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Technology Overview
DRILLING
Optimal Approaches to Drilling Technology Development
a report by
Dr Mike L Payne
Senior Advisor, Exploration and Production Technology Group, BP America, Inc.
Introduction
Dr Mike L Payne is a Senior
Advisor for BP America, Inc., in their
Exploration and Production Technology
Group. Previously an Advisor for ARCO
Gasoline, he has 23 years of drilling
experience including operations,
computing, technology and consulting.
Dr Payne has extensive industry
publications, is Chairman of the
American Petroleum Institute (API)
Pipe Committee (SC5), Convenor
of International Organization for
Standardization (ISO) SC5 Working
Group 2 and SC4 Working Group
1, and serves on the Board of the
Drilling Engineering Association (DEA).
He has been recognised both as a
Society of Petroleum Engineers (SPE)
distinguished lecturer and as the SPE
International Drilling Engineering
Award recipient for 2000. Dr Payne
holds BSc and PhD degrees in
Mechanical Engineering from Rice
University, an MSc degree in Petroleum
Engineering from the University of
Houston, executive education from
the University of Chicago Graduate
School of Business and is a
Registered Professional Engineer.
Technology strategies remain at the forefront of
discussions regarding potential catalysts to create
differential performance and value. Aggressive
technology approaches seem to bear the promise of
breakthrough step-changes in drilling performance.
Conservative technology approaches seem reserved
and unable to capture the value potential of
emerging technologies. Which type of strategy is
actually desired? What can we learn from stepping
back and studying the topic objectively?
Historical Perspective
Historically, the drilling industry has evolved via
evolutionary changes and improvements to todays
actively working and successful systems. Technology
advances that focus on specific elements of the
drilling system without generating substantial impact
on other elements are clearly most successful in terms
of development and implementation. Initiatives that
have attempted wholesale changes to the
fundamentals of conventional drilling systems have
been far less successful although significant time may
be required for these observations to become clear.
Examples of major drilling technology advances that
resulted from optimisation or innovative changes to
specific elements of the system include:
steerable mud motors;
polycrystalline diamond compact bits;
synthetic oil-based mud;
top-drive systems; and
rotary steerable systems.
Examples of initiatives that have attempted more
macroscale changes to conventional drilling systems
and techniques include:
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slim-hole and continuous coring drilling;
underbalanced drilling (UBD);
dual-gradient drilling (DGD);
coiled-tubing drilling (CTD);
multi-lateral wells; and
high-pressure drilling.
Some of these macroscale initiatives, such as UBD and
CTD, now play important niche roles in the industry.
Their applicability, however, is extremely narrow in
relation to the industry at large. The forecasts that were
once made for how these technologies would
dominate the industry and render conventional drilling
obsolete can be seen as inaccurate at this time. Several
of these macroscale initiatives, such as slim-hole drilling
and high-pressure drilling, had very limited lifespans
and are absent from the current technical landscape.
What can be learned from these lessons in technology
development and subsequent demise is a key issue that
should be objectively addressed if the current industry
community is going to improve performance in
optimising technology investments.
Various points emerge from reviewing such case
histories. For example, forecasting value that can be
derived from a proposed technology and estimating
accurately the real risks of execution and
implementation are extremely difficult. In this area,
human factors inevitably play a major role.
Proponents of a certain initiative have a tendency to
go into a marketing mode for the technology. Future
scenarios are forecast whereby very high values will
be derived. Multitudes of current drilling problems
will be resolved by the proposed initiative. Data is
selected and highlighted that supports the marketing
position. Data contrary to the position is ignored or
discounted. As the data, analysis and forecast pertain
to the future, who can step forward and assert that
they have definitive information that conflicts with
the scenario? Obviously, nobody with their feet on
the ground can take such a stance, so the scenarios go
largely unchallenged despite years or even decades of
case histories that illustrate the contrary.
Another serious problem with forecasting is the
inability of the industry to gauge its own capabilities.
