Abstract
Introduction
Risk sharing and alliance formation are central themes in the E&P business environment of the 1990s. A common manifestation of these themes is the recruitment and use of partners and contractors to perform drilling operations on specific projects which formerly would have been 100% managed and operated by large integrated oil companies. One consequence of risk-sharing activity is that integrated companies have had the opportunity to closely observe and assess the drilling practices of other operators and incentive-oriented drilling contractors on wells in real time, with funds at risk.
The debate over which kind of business organization and risk-sharing philosophy produces the most cost-effective drilling result often neglects the fact that for any given well, the in-situ conditions would be identical for anyone undertaking the work. There is no inherent logic in the notion that turnkey contractors have an edge on oil companies in addressing subsurface conditions. The economic outcome of a given well is more dependent on objective subsurface factors and the way they are approached than on the kind of risk-sharing philosophy selected for drilling. Similarly, there is no inherent logic in the notion that hiring a turnkey contractor absolves an oil company from risk on a well. At a minimum, the risk of possible production delays caused by acts of a turnkey contractor is always present.
Three wells (A, B, and C) drilled recently illustrate the point. One well was drilled by an oil company and two were drilled by turnkey contractors. All three wells penetrated geopressured sections. The resulting geopressure-related problems with fracture gradients and wellbore integrity caused large economic impacts on turnkey drillers and operators alike. The wells were selected to highlight the common-sense idea that the key to risk management and achieving profit goals is good planning and proper execution, not the form of risk-sharing selected for any particular venture.
