UNDERBALANCED DRILLING OPERATIONS

Underbalanced Drilling Operations

This course is intended to provide an overview of current underbalanceddrilling technology and is therefore by no means exhaustive.

It should serve as a guide to current technology, explaining how and why underbalanced drilling is carried out.

History

• UBD is oldest method of drilling• Cable tool rigs were used– Blowout meant discovery– No blowout, no oil or gas discovery

• Well control, protection of human life, and desire to not waste oil and gas promoted overbalanced drilling

• Overbalanced drilling became the normal method, the conventionalmethod.

History

• Early 1900’s air used to gas lift production

• UBD becomes more popular in the1930’s in some US states, mist drilling in . the late 1930’s

• Air drilling became popular in the 1950’s for increased RP in hard rock

• Late 1950’s, aerated fluids introduced

• Stable foams in the early 1970’s

• 1990’s, interest increased with the closed circulating system, and reduced . . formation damage

Technology Improvements

• Chronological Order– Underbalanced Drilling - (Cable Tool) 1859 - Modern UBD (1970’s) – Roller Cone Bits - 1909– Horizontal Drilling-1925– Steerable Motors - 1984– Electric Logging -1927– Jet Perforating-1932– Hydraulic Fracturing-1947– Offshore Drilling-1945– Reflection Seismology-1950’s– Coiled Tubing-1970– Top Drives-1990’s

Impact of Innovation

Year Accepted Technology Estimated Impact on Cost/BBL*

1960 Pre-3D Seismic -

1990 3D Seismic 30%

1995 Directional Drilling 50%

2000 Underbalanced 75%

* Cost impact is cumulative impact (i.e. 25% incremental impact between directional drilling and underbalanced)

Variations of UBD That Have Developed

• Air and natural gas drilling• Flow drilling to atmosphere (flare)• Flow drilling to closed system• Mist drilling• Foam drilling• Nitrified drilling fluid• Mud-cap drilling• Snub drilling• Offshore UBD

Underbalanced Drilling As A Definition

The intentional reduction of the drilling fluid density causing the hydrostatic pressure in a well bore to be lower than the pore pressure within a formation thereby permitting reservoir fluids to be produced while drilling.

Underbalanced Drilling

A successful underbalanced drilling operation can be defined by its controlover the wellbore and formation

It is not simply a matter of letting the well flow as hard as possible

Overbalanced Drilling

• When rotation stops pipe may become differentially stuck

• Mud loss into the production zone starts occurring (hydrostatic pressure of fluid greater than formation pressure)

• Drilling overbalanced with fluid in the hole

Gas

Oil

Water

Overbalanced vs. Underbalanced Drilling

UnderbalancedDrilling

(UB)

Overbalanced Drilling(OB)

Overbalanced vs. Underbalanced

“Hidden” zone:didn’t produce

“New” zone:produced while

drillingNew zone

Skin damage:• Not all zones

contribute

No skin damage• All zones

contributeIntrazone

contribution

• Lost circulation,• Differential sticking• Can’t get to TD

Well drilled to TD without problemsAccess

Enhanced Reservoir Productivity

UBD replaces the mud weight barrier with mechanical barrier (Rotating Control Device), additional surface equipment (flow control) and safety systems.

mud Line

Choke and separation package

mud pumps mud pits

RCH on top of BOP stack

mud

hydrocarbons

cuttings

mud gas / oilto flare or

production

NitrogenMembrane Compressors

Booster Rig Pump

Drilling Rig Manifold

Drilling Fluid Storage

Flare Stack

Propane

Vaporizer

2 Stage 4 Phase Separators

Product Storage Shipping Tanks

Kill Line

Natural Gas Booster

Rig Tank

Sample Catcher

Underbalanced Drilling ActivityUS Activity - 1994 - 2005 (1997-2005 Projected)

© 2001 W eatherfo rd . A ll righ ts reserved .

So u rce: U S D O E , O il & G a s Jou rn a l S ep t. 2 3 , 19 96

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5

Per

cent

age

of A

ll W

ells

0200

04000

6000

8000100

0012000

14000

Num

ber

of

Wel

ls

Perc en tage o f A ll W ellsNu m b e r o f W ells

U nderba lanced D rilling A ctiv ityU S A ctiv ity - 1994 - 2005 (1997-2005 P ro jected )

Advantages of UBD - Summary

Decrease drilling costs– Increased penetration rate– Increased bit life– Lower fluid cost– Reduced clean-up & testing time – Elimination of acid stimulation

Eliminate drilling problems– Differential sticking– Lost circulation

Reduce formation damage– Increased production rate– Increased ultimate recovery – Reduce injection pressures for gas injection wells

Advantages of UBD - Summary

Improve safety and environmental

Real time reservoir knowledge– Early reservoir fluid sampling– Identification of un-reachable zones – Identification of fractures – Optimization while geo-steering

Disadvantages of UBD - Summary

Additional engineering and operational complexityPotential hole instability through sloughingLimitations of steering tool and motors. Limitations on the use of conventional MWD toolSpecialized equipment requirements-up front cost Maintaining underbalance / formation damageFluids handlingCorrosionFlammabilityLack of experience in the UBD arena

Key Points

Underbalanced drilling is not the solution for all reservoirs. There are strict limitations on its use which varies from type to type and area to areaUBD can be used in different context other than increased production. For instance, this technology was employed to reduce the rig time while drilling through high pressure gas zones in the middle eastHowever, the main reason to drill underbalanced is:

– Increasing production by reducing formation damage– Reduce drilling time to Increase the rate on returns