Current perceived limits with existing equipment,
conventional procedures, etc., are not necessarily real
limits. These are often just perceptions or limits only
with regard to existing experience. Given the advances
in theory and application of mechanical wellbore stability, mud chemistries, better understanding of torque/
drag behaviours, etc., those well geometries and more
severe wells can now be drilled almost routinely.
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Taken as an integrated discipline, an organisation
comprising drilling engineers, equipment and service
support personnel, field supervisory professionals, tool
pushers, drillers, rig crews, mud engineers, mud
loggers, etc., form a powerful organisation with
hundreds of years of composite experience. It should
come as little wonder that such groups can innovate
and solve problems literally overnight. Such team
efforts have been responsible for many advances and
achievements that were previously thought to be
impossible. Some examples are highlighted below:
Unocal Corporations extended-reach drilling
(ERD) California offshore work in the late 1980s
included several wells, which simply should not
have been possible.
This work resulted in BP changing its approach to
the Wytch Farm development and pursuing
extreme ERD wells beginning in 1993. The
Wytch Farm case history is an excellent example
of how specialised, but nevertheless conventional,
equipment and procedures can be optimised to
achieve required operational objectives.
Debates are currently on-going about how far into
deep water wells can be effectively drilled. One
major operator believes that, in water depths of up
to 10,000 feet, conventional wells and techniques
will be completely sufficient (i.e. no surface
blowout preventers needed, no DGD, no
expandable casing, etc. required).
Each of these cases requires a great deal of explanation
in terms of the details of what was achieved and how
specific problems were overcome. This know-how
is the essence of technology because it represents
what was really done to overcome the challenges of
these wells and get the job done.
Clarification of that definition of technology is
critically important because so many people confuse
technology with science or research. Useful drilling
technology is not about the limits of science from a
research perspective. Useful drilling technology
means an effective, reliable and easily accessed way of
solving a real world problem in a cost-effective
(hopefully, the most cost-effective) manner. Falling
away from these boundaries in any way (i.e. solutions
looking for problems, lack of reliability, systems
without fast and responsive delivery, high-cost
systems, etc.) will rapidly result in the technology
stagnating and ultimately being withdrawn from the
market as another case history of failure.
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Additional useful perspective can be obtained by
examining industries analogous to drilling. Many cases,
authors or speakers like to compare drilling technology
with the advancement of the personal computer (PC).
This is entertaining, due to the dramatic differences,
but a flawed analogy because of the fundamental
difference between the evolution of the PC, which is
subject to miniaturisation, and the drilling industry,
which is not. Drilling will always involve the
excavation of a large amount of earth in order to create
a pathway for the hydrocarbon resources to be brought
to surface for use. There is no way to achieve this
reality with the miniaturisation of rigs, wells, etc.
A more parallel analogy can be drawn between the
drilling and automobile industries. In this case, both
industries and technologies have certain hard
boundaries around physical requirements. Considering
automotive technology, an interesting question is
whether it should be characterised by evolutionary
change or revolutionary step-change. For
perspective, an example would be to compare a 1909
(first production year) model car with a 2003 model.
Clearly, the 2003 model is far superior to this early
horseless carriage and the advantages with regard to
power, performance, comfort, safety, reliability,
efficiency, utility, etc., of the 2003 model could not be
questioned. On the other hand, they both have four
tyres, an internal-combustion power source, a steering
wheel, an accelerator, brakes, lights, passenger seats, a
storage area, etc. From this perspective, it could be
argued that the fundamentals of the automobile have
not changed and it has been a steady flow of
incremental element-level improvements and
innovations that make the 2003 automobile so much
more advanced than the 1909 model. Such a
revolutionary change is actually the cumulative effect
of years and years of incremental advances.
Looking back at the drilling industry, one must
wonder how advanced our systems could be if we
were as dedicated to the continuing advancement of
our product as the automotive engineers are to theirs.
The automotive culture of annually obsolescing their
current product with a redesigned and advanced
version alone is a behaviour that the drilling
community needs to study respectfully.
