a critique of dcwd tools

Module Code: BD415024S

MARKETING DESIGN & INNOVATION

A Critique ofDirectional Casing

While Drilling Tools

Prepared by:S.I.D. – 1031424

Word Count – 2948

S.I.D. – 1031424 A critique of directional casing while drilling

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List Of Abbreviations

1. BHA – Bottom-hole assembly

2. DCwD – Directional Casing While Drilling

3. DLA – Drill-Lock Assembly

4. LWD – Logging while drilling

5. MWD – Measurement while drilling

6. PDM – Positive displacement motor

7. R&D – Research & development

8. RSS – Rotary Steerable Systems

9. SDL – Steerable drilling liner

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TABLE OF CONTENTS

TOPICS Page

PRODUCT SELECTION & REASONING 3

WHAT IS DCwD? 5

DCwD DEVELOPMENT 6

DCwD COMPARISON 8

DESIGN ELEMENTS OF DCwD 10

VALUE & BENEFITS OF DCwD 13

BRAND APPEAL 17

CONCLUSIONS & RECOMMENDATIONS 19

APPENDICES 21

REFERENCES 22

BIBLIOGRAPHY 23

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Product Selection and Reasoning

“Not to innovate is to die” Freeman (1982).

The product that I have selected to critique is the innovative “Directional Casing while

Drilling” (DCwD) tools initially developed, marketed and patented by Schlumberger in

association with Tesco Corp. under the sponsorship of ConocoPhillips. Baker Hughes,

Halliburton and Weatherford have followed and are currently offering a similar product

under different trade names. This product targets energy companies who earn revenue by

exploring for, producing and fiscalizing oil and gas. This is a huge global market and the

ability to capture and retain market share is based on affordable technological

advancements.

DCwD is still a relatively new technology that won World Oil 2008 “Best Drilling

Technology Award”. “The business enterprise has two and only two basic functions –

Marketing and Innovation. Marketing and Innovation produce results: all else is cost”

Drucker (1953). This product was chosen since it is a prime example of how “co-

branding” impacts both marketing and innovation. Marketing is defined by the American

Marketing Association (AMA) as "the activity, set of institutions, and processes for

creating, communicating, delivering, and exchanging offerings that have value for

customers, clients, partners, and society at large." Innovation is defined as “a change in

the thought process for doing something, or the useful application of new inventions or

discoveries.” McKeown (2008)

The product was also chosen because it is a continuous innovation in the energy (and

specifically drilling) industry. As a Petroleum Engineer new technological developments

in the industry make my work easier. DCwD will greatly enhance success rate of finding

new and previously inaccessible reserves. Drilling is a complex process especially in

these times where all the “easy” oil and gas has been found. Wells are now being drilled

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in deeper waters, under harsher conditions than ever before, both offshore and on land.

Innovative technologies such as DCwD are required to overcome new and existing

problems and challenges.

Oil and gas is what currently drives and maintains industries and is hence very critical to

countries worldwide. The world’s energy consumption is almost totally based on

petroleum. “In 2008, total worldwide energy consumption was 474 exajoules

(474×1018 J) with 80 to 90 percent derived from the combustion of fossil fuels.” (Source:

Statistical Review of World Energy 2009, BP. Oct 24, 2009). Since hydrocarbons are not

renewable, any innovation or technological advancement that can assist in finding and

producing them economically is of great importance both on a personal and global level.

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What is DCwD?

DCwD uses a combination of rotary steerable systems (RSS) to provide directional

drilling capabilities with casing as the drillstring.

Directional/Horizontal Drilling:

This involves deviating a wellbore to a target given lateral distance and direction from the

vertical. Vertical drilling takes place until a planned depth (kick-off point) where the well

begins to deviate. Special bottom-hole assemblies (BHA’s) known as RSS which

incorporate measurement-while-drilling (MWD) and logging-while-drilling (LWD) are

used to allow directional/horizontal drilling with continuous rotation from surface.

Directional/horizontal drilling is used where vertical access into the reservoir is difficult

or not possible.

Casing Drilling:

This involves using standard oilfield casing as the drillstring instead of drillpipe/collars to

drill the well. Once the casing point is reached, the casing is left in place to case the well.

