Drillers https://drillers.com Drilling Jobs & Professional Support for the Global Drilling Community Thu, 26 Mar 2020 19:16:08 +0000 en-GB hourly 1 https://wordpress.org/?v=5.3.2 https://drillers.com/wp-content/uploads/2016/02/imageedit_8_3054722830.gif Drillers https://drillers.com 32 32 Making the Invisible Visible – Delivering Clarity https://drillers.com/making-the-invisible-visible-delivering-clarity/ https://drillers.com/making-the-invisible-visible-delivering-clarity/#respond Thu, 26 Mar 2020 19:09:02 +0000 https://drillers.com/?p=2051371 Cost Saving through Operational Optimisation Without exception, every Operator has the potential to reduce their operational costs significantly. I don’t think anyone would argue with this. But where do we start and how far should we go? Most will pay invoices, incurring unnecessary expense without realising. Introducing optimisation methods will put potential savings into practice. […]

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Cost Saving through Operational Optimisation

Without exception, every Operator has the potential to reduce their operational costs significantly. I don’t think anyone would argue with this. But where do we start and how far should we go?

Most will pay invoices, incurring unnecessary expense without realising. Introducing optimisation methods will put potential savings into practice. A company’s campaigns will become more streamlined, putting performance and cost-efficiency firmly in the top quartile.

Invisible losses will become visible, creating the ability to reduce unnecessary expenditure significantly. Clarity is provided, making cost-saving more achievable.

Streamlining processes, saving money on materials here, or a few hours of rig time, there can lead to a significant reduction in expenditure.

The following article will describe methods which have been used with great success, delivering savings of tens of millions of dollars.

The learnings below come from subsurface operations related to drilling wells, but these practices can be applied to just about every business.

Operational Optimisation

Team Architecture

Identifying which services are required to ensure an operation runs smoothly is a talent. However, it is not enough to simply tick a box by employing an individual with the right job title. It is essential to identify those capable of providing the required results. When an expert opinion has been given, it must be communicated to the wider team and – after discussion and agreement – implemented. Embracing new ideas is not something most personnel do easily. The benefits and rewards of the new input need to be made clear.

Real-World Example

During a drilling campaign where the first wells in the region were suffering severe Well Bore Stability (WBS) problems, a small, known Geomechanics team was engaged. This team provided guidance which in theory would solve the initial wellbore problems. With time the relevant team members were convinced of the value of this guidance, and it was put in to practice. Two to four days were saved on each of the following wells. Further time savings were made throughout the campaign via drilling practice monitoring and improvement.

In this case, it was essential to commission the right team. Their experience, advice and work method proved valuable. The value created by far outweighed the additional cost to the project for this service.

Managing Service Company Inventory

Ensuring the system has no waste is an essential part of the optimisation process. Carefully examine the equipment and consumables required and create a dynamic inventory which caters for those needs.

Real-World Example

A three-rig campaign where each rig had backup wireline equipment on site. By placing backup equipment in a central operating base and only taking it to the rig during the operational time, it was possible to considerably reduce the rental for back-up tools and release one full string for each tool type. Tool rental saving was considerable.

It is essential in this case to have the right project people to oversee the logistics and coordination of the service in question.

Utilising Company Scale

Benefiting from the stature of the demand you are creating is an often-overlooked bonus related to the size of your operation. Capitalise on this by looking for the potential value associated with scale.

Real-World Example

By taking an overview of regional operations rather than individual rig schedules, it is often possible to benefit from economies of scale. This can take the form of contract discounts or more practically it could mean requiring less charged-for backup equipment in the field.

Planning Advancements

A Fresh Set Of Eyes

Most Operators have planning systems which are tried and tested. There is, however, always a way in which these procedures can be adjusted to improve their effectiveness or to make them more streamlined. This can be as simple as removing unnecessary content or duplication or completely restructuring planning documents.

Real-World Example

During the planning of a multi-rig development campaign, the Mudlogging, Wellsite Geology and DD/LWD services were redesigned in such a way that headcount will be reduced profoundly during the execution phase. By reducing the number of personnel performing geology-related services at the rig, catering, security, logistics and HSE are also affected positively. These redesigns will save the Operator millions of dollars through the Development drilling campaign.

Knowledge Capture & Dissemination

By taking an overview of projects and examining the whole picture, it is possible to create efficiencies simply by being informed. In the drilling business, this information can be captured and spread to the wider team through Drilling Well On Paper (DWOP) and other ‘WOP’ exercises, Knowledge Capture / Lessons Learned sessions and workshops for individual disciplines. The value these exercises create should not be underestimated.

Real-World Examples

In a project where one company works in many countries, organising regional workshops to be attended by all teams to ensure good practices are adopted throughout the company. These sessions also communicate standard and proficient practices and reinforced the bigger picture of the regional project.

Additionally, Knowledge Capture sessions for entire campaigns for all disciplines related to drilling create massive value to the Operator. In these two or three-day conferences gather personnel associated with: HSE, Drilling Practices, Data Acquisition, Logistics, Communication and Reporting, Contracts and Procurement, Cementing, and Drilling Fluids. The meetings take an informal look at Highlights and Lowlights of the entire process. The outputs are Lessons Learned documents for each discipline which are implemented before future drilling campaigns. These long-term efficiencies provide a safer, cheaper result.

Similarly, the use of Drilling the Well On Paper (DWOP) and Logging the Well On Paper (LWOP) are invaluable tools which pay dividends, through the brainstorming of all salient individuals associated with the well or campaign. One observation from an unlikely direction can lead to significant clarity and efficiency.

Day to Day Operational Adjustments

The Right Person In The Right Place, Again

No matter how efficiently projects are planned, there are inevitably areas where the unforeseen or unpredictable happens. When these outliers show themselves, it is essential that there is an individual supervising the operation who have the experience, knowledge and gravitas to deal with the situation swiftly and without fuss.

Real-World Examples

During the drilling of a well in the final section. All legal and data acquisition objectives may have been satisfied, but the programme states a Total Depth (TD) of another two hundred meters – a day’s drilling – should be achieved. Here it is essential to have a professional in place with the ability to identify the potential saving. They need to communicate it to those in a position to approve the decision and to instruct the team that there has been a change of plan. Too often, for varying reasons, programmes are followed blindly.

Another common consumer of rig time is formation pressure tests recorded via wireline logging. These data are essential and lead to a greater understanding of the nuances of reservoirs. However, all data acquisition must be planned with an understanding of the end goal and with a sense of financial responsibility. Some subsurface teams can be a little overzealous with their data wish list. It is the job of a good coordinator to ask for a justification for programmes to be reduced if the end goal can be achieved with less data. Pressure test plans have been reduced by half in the past with a more than satisfactory result.

Data Acquisition Rationalisation

I Want vs I Need

Each Operator has a different approach to Data Acquisition. It is essential to engage the team and in particular, the higher level Managers to ascertain the goals. Only when the company’s philosophy is understood can the processes of capturing this data be optimised. Often this is through rationalisation of the programmes.

Real-World Examples

Rotary Side Wall Cores are often included in data acquisition programmes. The worth of the data these cores provide and their application to the project should be discussed with the Subsurface team involved. On numerous occasions, it is decided these samples are a useful supplement, not a requirement. The runs can be removed from the logging, saving rig time and the service charge, with no adverse effect on the project.

Vertical Seismic Profiles (VSP) in certain situations are revelationary pieces of information which can shed a whole new light on basin analysis. On other occasions, they are time-consuming, costly process which simply confirms what we already know. It is a vital and sometimes difficult process to ensure the team makes the right decision.

Process Improvement

We’ve Always Done It This Way

Often companies have guidelines and processes which are outdated or without reasonable justification. By looking at the required deliverables or end use of the data, it is often possible to create efficiencies in the process without affecting the end result. Operator processes can be very emotive. There are often personnel still in place who were instrumental in the creation or moulding of a design process or documentation structure. To convince these individuals, that their pride and joy is inefficient or outdated is a challenging, sometimes impossible task.

Real-World Examples

A project where fluid sample clean up during wireline operations was stated as requiring the samples to be 95% clean. After some investigation, it was determined that a much-shorted clean-up time would suffice for the analysis required. Two hours of rig time per sample – 12 hours per well in a 35 well programme – were saved.

The reduction in the number of cuttings samples collected and stored during a lengthy campaign was achieved through a simple five-minute discussion. The campaign saved a little on materials, logistical costs and storage. However, over the life of the field, the small annual saving will become significant. Often processes are followed because they are unquestioned remnants of the past. Repeating the same process without question is a common cause of inefficiency.

Operator planning processes and documentation are the elephants in the room. Too often they are convoluted, cumbersome, repetitive or just plain wrong! Forward-thinking companies will allow for these outdated monuments of inefficiency to be reduced without compromising results and streamlined without sacrificing the integrity of the result.

Contract Optimisation

Contract Design

Contract design is an essential cost-saving tool. Service companies tend to make significant profit by invoicing for non-contract items or non-standard contract items. By ensuring Invitations To Tender (ITT) are constructed in such a way that the Operator has as few unplanned items billed, is a simple yet frequently unobserved efficiency. It is not enough to ask the contracts team to create a streamlined contract. There must be input from a technical specialist who thoroughly understands the service.

Real-World Examples

When engaging a service, look at who the end-users of the product are. It is vital to carry out complete engagement of all of those who may require output from each service and to ensure all potential requirements are catered for in the standard contract. This way, off-contract invoicing is much reduced.

A specific case involved ensuring advanced gas detection equipment which was required by the subsurface team, was provided as a standard deliverable in mudlogging contracts. This simple addition saved the Operator hundreds of thousands of dollars.

Additionally, do your homework and ensure that standard contracts include sufficient sensors for the rigs which are to be used. This sounds like – and is – a very straight forward step. But if a contract is not tailored to the precise scope of work, there is massive room for spending on contracts to grow out of control.

