Resource, Talent Challenges Headline Annual Drilling Conference

A record number of attendees participated in the 2007 SPE/IADC Drilling Conference, which set its sights beyond the current drilling boom to examine the technical, economic, and political challenges of producing future reserves. Interest in this year’s conference in Amsterdam was high all around, with a record number of technical paper abstracts received as well, said conference Advisory Committee Chairperson Sjoerd Brouwer of Shell E&P. This was the 24th annual event, which rotates between the U.S. and Europe.

With the drilling and completions sector under pressure to satisfy growing global hydrocarbons demand, plenary sessions focused on three key areas: accessing hard-to-produce reserves, confronting the shortage of technical talent, and assessing the effect of high oil prices on the industry. Plenary sessions were interactive, with audience members given the chance to vote on questions posed by the moderators (Figs. 1–5). Technical sessions spanned such topics as mature field and unconventional production; advances in downhole drilling; fluids; deepwater drilling; bit technology; case histories; and health, safety, and environmental issues.

A Shortage of Resources?

The conference opening plenary, titled “Reserves Beyond Our Reach,” featured experts from a national oil company, service companies, and two international oil companies. Robert Samek, Petroleum Global Knowledge Leader with consultancy McKinsey & Co., moderated the lively two-hour session, which featured individual presentations, discussion, and audience participation. The global resource base currently looks tight, noted Samek, but there has been no shortage of predictions in the past about the world running out of oil—all of which have turned out to be off the mark. With the right technology and adequate capital investment, “the industry has continued to surprise itself” by increasing reserves and production, he said. “These are good times for the industry. Demand is unquenchable. The question is, ‘Where is the oil going to come from?’” In a poll of the audience, better application of existing technology was favored as the best way to supply more oil to the world.

Roelof Platenkamp, Vice President of Petroleum Engineering and Development for Shell E&P, agreed that the “age of hydrocarbons” would not come to an end because of a shortage of hydrocarbons. If it comes to an end, it will be for other reasons. He cited threats to the industry that are putting some of the global resource base out of reach, including government intrusion in places such as Venezuela and more regulation, globally as well as in specific countries.

Shell is capitalizing on new technology to increase output and reserves, with a major emphasis on smart wells, Platenkamp said. The application of new technologies is becoming more routine and allowing new output to come on line. In west Brunei, for instance, the firm is using one smart well to produce from five zones and estimates that doing so has increased production 5,000 BOPD. Use of smart technology will boost recovery efficiency in most of Shell’s fields by about 10%, he said.

High-pressure/high-temperature drilling has become more routine and will become more effective with “smartness” added, he said. Such drilling in the Permian Basin, the Gulf of Mexico, and the North Sea is bringing oil to production that otherwise might not have been recoverable. Another area of emphasis for Shell is underbalanced drilling for tight gas, he said. The company also is experimenting with the use of low-cost automated drilling rigs, which have been used in The Netherlands and soon will be attempted offshore.

“In all of these areas, we are learning because we are doing it over and over again,” Platenkamp said. “With these technologies, we are unlocking reserves that otherwise would have stayed in the ground.” This is in keeping with the industry’s practice of taking things that are complicated and expensive and making them routine. “I am confident we will be able to do that in the future,” he added.

The application of technology is also paying off for Saudi Aramco as it attempts to boost the resource base of the world’s most prolific producing country, said Saleh Al-Dawas, Manager of Production and Facilities Development for Aramco. Advances in gathering seismic data and in improved oil recovery through the use of smart wells and better reservoir modeling have paid dividends, he said. The firm still needs to make improvement in the real-time capture of information, water management, and more proactive reservoir management, he added.

Sami Iskander, President of Drilling and Measurements for Schlumberger, remains confident that technology will enable the industry to meet global demand growth, but he stressed that service companies and operators need to work together more closely on developing new technology. Technological advances in the past decade have made many more resources available for production, and that trend is likely to continue going forward, he said. He cited several areas where continued technical improvement would boost oil and gas efficiency and productivity, including

Enhanced azimuth seismic technology, which would benefit developments in deep water, where conventional seismic has proved inadequate.
Extended-reach drilling, which would help the industry tap small and distant reserves.
Better collaboration among service companies, operators, government, and joint-industry projects, which could enable production from exotic resources such as gas hydrates sand shale.

Chris Reddick, Technology Unit Leader for BP, said the industry also needs to take big leaps forward in sand control, expandable completions, and in deciding how to handle the huge amounts of data it is now getting. Rising demand for energy means there needs to be more focus on shoring up the technical talent base, he added, and that responsibility falls on everyone in the industry. “We all have a role to play,” he said, adding that those working in the industry should be speaking at universities and grade schools and educating students about the industry. And when young people do join the industry, companies should give them challenging and meaningful jobs so they will be inclined to stay.