80% of casing drilling jobs involves running a nonretrievable bit to the bottom and

leaving the bit in the hole after the casing is set. The bit is drilled out (lost) when the next

set of casing is to be run. The other 20% allows bits and other downhole tools to be

lowered and retrieved via wireline inside the casing and latched to the bottom-most joint

of casing. Casing drilling is mainly used to reduce hole problems when drilling into

difficult formations.

DCwD:

This innovation combines both the directional RSS BHA with casing instead of drillpipe.

DCwD allows deviated wells to be drilled using casing as the drillstring. The RSS BHA

is retrievable when the casing is set for all drilling jobs and this allows the operator to use

the drill bit of choice.

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DCwD Development

DCwD developed as a result of ConocoPhillips’s vision and Schlumberger’s and Tesco’s

commitment to research and development (R&D) and their strategic alliance. This is “…

an agreement between two or more partners to share knowledge or resources, which

could be beneficial to all parties involved” Vyas, Shelburn & Rogers (1995). Morrison

and Mezentseff (1997) suggest that “strategic business alliances will only achieve a

sustainable competitive advantage if they involve learning and knowledge transfer.” This

is exactly what occurred, with Schlumberger bringing their expertise in the directional

and measurement area and Tesco’s proficiency in casing drilling.

On December 17th 2007, “Tesco Corporation ("TESCO") announced that it has entered

into a non-exclusive Marketing Agreement with Schlumberger. The agreement provided

that the two companies will work together to identify opportunities to create value for

customers by combining the use of their respective proprietary drilling technologies,

including TESCO's CASING DRILLING® and the Schlumberger (patented PowerDrive)

directional drilling, rotary steerable, MWD and LWD systems. For this purpose, each

company promoted the other's equipment and services, and made approved use of certain

specified trademarks belonging to the other company.” (Source: PRNewswire-FirstCall,

HOUSTON, TX, Dec 17, 2007)

As hydrocarbons become increasing difficult to find due to harsher environments both

downhole and offshore, innovations and technological advancements are needed to assist

operators in finding new reservoirs and producing the hydrocarbons economically.

Appendix 1 shows a timeline of how drilling tools evolved over the years to suit market

needs. In the early days of the petroleum industry (late 1800’s), cable tool drilling was

the preferred method of drilling since oil was shallow and easy to find. This method was

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percussive and utilized a chisel. As wells became deeper, a combination of rotary drilling

with bits were developed to drill harder rock (early 1900’s). Logging tools were also

developed around this time to determine what formations were drilled into and what

fluids were contained in them. The early 1900’s also saw the development of cementing

processes to hold casing strings in place to protect wells integrity.

When it was realized that petroleum could be found offshore, new rigs and platforms

were developed in the 1930’s to go offshore. Directional/horizontal drilling with mud

motors resulted in the 1970’s, due to reservoir inaccessibility and a realization that

increasing the contact area of a reservoir with the well (either by deviated or horizontal

drilling) increases flowrate and production, but this method had wellbore stability

problems. In the 1980’s LWD/MWD evolved from logging since “real-time” data was

needed on drilled formations and their fluid content.

In 1998, the mud motor was eliminated completely and RSS was developed. In 2001,

casing drilling was developed due to lost circulation and wellbore stability problems

associated with problem formations. As a result of well stability problems, long thin

reservoirs and time, ConocoPhillips saw a need and tested a unique combination in 2007.

Upon successful testing, they assisted Schlumberger and Tesco with full-scale

development and DCwD was innovated.

Even though petroleum companies are competitors, technologies and innovations are

shared. As a company develops a product, another company innovates and pushes the

technology further resulting in consecutive progressive technological advancements

within the market. “Technology transfer is the application of technology to a new use or

user. It is the process by which technology developed for one purpose is employed either

in a different application or by a new user” Langrish et al., (1982). This promotes

healthy competition within the global village of the petroleum industry.

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DCwD Comparison

Since Schlumberger and Tesco were first to market this new innovation, they gained a

competitive advantage within the oilfield. Grant (2003) refers to first-mover advantage as

the advantage gained by the initial occupant of a market segment in terms of resources,

market share and profit-margins.