Thorough Tender Evaluation

Contract bids from service companies can often be vague, or even leave out relevant responses which could have financial or operational consequences. Ensuring a thorough evaluation is undertaken will create financial and operational efficiency (which reduces expenditure further).

Contract Monitoring

Very close monitoring of services and invoices associated with contracts is a quintessential feature of contract management. This scrutiny helps to ensure there is no ‘creep’ in contract spending. The task requires time and an in-depth knowledge of the contracts. It’s possible to save hundreds of thousands of dollars through simple contract monitoring.

Real-World Examples

A mudlogging contract in which the real-time data monitoring licenses up to five were included in the contract. Beyond five, there was a hefty fee per additional license. It is therefore essential – through contract monitoring – to ensure the number of licenses does not exceed five. If there is a requirement for more, write it into the contract at the design phase.

Finally, check invoices carefully. Mistakes are made. It is, therefore, essential to ensure you are paying for what you request and no more. Remove all charges from invoices which are not as per contract or which have been included in error. This is an important final step in contract management.

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Nigeria Oil Industry Overview https://drillers.com/nigeria-oil-industry-overview/ https://drillers.com/nigeria-oil-industry-overview/#respond Tue, 24 Mar 2020 20:16:49 +0000 https://drillers.com/?p=2051366 The Oil Industry of Nigeria If anyone asks Chevron or Shell, for example,  how they feel about Nigeria, the response would probably be that they were tired of problems, at least if they were honest. Pipeline vandalism, militant attacks on infrastructure, protests and lawsuits are among the issues that have plagued Nigeria’s oil industry for […]

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The Oil Industry of Nigeria

If anyone asks Chevron or Shell, for example,  how they feel about Nigeria, the response would probably be that they were tired of problems, at least if they were honest. Pipeline vandalism, militant attacks on infrastructure, protests and lawsuits are among the issues that have plagued Nigeria’s oil industry for years. Recently, the Nigerian government demanded more than $60 billion in back royalties under a production sharing agreement with the supermajors operating in the country. How did this happen?

History of oil in Nigeria

Oil was first discovered in Nigeria in the mid-1950s after decades of fruitless exploration. The country’s first field began producing in 1958 at a rate of 5,100 BPD. Production grew fast, and today, Nigeria pumps close to 2 million BPD, which makes it the largest producer of crude oil in Africa.

Nigeria joined OPEC in 1971 before it even had its own state oil company. That was formed in 1977 under the name National Nigeria Petroleum Company.

According to its OPEC file, the West African nation is home to 36.97 billion barrels of proven oil reserves as well as 5.675 trillion cubic metres of natural gas, which explains why the supermajors are not too tired of their problems in Nigeria. The country exports most of the oil it produces even though it has a refining capacity of almost 450,000 BPD. While in the past it used to transport the most oil to the United States, now Nigerian oil goes mostly to Asia, Europe, and South America.

The main players

A joint venture of Shell and BP was the first to discover oil in Nigeria. To date, in addition to these two companies, the international players in the country’s oil industry include Exxon, Chevron, Eni, and Total.

The supermajor with the most prominent presence in Nigeria is Shell. The company, through its joint venture with NNPC and the local divisions of Total and Eni, accounts for half of Nigeria’s oil production.

Exxon comes next: the U.S. company has a 40-60 joint venture with the NNPC, which is the majority shareholder, and stakes in several offshore fields, including several deepwater blocks that have yet to be developed.

The third-largest oil player in Nigeria also comes from the United States. Chevron has stakes in both onshore and offshore fields through a JV with NNPC that has the same percentage distribution as Exxon’s.

Eni’s Agip, Total, and ConocoPhilips have a smaller presence in Nigeria, but they are nevertheless important players. Total, for instance, started production from one of the most significant newly discovered offshore fields in Nigeria – Egina – at the end of 2018 with plans to ramp up production to 200,000 BPD. The operator of Egina is China’s CNOOC: Chinese oil companies are expanding internationally, and Nigeria is one of the destinations, despite the challenges.

A challenging environment

Most of the oil in Nigeria is concentrated in the Niger Delta, in the southern part of the country. That is also one of the poorest regions in Nigeria despite commitments both from the Nigerian government and the oil companies operating in the country to improve employment prospects for the local communities.

This state of affairs is coupled with few alternatives for making a living in Nigeria’s oil heartland, not least because of numerous leaks and spills from the pipelines that criss-cross the Delta. According to estimates from human rights groups, millions of barrels have leaked or spilt in the Niger Delta over the years. These leaks and spills have made a lot of arable lands unusable, depriving local residents of the option to make a living from farming.

The question of whose fault the spills are remains the topic of dispute between the local communities and the international oil companies. Local communities lean on the Nigerian law that says whatever the cause of a leak or spill is, it is the companies’ responsibility to clean up. The companies, for their part, argue that most of the leaks and spills are the result of vandalism that is difficult to keep track of constantly. The dispute continues as local communities sue oil companies for damages with mixed success.

Vandalism is a fact in the Niger Delta, like poverty and lack of prospects for the locals. For many, stealing crude oil from the pipelines and processing it at one of the many illegal refineries in the region is a means of earning a living. The government has been fighting the illicit refineries for years. Still, in 2017 it changed tack and decided to legalise the facilities instead, bringing what many see as a flourishing business in fuel-starved Nigeria to the light.

Militant activity in the Delta has been another consequence of the tense situation there. There have been many groups active in the Delta, attacking oil fields and infrastructure over the years. The most prominent among them in the recent past was the Niger Delta Avengers, which struck several pipelines and export terminals causing production and export outages, fighting, as its website proclaimed, for a fairer distribution of Nigeria’s oil wealth.

While the NDA’s methods were undoubtedly questionable, the rise in militant activity in the Delta coincided with the 2014 oil price collapse which plunged Nigeria into a recession. The government had little choice but to try and negotiate peace with the militants. While bumpy, this road has since 2014 led to a marked drop in attacks on oil infrastructure in the Delta.

OPEC commitments

The attacks on pipelines and terminals have dropped but so has oil production. Nigeria currently can produce more than 2 million BPD of crude oil. Still, it has been bound by the OPEC+ production cut agreement to produce less than that: according to OPEC, it was producing around 1.8 million BPD as of November 2019. How output will change now, with the current price war is a worry in an already oversupplied market.

During the first round of cuts, agreed in December 2016, Nigeria was exempted, along with Libya, because of the trouble it was having with the Niger Delta militants. After the ceasefire, however, Nigeria was asked to join its co-members in contributing to the overall cut in production.

Despite this contribution, the second round of cuts has failed to push international oil prices much higher, betraying the expectations of most participants. As a result, the federal government, which drafted a record-breaking budget of $34 billion for 2020, has had to look for other ways to boost oil revenues.

The $62-billion royalty dispute

In October last year, Reuters reported, citing Nigeria’s Attorney General, that the federal government would pursue international oil companies for $62 billion worth of unpaid royalties due under the oil production sharing agreement framework that has been in effect in Nigeria since the 1990s.

The framework, according to Attorney General Abubakar Malami, included a stipulation for reviews of the revenue-sharing terms by the Nigerian government whenever oil prices rose above $20 per barrel. These reviews were never conducted, and the terms of the contracts were never adjusted to reflect the changes in international prices, which at one point shot up above $120 a barrel.

It will fall to courts to rule on this case, and it will take quite a while. In the meantime, Nigerian legislators last year approved two new measures that should boost oil revenues. The proposals got approved as amendments to the 1993 Deep Offshore and Inland Basin Production Sharing Contract in October.

One of these measures targets offshore projects specifically. According to the change in legislation, companies operating offshore blocks will owe the federal government a 10% royalty rate on all projects at depths of over 200 metres and another 7.5% on frontier and inland basin projects.

The second measure is linked to oil prices. According to it, oil companies operating in Nigeria would owe an additional royalty to the government when oil prices pass the $35-per-barrel threshold. The rate of royalty will rise in tune with oil prices.

Nigeria’s President Muhammadu Buhari signed the bill into law in November. According to the administration, the legislative changes will boost Nigeria’s oil revenues by up to $1 billion annually and, according to President Buhari personally; they will benefit the whole Nigerian population.

The outlook for Nigerian oil

The international oil companies active in Nigeria are not happy with the changes. Especially as they come less than a year after the federal government asked six of them – Shell, Chevron, Exxon, Total, Eni, and Equinor – to pay a total $20 billion in back taxes they were alleged to owe local governments. However, the original contracts these companies closed with Nigeria will begin to expire in three years, so they need clarity for their long-term prospects in the West African country.

According to a group that represents 90% of the oil companies active in Nigeria, the legislative changes will create uncertainty. The Oil Producers Trade Section also believes the additional royalties will undermine the profitability of many projects, which would result in lower investment in future production. Ultimately, Nigeria could lose about $10.4 billion in oil revenues by 2030 as a result of these changes, the OPTS says.

Yet even some oil executives acknowledge that the original contracts of the supermajors with the Nigerian government were unfair, a November report by the Financial Times revealed. An updated legislative and regulatory framework would benefit them in specific ways, according to some analysts. For one thing, as Eurasia Group’s head for Africa Amaka Anku told the FT, it would provide clarity for the long term. For another, it would relieve them of the need to renegotiate each of their contracts individually after 2023, which would expose them to political factors since federal elections are due in that year and the incumbent party in power could lose.

As regards warnings that if they have to spend a lot more on future Nigerian projects, the supermajors might decide to up and leave, these are valid ones but far from a certainty. The new normal for Big Oil indeed is to choose the lowest-cost and fastest-return projects. Yet it is also true that the choice of proven and untapped large deposits of oil around the world is dwindling. In the end, Big Oil would need to choose between expensive and more expensive, rather than between cheap and costly.

The long term outlook for Nigeria’s oil industry may be mixed at the moment. It may remain mixed for the observable future, but it is highly unlikely Nigeria would sabotage its future oil revenues by placing too high a financial burden on the supermajors.