Factors Impacting Value
Strong consideration must be given to the timeframe
required for return on benefit for technology
investments. The longer the time period forecast for
potential applications and benefits, the more expensive
the investment in that technology becomes. This basic
truth captures the time value of money. When
technology programmes are prioritised from a larger
set of potential project opportunities, further cost
impacts are also involved. Specifically, if spend on a
longer-term project means that an immediate or nearterm technology need will not be funded and this
need carries with it consequential detrimental impacts
or inefficiencies relative to on-going operations, these
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consequential impacts and penalties essentially become
part of the cost of this longer term investment. Nearterm technology needs carry with them the ability to
impact operations and well-construction savings
sooner, and many times immediately, therefore these
benefit costs and the timing of them must be included
in the cost analysis of the different portfolio options.
Factors Impacting Risk
From a risk analysis standpoint, it must be recognised
that the ability to forecast technology requirements
degrades very rapidly with time. The ability to
forecast capabilities required immediately is clear. The
problem is that these sorts of requests cannot be
handled frequently unless there is usable technology
readily available that was simply unknown to the
requester. Forecasting timeframes in the order of six
months to two years can be relatively accurate
provided that such forecasts are integrated into wellplanning or project planning exercises. Such
timeframes provide adequate time for incremental
development, testing and implementation, but also
require a clear line-of-sight execution plan.
Forecasting out several years is very difficult and
inherently carries a very high risk of failure.
There are a number of reasons why this risk profile
occurs. A large number of potential technologies
provide scientific solutions but through means that
are not cost-effective against other options. In such
cases, market forces will ensure the elimination of the
non-competitive technology and will reinforce the
continuation of the most cost-effective means of
solving the problem. Disruptive technologies also
result in failure of a number of initiatives. In such
cases, alternative means of achieving the operating or
drilling objective emerge.
Industry Structure Impact
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Todays industry operates with leaner staffing than ever
before. Advances in computing technology, data
management, communications and collaborative work
tools have made it possible for increasingly large
operations and well portfolios to be managed by fewer
personnel. This lean organisation approach also results
in higher productivity requirements on each
individual. On a greater level, structural changes have
also made a significant impact on the shape of the
current industry. In the past, most major exploration
and production companies maintained independent
full-service technology organisations. These
organisations not only provided technical support to
their operating groups, they also conducted research
programmes in all major disciplines core to the
industry. Starting in the early 1980s, companies began
looking at collaborative arrangements and joint-industry projects (JIPs) to address various technology needs.
Increased accountability and increased scrutiny on
value delivered has been placed on the technology
function for a number of years. It should not go
unnoted that the result of these trends has been a shift
in technology spending and a transition in the parties
who are conducting different technology functions.
Government and university systems are tending to
conduct a higher share of the basic research with
longer-term time horizons. Industry companies from
both the operator and service sector are collaborating
with these organisations to provide feedback,
prioritisation, guidance and, in many cases, financial
support. JIPs continue to play an important role for
technology development in order to allow shared
costs and synergistic exchange of ideas and expertise.
Summary
The authors perspective of what lessons have been
learned includes the following points.
The potential for optimisation of current
systems should be recognised. Wells and drilling
performance targets that may seem unachievable
without some form of revolutionary change may
be achieved with existing systems and innovative work of your current drilling team. What
can be achieved when a high-performance team
works with good existing drilling systems should
not be underestimated.
Cumulative impacts of small, incremental
changes will result in revolutionary advancements
over time. Attention to detail, optimisation at
every corner, codification of such best practices
and dissemination and implementation and
adoption of large amounts of small improvements
will have enormous impact over time. As such
advances are more easily achieved, they have
much lower risks and represent line-of-sight
execution. A technology strategy that maximises
focus on such advancements may in fact be both
lower in risk and higher in value than more
speculative approaches.
Case histories of successful technology developments and failed, short-lived and/or niche
technology applications should be studied. The
outcomes of these previous initiatives should be
considered when weighing priorities and focus
relative to current projects. Success has historically
been much higher when a focused advancement is
made on one element of the currently successful
drilling system. Larger macroscale change-outs or
radical modifications to the drilling system are
historically shown to be much higher risks and,
more often than not, fail at some stage of the
process. Those who fail to learn from history are
doomed to repeat it.
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