Emerging Markets Summary

Minimum Operators ExperienceSignificant Engineering & Project Management is neededTechnology is in a preliminary phase of development, hence, COST is a major issueExperiments in these markets have shown tremendously good results. For instance in the Middle EastEmerging Markets Areas are:– South East Asia – South America– North Sea & Europe – Middle East – Offshore & Deep Water Wells

Mature Markets

CanadaSeasonal Market

35% Utilization in Summer 100% Utilization in Winter

Mid – Continent USAWest Texas South TexasRocky Mountains Area

South East Asia – Summary

Sub normally pressured reservoirsLost circulation in carbonate thief zonesHigh formation damage due to losses Few low ROP areas Most reservoirs can benefit from UBD

South America – Summary

High potential growth – reservoirs similar to US rocky mountainsPoor equipment availabilityPolitical unrest in the areaAggressive operators:– Petrobras– PDVSA– Independents

North Sea and Europe – Summary

Very successful campaign by Shell in Southern North Sea gas reservoirs Several onshore wells have been

drilled with mixed results– Italy – Lithuania – Germany

High growth potential in older depleted fields. One of the very benefits of underbalanced drilling

Middle East & North Africa – Summary

Very successful flow drilling campaign by Shell & Al-Furat Petroleum in SyriaPDO (Shell Oman) has been very aggressive in Nimr field. Weatherford is playing an active role in Nimr Oilfield exploitationAlgeria several UBD wells including Concentric casing injection methods

Challenging Offshore Areas

North Sea and South East AsiaHigh Technology / Project Management– Space Limitations– Limited Experience – Limited Equipment

Deep water areas represents big opportunity with riskA dominant growth area

Major operators are looking for non-marginal targets

IADC UBD Workshop

• Ad hoc Industry group formed in 1997 to discuss UBD issues and interests

• Strong support by Shell and Mobil• IADC came into play in 1998• Quarterly based meetings with an annual conference• Recent Committee deliverables – Standardized UBD Classification System– UBD Well Control Training Guidelines - a full course is now being

given for Certification

IADC Classification System

Attempts to standardize UBD Application descriptionsSimilar in format to Bit Classification systems IADC Classification Elements:– Risk Level– Application Class– Fluid Type

IADC Classification- Risk Levels

Level Remarks 5 Maximum projected surface pressures exceed UBO operating

pressures rating but are below BOP stack rating. Catastrophic failure has immediate serious consequences

4 Hydrocarbon production. Maximum Shut-in pressures less than UBD equipment operating pressure rating. Catastrophic failure has immediate serious consequences

3 Geothermal & non-hydrocarbons production. Maximum shut-in pressures less than UBD equipment operating pressures rating. Catastrophic failure has immediate serious consequences

2 Well capable of natural flow to surface but enabling conventional well kill methods and limited consequences in case of catastrophic equipment failure

1 Well incapable of natural flow to surface. Well in ‘inherently stable’ and is low level risk from a well control point of view

0 Performance enhancement only; no hydrocarbon containing zones

IADC Standards – Application Classes

Class A – Low HeadClass B – Underbalanced

Fluid System Specific Gravity

Equivalent Mud Weight (ppg)

Classification Level

Gas 0.00 – 0.02 0.0 – 0.2 1 Mist 0.02 – 0.07 0.2 – 0.6 2

Foam 0.07 – 0.6 0.6 – 5.0 3 Gasified Liquid 0.55 – 0.9 4.5 – 7.5 4

Classification Examples

• How to Qualify a Well– A Middle East Well would be : 1 – B - 1Where, 1 stands for the IADC Classification

B stands for an Underbalanced Well1 stands for a Gas fluid system

• Wells in North Sea would be : 4 – B – 4 • Where, 4 stands for the IADC Classification

B stands for an Underbalanced Well

4 stands for a Gasified liquid system

Is UBD Worth it?

Project economicsEstimating costsMain drivers to UBD from an operator’s perspective– Improved drilling performance

Higher ROP reduced drilling time– Elimination of drilling problems

Differential sticking reduced drilling time– Increased production rates

Absence of formation damage reduced costs– Improved reservoir knowledge

More insight of reservoir leading to a better exploitation of the field over its nominal life

Results

Summation of the previous calculations prove that UBD is significantly beneficial than conventional drilling practicesThe upfront cost for UBD is more than the conventional UBD technology is in very early stages & is deemed to progressChallenging market is awaiting the offshore arena as the onshore fields gives successful resultsNeed more encouragement from the operator’s endShell is writing an SPE paper on the evaluation of UBD success in their syrian operations at the Omar field.

Worldwide Success

Field Production increase Comment

Canada -Rigel Halfway 35X 7000 BOPD and 12 MMCFD / 20000 bbls cum. while drilling 300 m lateral

US – Illinois Basin New field 12,000 BOPD first well; 10,000 BOPD second well while UB drilling; largest discovery in state history

US – Caballos, TX 9X , 5X (2 wells) Infill vertical wells – UB vs. OB

US – Hugoton gas field 3X Added 7 years of well life and 0.5 BCF/well additional reserves;horizontal well

Lithuania Up to 24X UB + horizontal wells; 5X to 10X reserve increase

Canada – Weyburn Rejuvenated field – added 50000 BOPD; UB horizontal wells drilled at less cost than OB wells

Indonesia – Arun Large OB access impossible due to drilling problems; successful wells drilled in 2 ppg ECD formation

Colombia – Middle Mag New field 2 wells: 7000 BOPD and 10800 BOPD; PI of 46 bbl/day/psi on the 2nd

well.