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What It’s Like To Work On An Offshore Oil Rig https://drillers.com/what-its-like-to-work-on-an-offshore-oil-rig/ https://drillers.com/what-its-like-to-work-on-an-offshore-oil-rig/#respond Thu, 19 Mar 2020 18:11:04 +0000 https://drillers.com/?p=2051348 Working on an offshore oil rig or platform is a unique experience Note: In this article, we’ll use the word ‘rig’ and ‘platform’ almost interchangeably, but a rig does the drilling, and a platform does the pumping. Living on an offshore oil rig or a platform, or in living quarters on a vessel attached to […]

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Photo of a drilling floor on an offshore oil rig

Working on an offshore oil rig or platform is a unique experience

Note: In this article, we’ll use the word ‘rig’ and ‘platform’ almost interchangeably, but a rig does the drilling, and a platform does the pumping. Living on an offshore oil rig or a platform, or in living quarters on a vessel attached to a rig, all have similar challenges.

Offshore oil fields represent a substantial portion of the world’s total crude oil output. In 2015, this portion was 30%. Now, it is in all likelihood more significant with several recent discoveries made in Brazil, Norway, and Guyana, among others. Offshore oil activity is growing, and so is a demand for the workforce on the platforms that pump it out.

If there is one thing that everyone will agree is right about work on an offshore oil rig or platform, it is that this kind of work is the opposite of boring. When you work on an offshore platform, you work where you live, and you work long, busy hours. The work is often challenging, and it can also become instantly dangerous when the weather changes. But it could be highly rewarding work, with solid career growth opportunities.

Before you leave

There is a set of minimum requirements for those interested in working offshore in the oil industry. These have mostly to do with physical and mental endurance. An oil platform operates around the clock, and while the work is divided in shifts, these shifts are long, so you would need to be able to last for 12 hours straight and even more than that if you are just beginning.

To apply for the most menial job on a platform, you need to be at least 18 years old and have a high school diploma or an equivalent education certificate. Smoking and drinking are banned on offshore platforms, so the absence of these habits is an advantage.

Physical fitness is a must as a lot of the work on a platform, especially for beginners, it involves handling heavy machinery and carrying loads. Mental fitness is also a must because the typical length of an employee’s stay on a platform is two to four weeks with no going back to the shore. That may not sound very long when you first hear it, but it is quite an extended period.

Survival training

Before you begin your first hitch, or assignment, on an offshore platform, you will need to take a survival course because of the many inherent dangers of work offshore, including harsh weather, combustible materials, and the always present risk of equipment failure.

The oil and gas industry takes its health and safety seriously so it has developed the Basic Offshore Safety Induction and Emergency Training Course, or BOSIET, which you would need to complete before you board the helicopter to the platform. The course teaches things such as surviving in a helicopter crash, providing first aid, surviving at sea, and operating a lifeboat. Taking the BOSIET course could cost anywhere from $400 to $2000 depending on the location. 

Working on an offshore oil platform or rig

One two- to four-week stay on an oil platform is called a hitch in the industry. Shifts are called tours. Veterans in offshore work advise that you plan ahead before you leave, making sure your family has the contact details of your employer. Your employer also has the contact details of your family in case of an emergency. That is important because only the senior staff on an oil platform has unlimited access to a phone offshore.

Mentally preparing for hard work in shifts is also essential. A typical tour begins with a pre-tour meeting about half an hour before the start of the tour where the people who will be working this tour discuss the tasks of the day or night. After the tour, there is a handover meeting, pretty similar to how shifts work in hospitals with one team briefing the next one about what happened during the day. Outside tours, new employees also take part in training and safety meetings, which further adds to the workload.

Top risks

The first and foremost risk on an offshore oil platform is fire. Both oil and gas are flammable, so fire emergency response is a big part of the survival training you will undergo before you can work on an oil rig.

Besides the liquids and gases that get produced from oil platforms, however, there are also flammable chemicals used during drilling, and these chemicals are also a fire hazard.

Then there are the moving parts of all the machinery that is necessary to drill for oil and gas. (Then pull that oil and gas out of the ground and transport it). As with every sort of machinery, this equipment could injure or kill if you are not careful.

The well itself could be a hazard, too, as tragically evidenced by the Deepwater Horizon disaster. Despite significant advancements being made since then in ensuring the safety of a well, the danger of pressure building up and blowing out the well is always there.

Fatigue could also become an issue when you are not used to the intensive work schedule and the limited opportunities for distraction from work during your hitch.

Living conditions

Few platforms can offer their personnel single rooms to stay in. Space is tight, so you will almost certainly need to share a room with one or more people. Bathrooms get shared among several rooms. In such close quarters, veterans advise, you must respect other people’s personal space, such as there is of it.

Keeping your space tidy and making sure you don’t have to go back to the room after your tour begins because you have forgotten something, risking to disturb the co-worker who is resting after their tour, is always a good idea.

Because of the nature of work on an offshore rig, cooked food is available around the clock, with fresh products flown in by helicopter regularly. New platform workers often find with surprise that the food is not just fresh but also good. In essence, oil companies seek to make their workforce’s living conditions as comfortable as possible in the areas where this is manageable.

Free time on the rig

Despite the tight space oil platforms also have various amenities such as gyms, pool tables, TV and even cinemas. As with the food, it is essential for the people working on the platform to have the opportunity to unwind and relax, so employers are providing the means.

There is an internet connection on oil platforms but, again, it pays to be mindful of other people’s needs to communicate with their families and limiting the time you use on Skype or Face-Time, so others get the chance to see their families, too.

Mindfulness is as important as mental and physical fitness on a platform. Friendships for life are often made during hitches when people respect each other’s space and needs. Failing to do that could make a hitch a much more unpleasant experience despite the excellent pay.

Career opportunities

It’s no secret there is healthy competition for job vacancies on oil platforms because offshore jobs pay a lot better than work onshore. There are benefits, and there is the opportunity for a quick rise through the ranks, which makes these jobs even more desired. Yet you have to be ready to start from the bottom.

The most basic—and most physically demanding—position on an offshore oil rig is that of the roustabout. The job of the roustabout is the one with the heaviest lifting and most prolonged work hours, and it also pays the least. Yet as a roustabout you will acquire a lot of valuable skills in drilling equipment maintenance, for example, and electrical systems, as well as expertise that would then open up more specialised positions.

Next on the ladder is the roughneck. Roughnecks operate cranes, run drilling engines and pipes, and are in general given more skilled tasks and paid more for doing them. Several years of work as a roughneck are enough to pass to the next level, which is that of derrick hand, or derrickman.

The Derrick hands are responsible for the drilling mud and the mud pumps. If they stay in the job and have the ambition, they could further advance to drillers. That is the first supervisory position in the hierarchy of an oil production team, with the driller overseeing a team of roughnecks.

Wellhead pumpers also fall within this middle salary class. They are the people who operate the equipment around the wellhead and monitor the flow of oil. They also have supervisory responsibilities for roughnecks.

After the driller is the toolpusher, who oversees all roughneck crews and also does administrative work, toolpushers earn the highest salaries among the manual labourers on a platform to reflect their responsibilities.

Further up are the specialists with degrees in petroleum engineering, geoscience, marine engineering, and other relevant areas of knowledge. Essentially, the system on an offshore oil rig is a meritocracy. The salary rises in tune with the responsibilities and expertise an employee has. Geologists and roughneck supervisors make more than roustabouts and wellhead pumpers, and reservoir engineers make more than geologists. Production managers, in turn, because of their many responsibilities, make more than reservoir engineers.

The best-paid position on an oil rig, however, is that of the offshore drilling consultant. People in this position primarily oversee all operations on the platform daily, from drilling and production through contractor management and the ordering of supplies, all the way to safety monitoring and hiring.

Conclusion

Work on an offshore rig or platform is undoubtedly challenging, even for the senior staff. Limited personal space, a prolonged absence from friends and family, and a taxing work schedule are not for everyone. Yet for all the challenges, work on an offshore platform also offers opportunities for a lucrative career. There’s a marked path upwards, as long as you have ambition and the readiness to work hard, every step up the ladder.

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A Guide to Enhanced Oil Recovery (EOR) https://drillers.com/a-guide-to-enhanced-oil-recovery-eor/ https://drillers.com/a-guide-to-enhanced-oil-recovery-eor/#respond Tue, 25 Feb 2020 18:11:06 +0000 https://drillers.com/?p=2051299 The beginning of the 20th century in the United States was marked by what historians call the Texas oil boom. Its other name was the Gusher Age. The gushers were oil wells where the oil and gas were under so much pressure; they sprang out when the well got drilled. Today, the gusher age is […]

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A frac spread used for EOR

The beginning of the 20th century in the United States was marked by what historians call the Texas oil boom. Its other name was the Gusher Age. The gushers were oil wells where the oil and gas were under so much pressure; they sprang out when the well got drilled. Today, the gusher age is a thing of the past. We know how to handle gas and liquids under massive pressure. Also, oil producers have developed ways to extract as much oil and gas from a reservoir as possible even after the initial pressure subsides.

The three stages of oil recovery

The hydrocarbon resources associated with gushers of the Texas oil boom would now be called primary oil recovery. The gushing itself would now be called a blowout and drillers nowadays have blowout preventers to stop the oil from springing up in a fountain. The initial production of oil from a well that relies on the internal pressure of the reservoir to push the hydrocarbons to wellhead is called primary recovery.

This primary recovery can yield about a quarter to 35% of a reservoir’s reserves on average. After that, internal pressure declines and the well needs additional stimulation so the oil can rise to the surface. This extra stimulation comes in the form of water or gas. Waterflooding, as the name suggests, involves sending substantial amounts of water down the well to push the lighter oil to the surface. Gas injection does the same: the gas expands in the well and displaces the oil, which gets forced to flow up.