Drilling and Completion Award

Before the beginning of the second-day plenary session, 2007 SPE President Abdul-Jaleel Al-Khalifa presented the annual SPE Drilling and Completion Award to Curtis Blount, Well Supervisor/Adviser for ConocoPhillips Alaska. The award recognizes outstanding achievements in or contributions to advancement of the discipline. Blount has made significant contributions in coiled-tubing-intervention technology and in well-intervention and logging technologies.

The second plenary shifted the discussion from technology to the people who operate it. Moderator Walter Simpson, head of Well Engineering for BG Group, noted that these are “unprecedented times,” with rig utilization at an all-time high, which has left every sector of the industry looking for more people. In an audience poll, 78% said they did not think technology was the answer to the talent shortage.

Offering a drilling contractor’s perspective, Jeff Saile, Senior Vice President of Business Development with Ensco, said new technology has not cut the need for people in his sector. The drilling industry is doing more—and doing it more safely—and with more people than ever before. Technology has helped cut lost-time accidents and improve operational efficiency, but the number of technicians needed grows with each technological innovation, and the ratio of supervisors to laborers also has increased. In 1976, 20 people were required for a jackup rig in the Gulf of Mexico; 30 years later, that number had risen to 35, he said.

Paul Goodfellow, Wells Manager with Shell E&P, agreed that while technology offers better operational efficiency and competitive advantages, it often requires more people to run more complex systems. “Huge step changes in our capability” have occurred in seismic, for example, but turning that information into usable knowledge has required more people to interpret the data, he said. Similarly, on MWD/LWD projects, a steady increase in staff offshore has been needed to run these sophisticated tools. And 3D visualization has improved well planning, but more work is required “to deliver a superior solution,” so no manpower savings have occurred.

High-Bandwidth Promise

But Bill Sanstrom, Director, Technical Marketing with Halliburton, said he believes that real-time services, while not solving the talent shortage in the industry, will improve the situation significantly. Advances in high-bandwith applications will allow field data to be collected without human intervention, for example, and field operations to be monitored remotely. As rig-monitoring capability increases, fewer people will be needed on individual rigs through economies of scale, he added. Real-time advances may be able to reduce human-asset needs by as much as 10–15%, he said. In addition, such advanced technology may be able to attract a more diverse workforce, including young workers and women.

There is no question that technology improves performance and enhances efficiency, said François Viaud, Senior Vice President of Human Resources (HR) and Communication for Total E&P. “But technology is not meant to solve the people problem, although it clearly will contribute to the solution,” he said.

HR departments can make several contributions to the shortage of technical talent in the industry, Viaud said, by keeping up a steady recruiting regime, speeding up training time and e-learning, motivating and retaining senior employees, ensuring that employees are being managed for lifelong careers, and improving the industry image. Managing people for the long term includes creating equitable promotion schemes and providing ample opportunities for advancement.

Companies need better long-term manpower strategies, and they underestimate how difficult it is to outsource talent, Viaud said. “You just can’t move 10,000 Chinese engineers to Angola overnight and expect a seamless operation,” he said.

Saile commented that technology is advancing faster than the industry can train people in it. The contracting industry “is currently taking the path of least resistance” by hiring away employees from other companies.

Drilling Challenges, Solutions

Technical sessions during the conference covered a variety of drilling issues, challenges, and solutions. Among the presentations:

Three operators collaborated to document recent drilling problems in the ultradeepwater Gulf of Mexico, such as mechanical failures, tar, and weather events. The extremely high costs of ultradeepwater drilling make quality control of equipment for wellheads and casing essential, as well as rental company service tools. Extensive testing should be done onshore before delivery to the drilling site. Drilling programs should have detailed contingency plans to minimize rig downtime.
Improvements in the past 5 years in powered rotary-steerable systems and rotary-steerable bit technology have reduced drilling days and improved time to first production. Decreasing the number of trips per well has reduced nonproductive time and also has implications for improved safety.
Logistics, mobilization, and a limited drilling season make remote Arctic onshore exploration costly, but a significant reduction in exploration final hole size has helped to significantly reduce costs. Well evaluation is not limited because of recent developments in evaluation equipment. Use of a hybrid coiled-tubing drilling unit has helped mobilization and demobilization times. Combining new technologies, such as casing drilling and coiled-tubing drilling, has cut drilling time and enabled hybrid coiled-tubing rigs to drill deeper.
An extensive recovery program was undertaken to recover a jackup rig after it was hit by Hurricane Rita in 2005 in the Gulf of Mexico. Analysis concluded that the recovery could not be achieved safely without the use of a pull-back barge, which minimized load on the legs. The unit eventually was refloated and taken to a repair facility.
New-generation topdrive casing running and drilling tools provide opportunities for change in conventional well-construction methods. Applications include drilling with casing from rigs with top drives; casing installation in predrilled wells; and risk mitigation for casing installation in extended-reach and deviated wells.