Their communications strategy was through public relations, web site, seminars,

conferences and trade shows, downloadable material, case studies and in-house

presentations to energy companies.

The other service companies consequently had to react to suit the market needs. They

should however, be able to benefit from second-mover advantages which analyses “…

how (the product) is launched, its reception by customers and the continuing attention

given to its improvement.” Trott (2008) and adapt their product to suit.

Halliburton, after seeing Schlumberger’s success with the DCwD partnered with Tesco

to combine their “Geo-pilot” patented RSS and provide DCwD to operators. The main

difference between the brands is Schlumberger has more experience (in terms of footage

drilled and hours run) in using the DCwD than Halliburton since they were the innovators

of the technology. This experience leads to fewer problems, less downtime and faster

drilling.

In 2010, Baker Hughes developed a DCwD patented as “Steerable Drilling Liner

(SDL)”. It combines their patented “Autotrak” RSS with their patented “HRD-E” setting

tool and incorporates liners instead of long casing strings This is the natural progression

from DCwD, however since the application is new on the market, teething problems will

still have to be worked out.

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Weatherford developed a cheaper nonretrievable system whereby casing drilling can

take place but the casing and bit is cemented in place. The bit is drilled through and the

process continues. However, Weatherford’s systems are not steerable and are mainly

used for vertical or deviated wells where an RSS is not required. The main difference

between Weatherford’s system and Tesco’s system is in the area of logging and data

collection. This information is vital and Tesco’s system allows full logging to be

possible. Weatherford’s system only provides limited logging options which affects

drilling success.

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Design Elements of DCwD

The following is the design of the DCwD tool combination.

Figure 1: DCwD

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RSS

LWD & MWD System

Under Reamer

Roller Reamer

Vibration Sensor Sub

PDM

Casing Shoe

Internal Tandem Stabilizer

DLA Connecting BHA to Casing Profile Nipple


Design Elements (Features):

1. Shape – The tools that make up the DCwD are all cylindrical in shape. This is

due to the rotary drilling process. The cylindrical shape allows easy rotation and

reduces friction thereby increasing rate of penetration (ROP). Increasing ROP

increases drilling rate and decreases total cost since well will be completed

sooner.

2. Colour – The tools are mainly silver due to their metallic nature; however colour

plays no part in the tools performance. Operators’ main concerns are functionality

and benefits.

3. Tool Combination:

Bit – Polycrystalline diamond compact (PDC) cutters used to cut rock

together with the rotating drillstring. This sees the most “pressure”, since the

bit does the drilling. If bit becomes dull, ROP decreases. Bit selection is very

important depending on formation to be drilled.

RSS – A fully steerable rotating tool that allows bit to be directed from

surface with LWD / MWD to ensure precise well placement.

LWD & MWD system – Gives real-time information for geosteering and

formation evaluation. Transmits information about the formations types being

encountered and fluids contained. Data is transmitted from the bottom of the

drillstring through the drilling fluid, to surface for interpretation in real-time.

These 3 tools are the “heart” of directional/horizontal drilling.

PDM – Transmits and converts hydraulic energy by the drilling fluid to rotary

motion to increase ROP.

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Bit


Drill Lock Assembly (DLA), the “soul” of DCwD – Casing is used as

drillstring and DLA is situated close to bottom of string. Rotation of casing is

done via a top-drive system (at surface). DLA connects BHA to casing and

plays an important part in BHA’s retrieval. BHA is set and retrieved by a

mechanical “land-and-lock” profile. This is the main feature that makes the

DCwD so effective. Once the depth is reached for the casing to be set, the

DLA can release the BHA and it can be retrieved.

4. Imagination – DCwD was a combination of 2 different drilling technologies that

were previously conceptualized and perfected by separate companies.

Schlumberger and Tesco entered into a marketing agreement to “co-brand”, to

create marketing synergy. ConocoPhillips had already benefitted from these

companies individually, but with vision and imagination, seeing the benefits that

could be derived from the 2 companies, initially tested an application of DCwD.

Once it proved successful ConocoPhillips sponsored the full development of

DCwD.