These are both production approaches that work well at conventional wells in formations with excellent permeability characteristics, meaning it is easy to extract the oil from the rock. They also work well with lighter (less viscous) crude oil grades. But not all oil-bearing geology is the same and not all oil is the same. For heavier oil and oil trapped in less permeable rock, drillers have developed other, more complex, methods of extraction.

All the methods used to boost oil production after the primary phase are collectively known as enhanced oil recovery (EOR).

What is enhanced oil recovery or EOR?

Enhanced oil recovery involves injecting gas or chemicals into a well to change the makeup and location of the oil in it to improve recovery rates. EOR methods tend to be costly, but they can increase the amount of oil produced from a reservoir to as much as 75%. For some oil reservoirs, EOR is the only way to extract the oil because it is too heavy to flow.

The Canadian oil sands are a case in point. These deposits hold bitumen, which is oil in a solid form that cannot flow up a well. Some of the bitumen deposits are on the surface, so it can get mined, but some are located deeper underground, and mining does not make economic sense. Producers inject steam into the reservoir, to melt the bitumen into a liquid and send it up the well to the surface.

There are three established enhanced oil recovery methods, and a fourth one was recently added. One thing all four shares is the cost. EOR is an expensive way to boost the output from an oil well, which is why it is not employed for every well. Before a producer decides to use an EOR method, a detailed evaluation of the economics of such a move is made and only if the technique does prove economical, the producer goes ahead with EOR.

Water injection

Water injection, also called waterflooding, is perhaps the simplest enhanced oil recovery method. A well is drilled near the production well, and water gets pumped down to sweep the oil from the reservoir and send it up the production well. Often, depleted production wells are used as injection wells.

Besides the simplest, water injection is also probably the cheapest way to enhance oil production. At offshore fields, water is abundantly available and at onshore fields drillers often use the water that comes out of the well along with the oil instead of disposing of it.

While cheap and straightforward, waterflooding is not the most universally efficient enhanced recovery method. It cannot be used in natural gas reservoirs, for example. It also cannot move bitumen to the production well. That makes its application limited to conventional reservoirs of crude oil. It is also slow: the effects of waterflooding could take up to two years before it becomes evident, which is another drawback of the method.

Gas injection

Gas injection is the practice of sending gas into an oil and gas deposit to push the hydrocarbons to the surface when the internal pressure of the deposit wanes. Gas injection is commonly used during the stage of secondary recovery.

There are two types of gases used in this method of recovery when used for crude oil. Miscible gases can mix with the oil and since they are lighter than the oil and expand under pressure, they make the flow of oil to the production well easier. Methane and ethane are commonly used as miscible gases.

Immiscible gases, those that cannot mix with oil in a homogenous substance, are used to increase the pressure in the reservoir and push the oil out. Nitrogen and dry gas—a gas that is found without condensates or other liquid hydrocarbons—are commonly used as immiscible gases in gas injection recovery.

The most popular gas for gas injection recovery is carbon dioxide. It is a miscible gas that, when it mixes with crude oil, reduces its viscosity and makes it flow into the production well. The use of carbon dioxide has been hailed as a productive way to utilise greenhouse gas instead of letting it into the atmosphere. However, there is a cost issue to consider, and it is a significant issue, including capture and transportation costs.

These costs can be limited if the source of the carbon dioxide is close to the reservoir where it will get injected and some sources are indeed close to the fields, mostly gas processing plants that release CO2 as part of their operation. If the CO2 has to be brought to the reservoir from hundreds of miles, however, the cost may become prohibitive.

Gas injection, however, is a cost-effective solution to the gas flaring problem many oil drillers have on their hands. Gas flaring is the practice of burning associated gas that comes out of the reservoir together with the oil and has nowhere else to get sent or stored. The Permian shale play in the United States, for example, became a record-breaker in gas flaring last year due to a shortage of gas pipelines and storage facilities since the region focuses on oil rather than gas production.

Yet this excess gas can be injected into the reservoir and enhance the recovery of oil from it. It is much cheaper than having to bring in carbon dioxide from somewhere else, and it is also more environmentally conscious than flaring.

Thermal recovery

First used in the 1960s in Venezuela, whose oil reserves are overwhelmingly comprised of superheavy—highly viscous—oil, today thermal recovery is one of the most popular EOR techniques. Put simply; it involves heating the oil to reduce its viscosity and force it up to the surface.

Steam flooding

The heating process often involves steam produced by either burning natural gas or, more recently, solar power. The solar-powered steam gets produced by concentrating mirrors that reflect sunlight onto a solar collector that then turns the light into heat. The technique has a smaller carbon footprint than gas-produced steam. Steam flooding could be pretty efficient for tertiary oil recovery at a conventional field, but it is not as suitable for bitumen deposits.

Steam-assisted gravity drainage

This technique is an improvement on the steam flooding and uses two wells. The steam gets injected into one of these, and once the bitumen melts, it gets pushed up the second one. The two horizontal wells are drilled parallel to each other close to the bottom of the reservoir. Steam is sent continuously down the top well, and it heats the bitumen around. Thanks to gravity, this heated bitumen seeps into the lower well. From there, it gets pumped up to the surface.

Some companies have started adding solvents to the steam they inject into the bitumen formation to improve recovery rates. The solvents include natural gases such as propane and butane, as well as mixtures the companies develop themselves and that reduce the surface tension between the liquids and the solids in bitumen. Some producers are now doing tests to see if they can replace steam with solvent mixtures altogether, which would reduce the cost of EOR.

Microwave heating

Microwave heating is not a particularly popular technique for heating viscous oil mostly because of its high cost and the disproportionately low rate of success historically. Yet the method has been revived in recent years.

Microwave heating that might replace steam injection involves sending radio waves into a bitumen deposit where the waves heat the water molecules present in the oil. This water turns into steam and melts the oil. The oil flows into a production well and is ‘sucked up’ by pipes like a milkshake through a straw. It is an emerging technology that has yet to prove that it is cost-effective.

In-situ combustion

This method of oil recovery, which is even older than the steam injection, combines production and refining in one. Combustion occurs at temperatures high enough to crack the crude oil into fractions—the same process that takes place in a refinery—so in situ combustion does not just bring the oil up to the surface. Still, it also brings it up in a form that would then require much less refining.

In situ combustion can be a much more economical method of extracting oil than alternatives because it involves primary refining. It can also get deployed across a wide variety of formations. However, since the process is a lot more complicated than the steam injection, safety requirements are more stringent, which increases costs.

Chemical injection

Chemical injection into an oil reservoir works by either enhancing the effect of waterflooding with the addition of chemicals or by manipulating the surface tension between the oil and the formation to make the oil flow more easily to the surface.

The addition of water-soluble polymers to the water used to flood the reservoir is one way to improve oil recovery by making the water more viscous. The more viscous it is, the more effective its sweeping action in the reservoir that pushes the oil up to the surface. What’s more, the addition of polymers that boost the water’s viscosity makes it applicable in reservoirs with heavier oil.

Other chemicals, called surfactants and alkaline substances, when added to the water, act on the surface tension between the oil and the formation. They reduce it, the way soap reduces the surface tension of the objects it is applied to, and this helps the oil flow more easily out of the reservoir.

Chemical injection has proven itself a promising EOR method because of relatively low costs and high efficiencies. It does have drawbacks, and these have mostly to do with the loss of their effectiveness under certain circumstances. For example, polymer-enriched water tends to suffer loss of viscosity in reservoirs that feature brines besides the water and hydrocarbons. Water with surfactants and alkali, for its part, has strong adsorption properties, meaning it sticks to the rock pores.

A subtype of chemical injection involves bacteria. In microbial EOR the bacteria are flushed into the reservoir where they consume some of the hydrocarbons, producing solvents. These solvents mix with the oil to reduce its viscosity, which makes the method particularly suitable for heavy oil reservoirs.

The bacteria can also produce natural surfactants that have the same effect on oil as the artificial ones introduced through chemical injection. A third way microbial EOR works is with the bacteria producing gases as part of their metabolism and boosting the internal pressure of the reservoir.

The costs of using microbial EOR, however, are prohibitively high and there are also environmental concerns related to the use of this method, which has made it unpopular for the time being.

Plasma pulse

The plasma pulse technology, developed in Russia, uses a tool with a 3,500 W generator to create plasma arcs in the well. These plasma arcs emit enormous amounts of heat and pressure but only for a fraction of a second.

The heat and the pressure, in turn, create acoustic waves that resonate across the reservoir and this resonance eventually breaks up the large hydrocarbon molecules into smaller ones, which makes them more mobile and hence easier to extract.

According to proponents of the technology, it is much cheaper than alternatives, much easier to use, and more environmentally friendly. However, it has yet to garner popularity to become a mainstream enhanced oil recovery method.

Enhanced oil recovery is not standard practice for every oil field. Sometimes producers decide it would be cheaper to simply plug the well rather than try to extract any more oil and gas from it. Yet with the amount of undiscovered oil and gas in the world steadily dwindling because they are both finite resources, and with EOR techniques continuously improving, at some point some of them may become standard practice if the cost falls sufficiently without affecting results.

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Measurement in the Oil and Gas Industry https://drillers.com/measurement-in-the-oil-and-gas-industry/ https://drillers.com/measurement-in-the-oil-and-gas-industry/#respond Mon, 10 Feb 2020 11:17:32 +0000 https://drillers.com/?p=2051111 After extracting oil and gas from the ground, you have to accurately measure and weigh how much you have extracted using weighing systems like an industrial weight scale. Accurate weighing and measurement ensure that you get paid the right amount. In this article, we’ll talk about all you need to know about measurement in the […]

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After extracting oil and gas from the ground, you have to accurately measure and weigh how much you have extracted using weighing systems like an industrial weight scale. Accurate weighing and measurement ensure that you get paid the right amount.

In this article, we’ll talk about all you need to know about measurement in the oil and gas industry.

