The value of underbalanced drilling (UBD) and completion technology lies in several distinct areas. These include improvement in drilling performance by, for example, reducing losses or differential sticking, or increasing rate of penetration or even depletion of troublesome high-pressure zonesi. UBD is also used to improve production rates and increase ultimate recovery. In these cases, UBD has been applied to avoid formation impairment and thus to enhance well productivity. Recently, some operators have recognized that value can also be created through gathering and interpreting reservoir data while drilling underbalanced. This information is used to improve reservoir knowledge and consequently enhance reservoir management.
In low-cost drilling environments, such as land operations in the Middle East and USA, UBD drilling-enabling savings are often marginal and the cost of UBD operations becomes a blocker for wider implementation. The extra cost of UBD acts to discourage a company from fully evaluating the technology's capabilitiesii, even following technically successful trials. In addition, historically the Well Engineering community has championed UBD programs often with scant involvement from the subsurface Petroleum Engineering (PE) disciplines.
Petroleum Development Oman (PDO) operates in such a low-cost drilling environment. PDO commenced UBD campaigns in 2002 with the primary goal of enhancing production and has succeeded in sustaining UBD operations by making significant progress both in reducing costs and increasing the value of information derived from UBD to the Petroleum Engineering organization. This has created the opportunity to more fully evaluate the technical and economic benefits that UBD can deliver and the possibility to deliver cost-neutral UBD wells.
This paper describes some of the challenges faced when initially introducing UBD and the step-by-step approach followed by PDO in Oman and Shell Exploration & Production Co. (SEPCo) in the USA to widen its implementation to other fields. The paper underlines the need for integrated well engineering and petroleum engineering teams in UBD and confirms the pivotal role of sub-surface engineers in interpreting and using the additional and complementary reservoir data that becomes available during UBD. The paper also analyses more closely the actual cost of UBD and provides a balanced perspective on the longer-term UBD value equation.
Over the past 20 years in Exploration & Production, much of the business focus has been on value creation through unit cost reduction, i.e., spending less to produce incremental oil. This was driven primarily by the view that oil supply was, and would remain plentiful and that the oil price would not keep pace with general inflation. As oil prices proceeded to fluctuate between levels that allowed decent economic returns to near economic breakeven points for operators, the largest economic lever available to operators was constantly in flux, i.e., drilling budgets. In this business environment UBD projects, which have a relatively large initialization cost and add significantly to operating day rates, have been difficult to sustain through the budget cycles. Consequently, implementation of UBD has experienced growth and contraction concurrent with the rig count and continuous operation has been limited to North America and the southern North Sea, where it has been clearly demonstrated to deliver more value through lower costs and/or production enhancement over conventional drilling and completion techniques and for the past two and a half years in the Middle Eastiii,iv.
This paper focuses on the ongoing efforts to establish UBD as the preferred reservoir exploitation method in PDO. These efforts are concentrated on highlighting, not only the usual production benefits associated with UBD, but also the cost reductions that will help PDO achieve its goal of cost neutrality of UBD when compared to conventional operations. Equally important is the value of other less obvious benefits, in the form of reservoir learning enabled through the analysis of UBD derived reservoir characterization (RC) data. In fact the longer term value of the RC data, properly applied, is likely to far exceed the value of cost savings.