5. Relevance and usefulness – DCwD is extremely relevant in today’s economic

environment. In 2008, with the economic downturn, many companies reduced

their exploration activities since the energy prices also plummeted from heights of

>US $100/bbl to < US$40/bbl. However, increases in oil price to >US $80/bbl is

a sign that economies are recovering and oilfield activities will resume. As

countries further develop, there will be an associated increase in hydrocarbon

consumption. There will be a need for further exploration and production activity

to satisfy the energy requirements. The usefulness of DCwD will be described in

the following section.

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Source: www.horizontaldrilling.org


Value & Benefits of DCwD

Since DCwD features a combination of directional/horizontal and casing drilling, the

following are values and benefits that operators can derive:

1) Allows access to reservoirs where vertical drilling is not possible/economic –

Vertical drilling may not be possible and/or economic in: environmentally

sensitive areas, areas just offshore, mountainous areas. Due to economic expense

that operators would suffer to prepare the wellsite for vertical drilling, DCwD can

be used to enter the reservoir while drilling from a previously (or cheaply)

prepared wellsite.

2) Deviated/horizontal wells increases productivity – A deviated well will make

more footage contact in a reservoir than a vertical well (from trigonometry). Due

to the increase in reservoir contact, a significantly greater surface area of the

reservoir will be drained and hence increase productivity.

Figure 2: How footage increases with deviated and horizontal wells (D1<D2<D3)

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D1 D2 D3


3) Access thin reservoirs – Where oil and gas reservoirs are wider (longer) than

they are thick, vertical wellbores are only able to extract oil and gas from a small

area surrounding the wellbore. However, horizontal wells use lengthy lateral arms

to extend into these long, flat reservoirs and drain a significantly larger area.

4) Reduced trip time – During normal drilling operations with drillpipe, after a

section of hole is drilled, the drillpipe must be pulled from the well (tripped) and

the hole must then be conditioned (ensure drilling fluid in hole has correct weight

and viscosity). Casing is then run into the hole (tripped) to bottom and cemented

in place. With DCwD, since the casing is the drillstring, once the section of hole

to be drilled is completed, the BHA can be removed and the casing can be

cemented at once. This greatly reduces the trip time and saves on drilling costs

since the well will be completed in less time. Less time means less rig rental

which leads to cost savings. “The majority of nonproductive time in any drilling

operation comes when you are tripping pipe. That is when most well control

problems show up and when wellbore stability issues really become evident. If

you can avoid tripping pipe, you can sidestep much of the typical nonproductive

time.” (John Boyle, VP Casing Drilling®, Tesco 2008)

5) Improved personnel and equipment safety – Since there is reduced trip time

and reduced casing strings, there will be reduced pipe handling by personnel. This

will reduce the risks involved and hence improves overall safety. DCwD also

reduces the risk of a blowout which again improves safety.

6) Prevents drillstring sticking – In deviated/horizontal wells, there is a problem of

proper hole cleaning. Hole cleaning occurs when the cuttings made by the bit is

not brought to surface efficiently. Cuttings can fall back unto the BHA and cause

the BHA to “pack-off”, and the drillstring to stick. This is a major problem since

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stuck pipe can eventually lead to blowouts. With DCwD the casing is already in

the well keeping the hole open and allowing the annulus size (distance between

drillstring and openhole) to be minimized.

7) Mechanically strengthens wellbore – Reservoir productivity is enhanced by the

plastering effect (smearing) that results from smooth, continuous contact of casing

as it rotates against wellbore wall. Because DCwD minimizes annulus size, casing

rotation and contact with wellbore wall reduce or eliminate fluid losses to the

producing horizon and mitigate mud invasion through permeability. Drilled solids

are packed into the porous and permeable portions of the formation as drilling

fluids carry the cuttings up the annulus.

Figure 3: Diagram showing how casing strengthens wellbore

Source: http://www.slb.com/~/media/Files/drilling/brochures/drilling_applications/directional_casing.ashx

8) Reduced well construction costs – Well construction in fields with troublesome

formations and/or well stability problems sometimes require extra casing strings

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to be run. These extra strings increase the total cost of well construction. With the

use of DCwD, wellbore stability is not an issue since the casing is in place,

holding the wellbore open and stable. This reduces the number of extra casing

strings needed and hence reduce the overall cost of well construction.