Things you must know about measuring Oil & Gas Production

  • Initial Measuring Process of Crude Oil

Crude oil generally contains sediment, seawater, and several impurities when extracted from the ground. Before measuring it, crude oil must be put through an onsite filtering process, which removes the sediment and impurities. The output is then measured using a weighing system.

  • Measuring Crude Oil

Smaller amounts of crude oil are measured as the transport tanks are filled. Truck scales are mostly used for this purpose.

Larger volumes are measured by valves that record the volume as it enters the pipeline. You need to measure and record the initial volume.

  • Weighing Natural Gas

Natural gas is measured using a device installed in a gas pipeline where the gas is being extracted. The meter will record the volume and pressure, allowing you to determine the amount of natural gas.

  • Oil and Gas Measurement

Crude oil and gas are measured before leaving the well site. Oil is measured in barrels (bbl). Gas production is measured in cubic feet and is reported in million cubic feet (Mmcf), billion cubic feet (Bcf) or trillion cubic feet (Tcf)

You will be paid based on the initial measurement of the product. So, ensure that you use the right weighing system that will measure accurately.

4 Factors That Can Affect Weighing System’s Accuracy

  1. Load Cell Accuracy

Get a high-quality load cell to get accurate weighing. The load cell converts the mechanical force into an electrical signal. This signal is measured by the strain gauges that are bonded at points on the cell.

If you apply the load at the proper spot on the load cell, the strain gauges will provide a proportional electrical signal. Check the response time of the load cell for further accuracy.

  1. Load Factors

Apply load to each load cell in the weighing system like truck weight scale as specified by the manufacturer. For accurate weighing, only the load cells must support all the weight that you want to measure.

Align the load point assembly correctly to ensure that the mounting hardware channels the load directly through the load cell. The level of each load cell should be the same. Ensure that the floor beneath the load cells is strong enough to bear the weight of the load.

  1. Environmental Forces

The accuracy of the weighing system will be high only when the weight force is transmitted to each load cell. However, environmental forces acting on the load cell can also affect the load cell signal. These factors include large temperature variations, shock loading, pressure difference, wind loading, to name a few.

Try to eliminate or minimize as many environmental factors as possible to reduce errors in the load cell signal.

  1. Mechanical and Electrical Noise

The load signal must arrive at the weight controller in the cleanest form possible to ensure accuracy. As we discussed, the load cell transmits a signal that represents a mechanical force to an electrical signal. However, vibrations of the machinery are also a mechanical force that gets converted to electrical signals. Moreover, EMI and RFI are electrical signals that also get measured by the weight controller.

  1. Interference with Signal Transmission

Moisture and temperature can interfere with the signal transmission. Moisture can enter the weighing system’s junction box and attack each load cell. This will reduce the capacitance between the signal lines. This, in turn, will cause the load cell excitation lines to couple with the signal lines and create electrical noise. As we saw, any kind of electrical signal can affect the weighing accuracy.

Large temperature fluctuations can cause resistance changes in the cable. This will again cause excitation changes, leading to changes in load cell signal.

Eliminate as many mechanical and electrical noise sources as possible to improve the weighing accuracy.

Taking Care of Industrial Scales

In the oil and gas industry, measurement is critical and is done every single day. If you take care of the scales, you can be sure of getting accurate results. Here are some ways you can make sure you get accurate results:

  • Keep the Foundation Free of Debris: Debris and dust might accumulate through the day. It is essential that you remove this debris regularly to avoid inaccuracies in weight measurements. You can use a pressure sprayer to clean the scales but ensure that the load cells and junction boxes can withstand that pressure. If it damages the equipment, the measurements would be incorrect.
  • Conduct Regular Inspections: Keep an eye out for anything that seems out of place. Look for corrosion, wear and tear, or signs of damage. Inspect the junction boxes, wiring and hardware of the system. Look for signs of moisture inside the electronics. Regular inspections will give you the confidence that the weighing system is functioning properly. This way you can be assured of accurate measurements of oil and gas production.
  • Keep the Scale Grounded: Keep the scale grounded as a basic defense from lighting and power surges. Connect the scale to the manufacturer’s grounded system. If the ground connection is disrupted, it will shunt the power surges to other places like load cells and scale electronics, causing a lot of damage.
  • Make Important Adjustments: Industrial scales can expand and contract a little at different times of the year. Therefore, you need to make the necessary adjustments for thermal expansion so that you get accurate readings. Ensure that the scale is giving accurate measurements by testing it with certified weights.

Regular maintenance of industrial scales won’t just give you accurate readings but also prolong the life of the scales. Choose the right equipment and weighing scales that can withstand the harsh conditions of the oil and gas industry.

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Offshore Drilling https://drillers.com/offshore-drilling/ https://drillers.com/offshore-drilling/#comments Tue, 21 Jan 2020 18:24:02 +0000 https://drillers.com/?p=2051021 Offshore Oil and Gas When fossil fuels formed under the pressure of newly emerging rocks, they formed in a world that was geologically very different from today’s world. Where there were seas, there is now land and vice versa. As a result of these processes, a lot of the oil and gas the world uses […]

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An FPSO ( Floating Production and Storage Offloading Ship

An FPSO; Floating Production and Storage Offloading unit at a shipyard.

Offshore Oil and Gas

When fossil fuels formed under the pressure of newly emerging rocks, they formed in a world that was geologically very different from today’s world. Where there were seas, there is now land and vice versa. As a result of these processes, a lot of the oil and gas the world uses today comes from offshore deposits. Most of the undiscovered oil and gas resources today are also located under the seafloor of the world’s oceans. For the extraction of hydrocarbons, the oil industry has developed a whole branch of exploration and production, targeting these offshore deposits.

A History of Offshore Drilling

Offshore drilling began not long after onshore drilling. According to some sources, the earliest offshore wells got drilled in the Grand Lake St Marys in Ohio, in 1891. These wells got drilled in shallow water from platforms standing on piles. The first salt-water offshore wells, according to the American Oil and Gas Historical Society, were built in 1896, in the Summerland oil field in California. Those wells were, too, constructed in shallow water. In fact, until the late 1940s, no company dared drill further than a few hundred feet off the coast.

What oil producers did then was build piers into the sea and mount ordinary onshore rigs on them. Images from that time show rows of piers extending into the sea, dotted by oil rigs. That changed in 1911 when the Gulf Refining Company drilled an oil well in Caddo Lake in Louisiana without using a pier. Instead, it used tugboats and barges, and floating drivers for the piles on which it erected the rig. Other wells in the vicinity soon followed.

The prototype of what we now call a fixed oil platform came more than 20 years later. In 1938, an engineering firm called Brown & Root Marine Operators built a wooden platform a mile from the Louisiana coast with wooden pilings driven into the seafloor to keep it in place. A hurricane proved the structure was not all that stable in 1940 but the Creole platform got rebuilt following the hurricane and production continued.

The first offshore oil well to get drilled out of sight of land came in the late 1940s, also in the Gulf of Mexico, as it began to take the shape of the major producing region we know today. At 10 miles from the coast, the Kermac Rig No. 16 stood in about 20 feet of water, and it withstood the hurricane that hit the Gulf of Mexico just a week after the rig was installed.

Since the 1940s, offshore drilling technology has been improving consistently, and today we have the technology and equipment to explore for and extract oil and gas from even ultradeep waters economically.

Offshore Exploration

Before drilling begins at an offshore location, exploration and production companies conduct a series of surveys to determine whether drilling would be justified. Offshore oil and gas production, despite the progress made in technology and cost reduction, is still more expensive than most conventional oil and gas operations onshore, so preliminary exploration is even more critical offshore than onshore.

Magnetic surveying and gravity measurements are conventional means of determining what sort of rocks lie underneath the seafloor and what the chances are of those rocks bearing oil and gas.

Magnetic surveying involves detecting anomalies in the intensity of magnetic fields in sub-seafloor rocks that may indicate the presence of what petroleum engineers call oil and gas traps.

Gravity surveying focuses on one property of rock formations: density. Since the denser a rock is, the less likely it is to be reservoir rock, data about the density of different rock layers can also tell explorers how likely it is for a particular segment to hold oil and gas.

Seismic surveying, of course, is also an integral part of offshore exploration. It involves sending shock waves into the rock under the seafloor and recording the time it takes for it to return, reflected or refracted, and give the drillers data about the properties of the geology.

The combination of these methods as well as sampling cores from the rock helps establish whether the likelihood that oil and gas being present in the rock is high enough to justify drilling an appraisal well. If the answer is yes, exploratory drilling begins.

Offshore Drilling Equipment

For the most part, offshore drilling requires the same equipment as onshore drilling. A rig, a drillstring with a drillbit at the end, and a turntable are the essential equipment for drilling. (Along with a power source and the drilling mud that facilitates drilling by cooling and lubricating the drillbit).

A blowout preventer that is a critical component of an onshore wellhead is even more critical in offshore drilling because, unlike onshore, it is hundreds, often thousands of feet below the surface of the sea or ocean and a lot more challenging to access for maintenance or repairs.

There are also several pieces of equipment that are special to offshore drilling. These include:

Templates: Subsea templates are steel structures that play the role of a foundation for other structures at the bottom of the sea, including wellheads, Christmas trees, and manifolds.

Manifolds: These structures are installed at the wellhead to transfer the oil and gas from it to the subsea pipelines that will carry them to the shore or the floating, production, and storage vessel.

Marine riser: The riser is a steel pipe that connects the wellhead and the BOP to the surface to keep the drilling mud flow cycle going. Without a riser, the mud once flushed down into the wellbore would just spill out rather than return and be reused.

Drillship for offshore drilling

This is a drillship, a wonder of modern technology considering the depths it’s capable of drilling in.

Drilling Rigs

Offshore drilling rigs get broadly divided into two groups: fixed and floating. Within these groups, there are several types of rigs.

Fixed platforms include barge rigs, jack-up rigs, and tension leg platforms.

