The upsurge in drilling activities in 2004, occasioned by the strong oil prices resulted in a challenging rig market situation such that operators have to plan well in advance to be able to get a rig for the next well campaign. For desperate operators, the only option is innovation or new technology and unusual risk taking.
An operator in Nigeria recently adapted a light work over rig of 800 horsepower and 320,000lbs pulling capacity to drill an exploration to 11,000 ft. This was operating the rig at beyond its capacity.
Minor modifications were made to the rig to enable the running of casing strings, and operations monitored with the help of wells software, resulting in the successful drilling and abandonment of the A-1x well. The result was a 30% savings of the budget well cost contributed mainly from the slimmer design and lower rig rates of the light 800 hp rig. It is also noted that the light rig was moved in 8 days compared to 23 days planned with the heavier rig.
The paper highlights the detailed planning and execution of the drilling phase of the A-1x well and how the capacity issues were addressed leading to the estimated savings of $2million.
Global drilling levels have gained more than 20% since 2002. Specifically, the forecast for 2004 were exceeded without signs of abating. This has been as a result of strong oil prices prompted by increasing demand and persistent instability in important petroleum exporting countries, among other reasons. The effects of this increased activity levels can be summarized as follows:
The high oil prices meant increased investment funds have become available to operating companies to strengthen the oil patch, making this the longest up-cycle since the glut in the early nineties when crude oil prices slid to $13/barrel and activities ground to a halt.
The increased investment fund also means increase in exploration activaties into riskier terrains.
Rig availability has become a major constraint as several data sources, eg Baker Hughes rig count, suggest that there is very little spare capacity left as rig utilization is approaching 90%.
Many of the remaining rig units have not worked for several years due to the previous slump in oil prices in the mid nineties. This has resulted in the long lead-time required to start up a rig for a project.
For Operator, there is increased pressure from available rig owners for review of rig rates for rig already contracted. This has resulted in the current high rig rates.
With the evidence of increasing activities in 2005 due to the ever-rising crude prices, there is no foreseable end to the era of high rig rates.
Considering the current reality in the global rig market, There is a need for drilling engineers to re-think well designs and project plans with a view to making the best use of available rig units.