Combining all these benefits will result in more trouble-free wells being drilled

economically to find and produce oil and gas. This will lead to increased worldwide

energy and consequently sustainability of countries in terms of development and

progression.

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Brand Appeal

Aaker (1991) states that “Brand equity is a set of assets (and liabilities) linked to a

brand's name and symbol that adds to (or subtracts from) the value provided by a

product or service to a firm and/or that firm's customers. The major asset categories are:

1. Brand name awareness

2. Brand loyalty

3. Perceived quality

4. Brand associations"

The companies involved in the development of DCwD are considered “brands” in their

own right. Their names are synonymous with competency, credibility, innovation,

expertise and results.

ConocoPhillips is the third-largest integrated energy company in the United States, based

on market capitalization, oil and natural gas reserves. They are known worldwide for

their technological expertise in reservoir management and exploration & 3-D Seismic.

Schlumberger is the leading oilfield service provider of technology, project management,

information solutions and consulting services to oil and gas exploration and production

companies worldwide.

Tesco Corporation is an industry leader in the development and commercialization of

innovative drilling technologies and services. They have 3 main divisions:

Top drives, tubular services and casing drilling.

DCwD was first tested in 2007 on the offshore well 2/7B-16A drilled in the North Sea

from the Eldfisk Bravo platform, operated by ConocoPhillips. Approximated 11,000’ was

successfully drilled and correctly positioned. After this success, other operators

worldwide have utilized this innovative technology with much success.

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The technology was recently used in 2010 by PETRONAS in a project from a producing

platform in Malaysia. The project was completed successfully in terms of increasing ROP

and lowering the time and cost to drill the top-hole section of the well.

“The successful operation led to several records:

World’s deepest 13 3/8-in. DCwD job

World’s highest-angle directional well with 13 3/8-in. DCwD

World’s fastest rate of penetration for a 13 3/8-in. DCwD

World’s first application of Gyro MWD with DCwD”

(Source: http://drillingcontractor.org/directional-casing-while-drilling-applied-to-improve-high-angle-top-

hole-drilling-from-producing-platform-6383)

Due to the companies involved in the DCwD development, it would have initially

appealed to the oilfield market based on Aaker’s (1991) brand equity definition. However

the success of DCwD thus far in various environments under different conditions serves

to strengthen its brand appeal. Numerous papers and case studies have been written about

this innovative technology and it has even won the World Oil 2008 “Best Drilling

Technology Award”.

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Conclusions & Recommendations

DCwD has clearly been an innovative technology that resulted out of a need for solutions

to previously unsolvable problems. ConocoPhillips due to their vision (and sponsorship)

allowed Schlumberger and Tesco to combine their technologies successfully and develop

the DCwD. The brand combination has a great appeal within the oilfield and its success

for various operators only serves to strengthen its brand.

The features of the DCwD include:

PDC bit

RSS

LWD/MWD system

PDM

DLA

DCwD provides the following benefits:

Allows access to reservoirs where vertical drilling is not possible/economic

Deviated/horizontal wells increases productivity

Access thin reservoirs

Reduced trip time

Prevents drillstring sticking

Mechanically strengthens wellbore

Reduced well construction costs

Improved personnel and equipment safety

Even though downhole conditions are getting increasingly difficult, the market for

DCwD is expected to grow since countries are resuming their activity after the economic

downturn. This activity will have a corresponding need for hydrocarbons and will push

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energy prices up. The increasing energy prices will make drilling for new oil and gas

deposits worth pursuing.

Roussel et al. (1991) defines R&D: “To develop new knowledge and apply scientific or

engineering to connect the knowledge in one field to that in others.” A recommendation

that can be made is for Schlumberger and Tesco to continue their R&D. “R&D

programmes are…focused on the business aspirations of the company and its future

markets” Trott (2008). This will ensure that even better technologies can be innovated to

assist operators in tackling the downhole environment in the most efficient, effective and

economical way possible.