Barge rigs get used in shallow waters of no more than 20 feet and other damp environments but not in deep water. They are fixed to the bottom of the basin via anchors or submerged to rest on the bottom.

Jackup rigs are the most common offshore drilling rigs that feature support legs. These can be either open-truss legs — steel structures similar to electrical towers — or columns, also made from steel. Column legs are cheaper to produce than open-truss legs, but they are less stable, which confines their use to depths of up to 250 feet, while jack-ups with open-truss legs can get used at depths of up to 350 feet.

The jack-up rig floats to the drilling site with its legs raised, and once it reaches its destination, these are lowered — jacked down — to fix the rig to the seafloor. While this fixing takes place, the drilling equipment gets automatically jacked up to the above-surface part of the installation. Once drilling is complete, the legs of the jack-up rig get raised again, and it floats to the shore or the next drilling location. This ease of use is what has made jack-ups so popular.

Tension leg platforms feature buoyant hulls for the topside — the part of the platform that is above water — and a system of “tendons”, or tension legs, that fix it to the seabed. These tension legs allow for horizontal but not vertical movements, which has made them popular in hurricane-prone areas such as the Gulf of Mexico. Meanwhile, the hulls, filled with air, keep the topside floating.

Floating rigs can be semisubmersible platforms, drillships, and floating production, storage and offloading vessels, or FPSOs.

Semisubmersible platforms, as the name suggests, are not fixed to the seafloor but only partially submerged and held in place by water ballast. There are two types of semisubs based on the way they are kept in place: bottle-type and column-stabilised.

Bottle-type semisubmersibles have hulls in the shape of bottles below the deck. These are filled with water to keep the platform in place.

Column-stabilised semisubmersibles feature, in addition to the water-filled hulls, a system of columns that connect the hulls to the deck, i.e. the hulls are not directly welded or bolted to the deck.

Both types of semisubmersibles are also anchored to the seafloor to stay in place. They can drill in water depths of up to 5,000 feet and are suitable for drilling locations with harsh weather as their semi-submerged state enhances their resilience to winds and waves.

Drillships can get used in depths of over 10,000 feet, which makes them the only suitable option for ultradeep offshore oil and gas deposits. They are also autonomous in terms of movement from one drilling site to the next one, unlike the other types of drilling platforms.

Because they get used in ultradeep waters, drillships need extra attention to stabilisation. This attention, in addition to the mooring, comes in the form of dynamic positioning systems, or DPS. A DPS involves several thrusters located at different points along the length of the drillship. These move to compensate for wave and wind movement directed by an onboard computer. Mooring is used in relatively shallow waters, while DPS gets deployed at ultradeep drilling locations.

FPSOs take over after the drillship finishes. These are vessels that take in oil and gas from several wells and accommodate production and processing equipment on deck along with storage capacity in the hulls. The oil and gas are kept there before being taken to the shore. That can happen via pipeline (for gas), or by loading oil onto another vessel to transport it to the coast. If there is no pipeline for the gas, it is either flared or injected back into the wells to boost production.

FPSOs can be moored to the seafloor either centrally, in a way that allows them to rotate in response to changes in the weather, or from the bottom up, meaning from multiple locations on the seafloor. Their multifunctionality is the best and most cost-effective option for offshore fields in areas without any oil production and transportation infrastructure.

Drillships and FPSOs are likely to become even more popular in the coming years and decades as the world’s more easily accessible offshore oil and gas deposits get depleted, and E&Ps push further out at sea in search for commercial reserves.

Most significant Offshore Fields and New Discoveries

It is hardly any surprise that four of the five largest offshore oil fields in the world are in the Middle East. Russia, Brazil, the United States, and Norway have also made a name for themselves as home to some of the largest fields, and tiny Guyana may soon join these ranks, too.

The biggest offshore oil field in the world is the so-called Marjan Complex in Saudi Arabia. It has 17.24 billion barrels of oil equivalent in remaining reserves, according to a ranking by Offshore Technology. It comprises several fields but is viewed as a single producing area.

Next is the Safaniya field, also in Saudi Arabia. It has 17.14 billion barrels of oil equivalent in remaining reserves. Its average daily production capacity is over 1 million barrels.

The Zuluf field, another of Saudi Arabia’s giants, has remaining reserves of 11.37 billion barrels of oil equivalent, of which over 11 billion barrels are petroleum and other liquids.

Fourth on the list of top offshore fields is Upper Zakum, in the UAE. Upper Zakum has remaining reserves of 11.064 billion barrels of oil equivalent.

Next is an entrant from Kazakhstan. The Kashagan oil field in the Caspian Sea has recoverable reserves estimated at between 9 and 13 billion barrels of oil and production rate of over 400,000 BPD.

Another giant offshore field that may hold up to 13 billion barrels of crude is Buzios, in Brazil’s pre-salt zone. The subsalt zone is currently contributing about two-thirds of Brazil’s total oil output from just three fields: Lula, Buzios, and Sapinhoa. Lula is pumping at close to 1.1 million BPD, with Buzios at more than 440,000 BPD, and Sapinhoa at some 203,000 BPD.

Looking forward, the star of offshore drilling is no doubt Guyana. Thought the tiny South American country only recently became visible on the international oil map after Exxon and Hess made a string of discoveries in the Stabroek Block that have brought the total reserves to an estimated 6 billion barrels and change. Discoveries are being made in other parts of the Guyana continental shelf as well.

In gas, the largest producing deposit remains the North Field/South Pars that Iran and Qatar share. Qatar recently lifted a moratorium on production expansion at the North Field in a bid to maintain its number-one status as LNG exporter and Iran is trying to increase production from South Pars as well, despite sanctions.

Australia and the U.S. Lower 48 have become a force to be reckoned with in natural gas and LNG in recent years, too. Australia even overtook Qatar as the world’s largest LNG exporter at one point last year and is striving to do it again, even at the expense of a gas shortage at home.

Russia is announcing new oil and gas — mainly gas — discoveries, too. This year alone it reported new oil and gas discoveries of 1.5 billion barrels of oil equivalent in the Arctic. Developing these reserves, however, will be challenging because of concerns about the changing climate.

The Economics of Offshore Oil and Gas

Offshore drilling is more complicated than onshore drilling because of the environment, so it is no wonder costs are substantially higher. As of 2018, the cost of deploying a drilling rig offshore was as much as 15 to 20 times higher than the costs associated with drilling an onshore well. Yet E&Ps are working on those costs and have managed to reduce them. They have also shortened drilling times and the times from striking oil to beginning production, which accelerates the start of the payback period on what is invariably a substantial investment.

Offshore drilling is unlikely to become cheaper or even as cheap as onshore drilling in some parts of the world, at least. Still, it is becoming more efficient as is exploration, in large part, thanks to advanced surveying and drilling technology. That contributes to lower costs and makes more projects viable, even in deeper waters. These advancements will ensure a continual supply of competitive oil as legacy producing fields near depletion.

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Smart Hard Hats in the Oil & Gas Industry https://drillers.com/smart-hard-hats-in-the-oil-gas-industry/ https://drillers.com/smart-hard-hats-in-the-oil-gas-industry/#comments Thu, 12 Dec 2019 18:24:18 +0000 https://drillers.com/?p=2050956 How Smart Hard Hats Improve the Safety and Efficiency of Oil & Gas Workers The oil and gas industry, being one of the oldest participants in the industrial revolution, has seen a lot of disruption in the technological arena. Whether it’s in identifying, extracting, or producing raw materials on offshore or onshore operations, or downstream […]

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How Smart Hard Hats Improve the Safety and Efficiency of Oil & Gas Workers

The oil and gas industry, being one of the oldest participants in the industrial revolution, has seen a lot of disruption in the technological arena. Whether it’s in identifying, extracting, or producing raw materials on offshore or onshore operations, or downstream services like fuel delivery to the consumers, the industry has witnessed a significant evolution. Both Onshore and Offshore oil rigs are implementing the latest technologies in the form of new types of equipment such as hoisting systems, cranes, turntables, pumps, and large engines.

Additionally, E& P companies are integrating IoT enabled devices that monitor and keep track of every operation seamlessly. Downstream companies are adopting on-demand fuel delivery services to their business strategy.

In this article, we’re going to shed some light on a much-discussed, and widely adopted IoT enabled technology called – the smart hard hat! We’ll cover each aspect of the smart hard hat and how it is taking its place in the O+G industry. We’ll also understand why implementing this tech into oil fields would lead to increased safety and efficient operations.

With further ado, let’s start and explore this pioneering technology.

Why Do Smart Hard Hats Deserve Their Inclusion in Oil & Gas Sites?

Exploration & Production (E & P) companies are usually associated with heavy machinery & operations that require special attention and frequent maintenance. Notably, in any upstream operations, workers’ safety is an important matter.

Upstream operations pass from finding hydrocarbon reservoirs, drilling oil and gas wells, and extracting raw materials to selling them to be refined by other companies into products such as gasoline, which demands meticulous monitoring of operations. However, sometimes due to practical, procedural and operational processes, it becomes gruelling to coordinate with your staff and workers.

Here is where smart hard hat comes in!

What is a Smart Hard Hat & How Does it Work?

Smart Hardhat’ as the name suggests is a smart device that could help company owners and workers in many ways. The whole device gets embedded with sensors that track surrounding quantities and measures the data accurately for the betterment of its wearer and the one who is monitoring. These sensors can be anything from a temperature tracker to an air quality checker.

A smart hardhat is awash with various sensors like a smoke detector, barometer, SOS panic, gyroscope, body temperature sensor, GPS, and humidity sensor. Sensors continually detect particular quantities and send a signal to the owner as well as its admin – whether the controlled parameters are out of their defined range or not! If any parameters indicate a variance beyond safe limits, the signal triggers alert to the wearer and administrator about the situation. Hence, many hazardous incidents can be avoided.

Management Software

 

Here is how these sensors work!

