is made thatcosts are time driven

Up to 70% of drilling costs are time

dependent

If the amount of time on location

can be reduced, the cost of the

well can be reduced

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This reduction requiresextraordinary effort and

commitment challenging the

common mindset and philosophyof the drilling personnel

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The technical limit approach consists of

answering three questions.What is the current performance? Or what is

the historical or actual performance of wells

near the location?What is a possible and achievable

performance? Alternately, what is the

theoretical limit of the performance in this

location?What resources or investments are needed to

achieve the theoretical or technical limit?

PLANNING

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Offset wells are evaluated in detailfor time required to drill and

complete

Based on the gathered

information, the well drilling plan

is broken down into many tasks

Complicated wells may have more

than 100 separate tasks

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The time is broken up intoTheoretical well time,

Conventional lost or down time, and

Invisible lost time

Theoretical

Well Time

Conventional

Lost or Down

Time

Invisible Lost

Time

Industry Normal Well Time

Actual Well Duration

Technical Limit

PLANNING

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Technical limit requires muchmore in-depth well analysis and

planning

Each phase of the drilling operationmust be broken down into it's parts

On complicated wells, planning may

take as much as six month andthousands of man hours

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ExampleTime to drill 12 hole (311mm)

Pick up BHA

Trip in hole

Test casing

Drill out shoe track

Drill formation

Leak off test

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ExampleTime to drill 12 hole (311mm)

Drilling

Surveying

Tripping

Circulating

Formation evaluation

Etc.

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After the time breakdown, everydetail must be analyzed by a

team

The team includes drilling,completion, production, reservoir,

service companies, drilling contractor,

permitting, purchasing andmanagement

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Field personnel need to be includedas part of the planning andimplementation

During the actual wellconstruction, the time for eachoperation must be tracked

Deviation from the technical limitmust be explained and solutionsoffered

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A post well analysis isconducted after the well

construction is completed

Summarize the lessons learned

Give possible solutions to eliminate

the lost time

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There cannot be an environmentwhere the parties are looking for

someone to blame

It must be:

What are the problems

What are the solutions

How can we improve

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Jones and Poupet reported 20%

improvement from the best previousoffset well performance and 25%cost reduction from the budgetedamount

41

31

27.25

21.63

15

0 5 10 15 20 25 30 35 40 45

Days

Historical Estimate

Historical Estimate with

One Improved Task

Best Well in the field

Well Drilled after the

Alternate Planning

Technical Limit

PLANNING

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PLANNING

The technical limit approachprovides an immediate benefit ofreduced costs to construct a well

It intensifies planning andengineering effort

Challenges the established practicesand procedures

Creates an opportunity for betterperformance and thereby, accelerateswell construction activities

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The technical limit approachshould not be designed to

surpass the regulatory, health

and safety issues related to welldevelopment

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The approach improves wellconstruction time, and hencewould need careful resource

planning during the constructionphase as well as after theconstruction activity is over

It does no good to drill faster if youhave to wait on equipment orpersonnel because they are not thereon time

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As with any new activity, therewill be a learning curve for

implementing and reaping full

benefits from the new approach

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Extending The Alternate Approachto Drilling Cost Management

Time dependent costs e.g. drilling rig

rate etc.

Time independent variable costs e.g.

mud, cement etc.

Fixed costs e.g. casing, well heads,mobilization, demobilization etc.

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A much larger improvement can be

achieved by also including time-independent costs into the planning

procedure

The time-independent cost elementcan be 30-60% of the well cost

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The planning should begin even before

the bids are floated for the welldevelopment

01 planning

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