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Appendices

1. Drilling Innovations Timeline

Year Innovation Function/Benefit

1859-1920 Cable Tool Drilling First method of drilling – Percussion: used rods & chisel

1900’s Rotary Drilling Drilling method changed from percussion to rotary

Logging developed

Cementing developed

1906 2 cone rotary rock bit Able to drill through hard rock

1930’s Offshore drilling More oil and gas to be found, jack-up, submersible rigs

1946 Diamond bits Stronger bits for tougher formations

1970’s Directional drilling w/

mud motors

Able to deviate from vertical and drill many wells from

one platform or where reservoir is inaccessible

1980’s LWD/MWD Allowed logging and measurements while drilling to be

taken in “real-time”

1998 Rotary steerable systems Eliminated the use of a mud motor. Can steer bit while

rotating

2001 Casing drilling Allowed casing to be used as the drillstring to prevent

holes collapsing and drillstring sticking

2007 DCwC Combined casing & directional drilling

2010 SDL Replaces long casing sections with short liners. New

technology to be further tested

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References

1. Aaker,D.A.(1990),“Brand extensions: ‘the good, the bad, the ugly’”, Sloan

Management Review

2. American Marketing Association "Definition of Marketing".

http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx.

Retrieved 2009-10-30.

3. Boyle, J. (2008) VP Casing Drilling®, Tesco

4. Drucker, P.F. (1953) The Practice of Management, Harper-Collins

5. Freeman, C. (1982) The Economics of Industrial Innovation, 2nd edition Frances

Pinter, London

6. Grant, Robert M. (2003). Cases in Contemporary strategy analysis, Blackwell.

7. McKeown, Max (2008). The Truth About Innovation. London, UK: Prentice Hall.

8. Morrison, M and Mezentseff, L. (1997) ‘Learning alliances – a new dimension of

strategic alliances’, Management Decision, Vol 35

9. Roussel, P.A., Saad, K.N. and Erickson, T.S. (1991) Third Generation R&D,

Harvard Business School Press, Boston, M.A.

10. Vyas, N.M., Shelburn, W.L, and Rogers, D.C. (1995) ‘An analysis of strategic

alliances: forms, functions and framework’, Journal of Business and Industrial

Marketing, Vol. 10

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http://en.wikipedia.org/wiki/McKeown

http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx.%20Retrieved%202009-10-30

http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx.%20Retrieved%202009-10-30

http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx

http://en.wikipedia.org/wiki/American_Marketing_Association


Bibliography

Textbooks:

1. Kotler, Philip; Gary Armstrong, Veronica Wong, John Saunders (2008).

"Marketing defined". Principles of marketing (5th ed.)

2. Langrish, J., Evans, W.G. & Jerans, F.R. (1982) Wealth from Knowledge,

Macmillan, London

3. McKeown, Max (2008). The Truth About Innovation. London, UK: Prentice Hall.

4. Roussel, P.A., Saad, K.N. and Erickson, T.S. (1991) Third Generation R&D,

Harvard Business School Press, Boston, M.A.

5. Trott, P (2008) Innovation Management and New Product Development, Prentice

Hall (4th ed.)

Websites:

1. http://www.offshore-technology.com/features/feature52912/

2. http://www.epmag.com/Magazine/2009/4/item33845.php

3. http://drillingcontractor.org/directional-casing-while-drilling-applied-to-improve-

high-angle-top-hole-drilling-from-producing-platform-6383

4. http://www.slb.com/~/media/Files/drilling/brochures/drilling_applications/

directional_casing.ashx

Other:

1. Statistical Review of World Energy 2009, BP. Oct 24, 2009

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http://drillingcontractor.org/directional-casing-while-drilling-applied-to-improve-high-angle-top-hole-drilling-from-producing-platform-6383

http://drillingcontractor.org/directional-casing-while-drilling-applied-to-improve-high-angle-top-hole-drilling-from-producing-platform-6383

http://www.epmag.com/Magazine/2009/4/item33845.php

http://www.offshore-technology.com/features/feature52912/

http://en.wikipedia.org/wiki/McKeown

http://books.google.com/books?id=6T2R0_ESU5AC&lpg=PP1&pg=PA7#v=onepage&q=&f=true

http://en.wikipedia.org/w/index.php?title=John_Saunders_(Marketing_researcher)&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Veronica_Wong&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Gary_Armstrong_(Marketing_researcher)&action=edit&redlink=1

http://en.wikipedia.org/wiki/Philip_Kotler

a critique of dcwd tools

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