  • Temperature Sensor: This sensor lets the smart hardhat track the temperature variation of surrounding the area. It continually sends the signal about the changes happening in the temperature.
  • Humidity Checker: As the name suggests, the sensor facilitates in knowing the moisture in the air. Therefore, if at the site, specific humidity is required, a smart helmet helps to monitor that.
  • GPS: Today, most smartphones utilize GPS to give you the exact location of your interest. This GPS module tracks the wearer precisely.
  • Map Navigation: Workers in the oil field, especially new ones, can navigate their way through the site very quickly using the navigation capability of the smart hardhat.
  • SOS Panic Button: The panic button installed on the device comes to aid when there’s any medical emergency.
  • Proximity sensor: This sensor helps the wearer to stay away from the objects that they’re not allowed to touch or risk going near.

This hardhat works on IoT (Internet of things) technology where software, network connectivity, each device continually communicates with each other without any human interaction. They get connected through any internet connection, and as stated earlier, it adjusts its values according to the situation.

What is the Role of IoT Enabled hardhat in the Oil & Gas industry?

As we mentioned earlier, the smart hardhat comes handy in safety issues and the need for effective resource management. The benefits of a smart hat don’t stop here. It also monitors the health of your valuable workers.

If a worker is heading unknowingly toward a restricted area or any dangerous place in the site, it would instantaneously alert him about it. Nowadays, these devices get furnished with groundbreaking headsets. That allows the workers to communicate efficiently through their reporting authority as well as related workers. It also reduces the unwanted noise that’s coming from the site.

The panic button installed on the hat lets people take precautions in case of any emergency. 

Respiratory hazards can also get avoided by forecasting any leakage or defect in any of the instruments at gas sites. Workers could save themselves getting in contact with dust, fumes, mists, gas, smoke, sprays, vapours, or other hazards.

It’s not only manual workers, but E& P company management can also find smart hard hats promising due to their resource management capacity.

There are hundreds or even thousands of workers in each company working on onshore and offshore sites at their allocated location. To manage each and everyone could be challenging for any manager. For higher production and output in the oil field, effective monitoring and management become vital. A smart hard hat comes as the best solution for this situation. You might ask how?

Well, the smart hardhat gets integrated with GPS modules that always sends a signal to the software that is managed by the higher authority person on the site. So every wearer can be tracked with their live location. A manager will be able to identify a particular worker and know whether he is at his allocated work location. Or if he is idling away his time doing unnecessary things — any extra insights into these kinds of data aids in better management of assigned workers.

Conclusion

By 2025, it’s forecasted that there’ll be more than 21 billion IoT devices. More and more industries are adopting these IoT enabled solutions to enhance their businesses. The oil & gas industry will be one of the most affected sectors by IoT and other technologies. The smart hard hat has penetrated in multiple areas where safety and management is the prime concern. It remains to be seen how soon upstream and midstream companies install such technology for their betterment.

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Thunder Cranes Wins Chevron Contract https://drillers.com/thunder-cranes-wins-chevron-contract/ https://drillers.com/thunder-cranes-wins-chevron-contract/#comments Wed, 27 Nov 2019 19:34:54 +0000 https://drillers.com/?p=2050940 (PRESS RELEASE) The Thunder Cranes Group has been providing offshore lifting services since 1994 and it’s latest contract is a 3-year project with Chevron Corporation supporting plug and abandonment projects in the Gulf of Thailand for some 3000 wells. The multi-million dollar contract with Chevron will see Thunder Cranes adding a further 3 brand new […]

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(PRESS RELEASE)

TC70-crane-labuan-yard.jpg (Thunder Cranes’ TC70 crane undergoing rig up and testing at the Thunder Cranes facility in the ASB yard, Labuan)

The Thunder Cranes Group has been providing offshore lifting services since 1994 and it’s latest contract is a 3-year project with Chevron Corporation supporting plug and abandonment projects in the Gulf of Thailand for some 3000 wells.

The multi-million dollar contract with Chevron will see Thunder Cranes adding a further 3 brand new TC90XL cranes to its fleet, making Thunder Cranes the
largest operator of offshore rental cranes in the Asia-Pacific region and just one of only four providers of self-lifting offshore cranes globally.

“Apart from Malaysia and Brunei, Thailand has been a focal point for Thunder Cranes since our entry into the market a decade ago and this latest award demonstrates the reputation we have successfully built in the region. In the next 6 to 12 months we will be expanding further and bidding on several major project contracts in the UAE, Saudi Arabia, India, Vietnam and Indonesia” said Chris Poheng, CEO of Thunder Cranes.

According to Poheng, “Providing an extremely niche service can make marketing Thunder Cranes a challenge, but when given the opportunity to
provide solutions and demonstrate our capabilities, clients often find Thunder Cranes invaluable to their projects.”

TC90-offshore-platform.jpg . (Thunder Cranes’ TC90 Portable, Modular Crane Installed on Platform Offshore Labuan)

BECOMING ASIA PACIFIC’S LARGEST FLEET OF SELF-LIFTING OFFSHORE CRANES

According to CEO Chris Poheng, it Thunder Cranes’ combination of unique innovations in its crane technology, as well as it’s experienced, highly-trained
personnel has given the Malaysian based company its edge and ability to grow into Asia Pacific’s largest provider of self-lifting offshore cranes.

“Delivering operational efficiencies for our clients means continuously developing both our crane technology and our human capital”, said Poheng.

The soon to be launched TC90-05XL modular offshore pedestal crane is just the latest innovation from the company and they believe will keep Thunder Cranes
at the forefront of the self-lifting offshore market.

“Our offshore cranes can be rapidly deployed to any offshore location in the world in support of rigless well-intervention services, plug and abandonment projects, or facilities engineering.” In addition, Poheng says, the deployment of portable cranes offshore requires highly trained and experienced staff, “As important as the technology is, the deployment of portable cranes offshore requires highly trained and experienced staff – it is a real skill.”

For Thunder Cranes, growing and developing its employees’ skills is a priority that leads to success.

“To be a global company, our customers should expect the same standards wherever we go.”

Poheng went on to say that Thunder Cranes has had great staff retention over time – a key factor in its excellent safety record,

“Staff retention means experienced, knowledgeable and safer personnel, and ultimately the productivity that our clients appreciate”.

ThunderCrane-Dubai-HWO.jpg . (The TC90 Crane Supporting Rigless Hydraulic Work Over Project on an Offshore Platform in the UAE.)

THUNDER CRANES SET TO LAUNCH NEW GENERATION OF OFFSHORE PORTABLE CRANE

Thunder Cranes, a leading provider of portable, offshore rental cranes, has just announced the latest innovation in its offshore crane technology that is set to
bring better lifting solutions to the oil and gas industry.

TC90-offshore-lifting.jpg . (Thunder Cranes’ TC90 Crane engaged in lifting activities on Malaysian Offshore Platform)

The TC90-05XL pedestal crane is the fifth generation of its portable, modular cranes, and incorporates 25 years of experience, distilled into a portable crane
that has been designed to meet the needs of the offshore industry for the next 25 years.

The TC90-05XL pedestal crane was built in partnership with Appleton Marine Inc, the USA-based API crane manufacturer, and is scheduled for delivery in Q4, 2019.

The TC90-05XL features:

Combined Turret and sub-base minimize rig up and rig downtime while maintaining the lightest component weight in its class.
●Enhanced boom section connectors
●New control panel offers better visibility for the operator with simplified controls equate to better control and placement of clients’ assets.
●Customized hoists made by Appleton are lighter and allow for more rope capacity with enhanced line speed.
●Different boom configurations provide clients with more options, resulting in more economically efficient lifts.

For further information please contact:

Ywan Georges Carraz
Thunder Cranes Sdn. Bhd.
ywan@thundercranes.com
+60128385716

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PVT Tests, Analysis and Its Advances in the Industry https://drillers.com/pvt-tests-analysis-and-its-advances-in-the-industry/ https://drillers.com/pvt-tests-analysis-and-its-advances-in-the-industry/#comments Thu, 14 Nov 2019 11:57:19 +0000 https://drillers.com/?p=2050886 Pressure, Volume, Temperature (PVT) Tests Offer Valuable Insights PVT tests are an essential part of the exploration and production process. The behaviors of reservoir fluids are nothing short of complex, but for oil and gas exploration projects to reach an optimal outcome, companies need to understand these unique behaviors so that they can make data-driven […]

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Engineering student looking simulated oil pvt tests

Pressure, Volume, Temperature (PVT) Tests Offer Valuable Insights

PVT tests are an essential part of the exploration and production process. The behaviors of reservoir fluids are nothing short of complex, but for oil and gas exploration projects to reach an optimal outcome, companies need to understand these unique behaviors so that they can make data-driven engineering decisions. A PVT (pressure, volume, temperature) analysis takes a deeper dive into the behaviors of a reservoir’s fluids to collect this essential data that will advance your project to the next phase.

True to the nature of the oil and gas industry, the amount of time required to extract the hydrocarbons from the subsurface will directly impact the cost of the well (more time = higher costs). Because oil and gas companies have no control over the commodity pricing of the market, experiencing increased costs will reduce the overall profit margin for each project.

In response, companies can determine the properties of the oil and gas contents in the reservoir to discover how hydrocarbons flow from the well, which will allow operators to determine the most cost-effective methods for extraction.

In essence, the PVT analysis looks at the way a specific reservoir’s fluids behave under certain conditions. The results of the study serve to answer critical business questions, including

  • What is the volume of crude oil and gas in the reservoir?
  • How can we optimize the liquid recovery process?
  • What are the unique flow properties of this reservoir?
  • What do we need to know to maintain the pressure?

PVT Tests and Analysis are conducted by a professional petroleum service provider that can not only collect the essential data but also provide insight and guidance on next steps.

Pressure Volume Temperature Analysis (PVT): A Brief Overview

Companies can perform a PVT analysis for any stage of the hydrocarbon extraction process. This method collects samples from specific well sites to study so you can make decisions based on your unique data, not just industry standards. As a result, PVT Analysis has made it easy to understand how reservoir fluids behave so engineers can maximize the hydrocarbon recovery process at a minimal cost.

Here’s a closer look at what a PVT Test and subsequent Analysis entails:

Finding the Bubble Point

To fully understand the mechanics of fluids in an oil well, we perform a test to find the bubble point of the sample fluid. This is a major component of a PVT Analysis that allows us to understand the characteristics of the reservoir.

Geologists will use the results of the bubble point test to determine information related to the expected recovery of oil in the well. If the oil to be recovered is undersaturated (i.e. contains very little dissolved gas), then only a small percentage of the oil can be recovered without the intervention of advanced tools or other methods. This can have a significant influence on the overall operating costs of the well.

Differential Liberation

PVT Analysis examines the differential liberation process, where the gas is separated from the liquid sample in a continuous cycle. Because the pressure is reduced gradually, the gas doesn’t reach equilibrium with the liquid.

Flash Liberation

A PVT analysis will also look at the flash liberation process. This occurs when a sudden drop in pressure causes the crude oil to separate into an oil and gas mixture quickly.

Understanding the Reservoir to Surface Volume Relations

Though the bubble point test is a critical component of a PVT analysis, there are additional steps and measurements to take that will help to determine the best way to move forward.

The results of the flash liberation test and differential liberation test will yield three essential factors that will determine the relationship between the reservoir to surface volume: the oil formation volume factor, gas formation volume factor, and solution gas to oil ratio.

Let’s look at each one:

Oil Formation Volume Factor

This factor represents the ratio of the volume of oil at the reservoir conditions to that of the surface conditions.  The results are used to convert the flow rate of the oil at the surface to that of reservoir conditions.

Gas Formation Volume Factor

Similar to the Oil Formation Volume Factor, the Gas Formation Volume Factor is the ratio of the volume of gas at the temperature and pressure of the reservoir compared to the gas at the temperature and pressure of the surface.

Solution of Gas to Oil Ratio

This ratio indicates the amount of gas dissolved in the oil or water at any pressure. This ratio increases linearly with pressure and reflects the oil or water and gas composition. For perspective, a light oil contains more dissolved gas than a heavy oil.

Compositional Analysis: The Ultimate Goal of Performing PVT Analysis

The main reason that oil and gas companies choose to drill a well is to turn the project into a revenue-producing asset eventually. However, the main complication in doing so is the fact that the value of the oil extracted from one well is not the same as the value of oil extracted from another well.

This can complicate the process of determining the valuation of a project, calculating an ROI, and deciding whether to move forward or seek another drill site.

The composition of the oil, which can be discovered with compositional analysis, is an essential piece of the process. The results from this analysis can help companies determine with greater confidence how profitable a play will be. Once completed, the analysis can help companies learn just how much of each type of petroleum product (e.g. gasoline, kerosene, diesel fuel, etc.) can be produced from a single barrel of oil from that particular well.

Also, every refinery is set up to produce specific types of crude oil. A heavy crude oil and a light crude oil have very different production processes, which means they each require different refining methods. On the surface, this may seem like a small concern, but the differences in oil composition and the wells from which they came can have a major impact on your profit margins.

Depending on your projects, you may need to investigate refining along the Gulf Coast, where refiners are geared toward heavy crude oils, or in places like Europe or the East Coast of the U.S., where refineries are set up to handle lighter crudes.

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How Much Oil is Left in the World? https://drillers.com/how-much-oil-is-left-in-the-world/ https://drillers.com/how-much-oil-is-left-in-the-world/#comments Mon, 11 Nov 2019 18:26:43 +0000 https://drillers.com/?p=2050879 In the oil industry, We can get our data from a variety of sources, from the largest government bodies to small independent niche oil supply monitoring specialists. The question of how much oil is left in the world has been speculated upon for a long as the industry has existed. Just a couple of years […]

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A black drum barrel pouring crude oil as a map of the world: Illustrating an article about how much oil is left in the world.

In the oil industry,

We can get our data from a variety of sources, from the largest government bodies to small independent niche oil supply monitoring specialists. The question of how much oil is left in the world has been speculated upon for a long as the industry has existed.

Just a couple of years before the 2008 financial crisis, peak oil supply was a popular topic, garnering a lot of headline space. Now, more than ten years later, it is peak oil demand that is bothering the industry. Meanwhile, the question of how much oil is left in the world continues to fascinate.

That oil, like coal and natural gas, is a finite resource is nothing new. It was this finite nature of fossil fuels that sparked the peak oil supply worry. Yet those worrying about peak oil did not factor in the continual improvement of exploration and extraction technology, and the development of new methods to tap these finite resources.

Future supply depends on current investment

Investment in these improvements and the application of new extraction methods, however, depends on oil prices, which, in turn, depend on numerous factors. And while it may sound counterintuitive, low oil prices tend to spur greater improvements in oil extraction as companies strive to boost the efficiency of drilling while maintaining—or even lowering—costs.

This is what we saw during the 2014-2016 oil price crisis. In the United States, this was not just a time of many bankruptcies as exploration and production companies with high production costs couldn’t survive the price pressure. It was also a time of innovation as those still afloat struggled to make more with less. Many industry observers today argue the so-called second shale revolution was to a great extent fuelled by that innovation drive.

It is precisely these improvements in exploration and extraction that make it hard to pin down exactly how much crude oil is left in the world. In 2016, for example, the U.S. Geological Survey estimated there were up to 20 billion barrels of undiscovered, technically recoverable crude oil in the Wolfcamp Basin. (Part of the Permian shale play). Two years later, the USGS revised this estimate to 46.3 billion barrels. In just two years, the extraction methods used in the U.S. shale oil industry had changed enough to make more than double the amount of oil that was technically recoverable in 2016 recoverable in 2018.

Yet, prices can also discourage technical improvements in oil exploration and extraction. They can deter exploration growth in general, which is another thing that happens when the industry cycle reaches a low point, and we witnessed it relatively recently during the 2014-2016 crisis.

Reserve replacement ratios

Every oil company keeps an eye on its reserve replacement ratio. That is the ratio between new oil the company discovers through exploration and the oil it produces. If the company wants to survive and remain profitable in the long term, it needs to maintain a reserve replacement ratio of at least 100%.

In 2015, the reserve replacement ratio of the seven Big Oil majors—Exxon, Shell, BP, Chevron, Total, ConocoPhillips, and Eni—fell to just 75%. As a result, energy consultancy Wood Mackenzie in 2016 warned the world might face an oil shortage of as much as 4.5 million BPD by 2035. To date, reserve replacement is at a 20-year low, according to Rystad Energy data; oil companies are replacing just one in six existing barrels with new discoveries.

There is also another metric related to the reserve replacement ratio that has a bearing on estimates of global oil reserves. This is reserve life: the period that an oil company can continue producing a stable amount of oil from its existing reserves. In 2017, according to a Reuters analysis, the reserve life of Exxon’s oil declined from 17 to 13 years, and that of Shell fell from 12 to 10 years.

Now for some hard numbers.

In its latest Statistical Review of World Energy, BP estimated the world had 1.7297 trillion barrels of crude oil remaining at the end of 2018. That was up from 1.7275 trillion barrels a year earlier and 1.4938 trillion barrels in 2008. In 1998, the world had 1.1412 trillion barrels in remaining reserves.

So, as demand has continued to grow consistently over the last 20 years, so has production and, counterintuitively, so have global oil reserves. Yet in that same statistical review, BP said these higher reserves would last us for just another 50 years: another metric oil companies use to measure their business sustainability.

Called reserves-to-production ratio, this simply means the oil reserves of a company—or a planet—at the end of any given year, divided by the production of oil during that year. The caveat here is that the R/P ratio only provides us with the length of time reserves will last if production continues at the same rate. In other words, the world would have enough oil for another 50 years if production remains at 82-84 million BPD, which it averaged in 2018.

This is unlikely to happen. Energy demand has been growing as consistently as oil production. While at the moment, demand is lagging behind supply, most forecasters expect this to change as the global population grows fast, and this leads to an equally rapid rise in demand for energy. Notably, demand for electricity is expected to expand by 62% by 2050, according to Bloomberg NEF. While a lot of the additional generation capacity will come from renewables, oil will continue to feature heavily in the global energy mix, which makes it safe to assume production will continue growing for some time.

As this happens, the work of oil companies will become more challenging because recoverability of oil reserves will worsen. This is yet another facet of oil exploration and production that has a bearing on the answer to that fascinating question: how much oil do we have left?

As in other human activities, oil extraction begins with the “easiest” parts of a deposit—the places where there is the most oil that is easy to pump out of the ground. As these sweet spots get exhausted over time, producers need to tap harder to access reserves, which cost more to develop.

Again, the story of U.S. shale is a case in point. Thirty or forty years ago few companies, if any, paid any attention to shale because there was enough conventional oil. As that started to run out, E&Ps turned their attention to shale simply because there was no other alternative.

Deepwater exploration is another case in point. Offshore production has historically moved from shallow waters to ever-deeper deposits as natural depletion takes its toll. Onshore production has moved from conventional deposits to shale and oil sands, and from easy-to-access oil to more challenging fields.

Conclusion

So, as the difficulty level in oil extraction increases, so do costs. When these rise to a point when a company cannot extract the oil at a profit, the deposit becomes economically unrecoverable. Even if it remains technically recoverable, this is one more reason to take any global oil reserve estimate with a pinch of salt. Whatever technically recoverable oil the world has – is not all economically recoverable.

The amount of technically recoverable oil will probably continue to rise from year to year. Oilfield service companies continuously work to make exploration and extraction more reliable and more efficient. As for economic recoverability, this is a whole other matter. It depends on oil demand, and many believe oil demand is getting threatened by renewables—a threat that will only grow. We may well have enough oil to last us another 50 years. Whether this is time enough to wean ourselves off the fossil fuel before it runs out remains to be seen.

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