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True Lies: Measuring Drilling and Completion Efficiency View Article...

SPE 178850

Drilling efficiency is an often used term for various measures that purport to represent the relative difference between current performance and some reference performance. Non Productive Time (NPT) is globally used as an analogue for efficiency. Many reported efficiency measurements are in the 90% range and NPT in the 20% range when the overall drilling and completion times are some 50% or more slower than Best In Class (BIC) as determined by external benchmarking. Current measures of drilling efficiency and NPT are both misleading and poorly defined.

This paper evaluates these misleading measurements and introduces the application of a meaningful measure of drilling efficiency. The term drilling efficiency is used for a short description; the same process applies to all well operations including drilling, testing, completion, well intervention, workover and plug and abandonment operations; the well life cycle.

A drilling efficiency model with reference to a calculation method is available for the industry to measure the real gap to 100% efficiency. This will in general produce vastly lower efficiency numbers for current performance than some of the inappropriate efficiency calculations currently used. It provides organizations with a more accurate view of the improvement potential they could aspire to reach, and become an enabler for the global oil and gas industry to improve performance and reduce cost of wells.

The recommended methodologies and efficiency measure provides the first realistic number for drilling efficiency. It will be a wake-up call to the industry and initially show much lower efficiency numbers than many organizations currently calculate and report. It will be an eye opener to managers who want to truly assess the performance of their drilling operations and provide them the information to set new performance goals. The challenge will be how willing the managers are to show how badly we perform as an industry today, and how persistent they are in the needed step change and follow through with improvement steps.

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Systems Architecture and Operations States for Drilling and Completion

The Foundation to Real Performance Measurement and Drilling Systems Automation

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SPE 178814

The highly fragmented nature of drilling and completion operations results in complex interactions that inhibit performance and systems automation. Reorganization into interconnected systems in a designed architecture aligned to key performance requirements and constraints solves this fragmentation. This realigned systems architecture provides a solid foundation to effectively measure and drive system performance, and implement drilling systems automation.

In current wellsite activities, the "operation state" identifies activities in drilling and completion operations, and is critical for accurate performance measurements, in managing automation modes, and in activating automation controls. Although a definition of operation states related to drilling ("drilling states") exists, there is significant work remaining to validate a complete spectrum of these states, and to define completion states, wellbore states and other operation states.

This paper describes the concept of systems architecture as applied to drilling oil and gas wells. It explains how to develop systems architecture for specific drilling projects. The paper discusses the development of a range of operational states for performance monitoring and systems automation. These guidelines will enable all parties involved in either monitoring performance or implementing systems automation to use a common framework in a coherent and effective manner.

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Human Systems Integration

Key Enabler for Improved Driller Performance and Successful Automation Application

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SPE 178841

Human Systems Integration (HSI) is a multidisciplinary application of expertise that is heavily relied on in many domains including the military, aerospace and aviation. HSI optimizes the effectiveness of human interaction with the machine and ensures that technology, from development to acquisition, is focused on the requirements of the operator. HSI is finding wider adoption in heavy industrial applications due to its emphasis on improving operator safety and efficiency. HSI is a relatively new concept to drilling operations and has the potential to support significant improvements in performance and successful adoption of drilling systems automation.

The transition from manual to autonomous operation can be described in a formal taxonomy of discrete levels of automation. Such taxonomy can be adopted for drilling systems automation application. Notably, automation will advance more rapidly in locations not suited to human control as well as for feedback loops requiring continuous and high-frequency adjustment.

Introduction of HSI to the drilling industry, articulation of the Levels of Automation Taxonomy and a roadmap to provide significant improvement in the feedback to the driller in both manual and automation modes will be vastly beneficial to the drilling industry.

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Data Ownership for Drilling Automation

Managing the Impact

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SPE 178787

Drilling systems automation depends on timely flow of accurate and relevant data from multiple sources to control equipment, machines and processes. The fragmented nature of the drilling operations business means that data must be shared between the various companies contracted to perform services, and the various companies must trust that data. This paper describes the issue of data ownership in terms of the application of drilling systems automation, and proposes solutions.

This paper will describe the history of data measurement, data flow and data ownership in the drilling industry. It will address data ownership issues pertaining to both drilling systems automation and drilling performance improvement. Analogies from other industries will assist in understanding how those industries advanced their automation applications and processes in a multi-supplier environment. The paper will present a data ownership and data sharing solution that will provide an environment for drilling systems automation.

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Advanced Trajectory Computational Model Improves Calculated Borehole Positioning and Tortuosity View Article...

SPE 178796

Wellbore tortuosity, defined as the degree of wellbore deviation from the smooth trajectory, and wellbore rugosity, defined as the degree of wellbore diameter irregularity, are critical elements in determining torque and drag (T&D) magnitudes in the drilling of long-reach horizontal wells and deep verticals. Current three-dimensional well trajectory models represented by the minimum curvature method (MCM) tends to mathematically smoothen the wellpath between survey-stations creating an artificially low tortuosity expressed as dogleg severity (DLS). This can lead to the miscalculation of the actual true vertical depth (TVD), leading to the underestimation of T&D magnitude. A robust three-dimensional trajectory model, the Advanced Spline-Curve (ASC) model, has been developed by the Colorado School of Mines to overcome these limitations. The ASC model provides realistic results and accurately calculate the spatial course of the wellpath.

In this paper, various applications of the ASC model are presented and its results have been validated using two approaches: (a) an academic wellbore example of a known trajectory path, and (b) the use of high resolution continuous gyroscopic (HRCG) survey data recorded at one survey per foot. The calculated trajectory utilizing ASC model guarantees continuity along the entire wellpath with significant better accuracy as compared to MCM. These findings allow better wellbore positioning, more realistic tortuosity and the introduction of a rugosity measurement. This helps to evaluate drilling equipment and procedures while drilling highly deviated wells and extended verticals.

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Drilling Systems Automation Roadmap

The Means to Accelerate Adoption

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SPE 173010-MS

The Drilling Systems Automation Roadmap (DSA-R) initiative is a cross-industry effort launched in June 2013 to accelerate the adoption of advancements in drilling systems automation. This technology roadmap will provide the drilling industry with a well-defined guide on the expected development and adoption of drilling systems automation technology in the near and long terms. The focus on needs, vision, scope, and boundaries will enable development of solutions to implement Drilling Systems Automation (DSA) in a manner that effectively improves performance, reduces well costs, removes people from high-risk operations, and promotes general drilling safety, among other key goals. To enhance consensus, the DSA-R initiative decided to affiliate with the SPE, IADC and the Association for Unmanned Vehicle Systems International (AUVSI).

The roadmap was segmented into eight key challenges, each individually defined in terms of functional description, performance targets, current status, problem statement, and development to meet the vision. The eight challenges are (1) Systems Architecture, (2) Communications, (3) Instrumentation and Measurement Systems, (4) Drilling Machines and Equipment, (5) Control Systems, (6) Simulation Systems and Modeling, (7) Human Systems Integration, and (8) Certification and Standards.

The purpose of this paper is to describe the launch of the DSA technology roadmap initiative, the processes being applied and key details on the status of each of the challenges.

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Well Cost Estimation and Control

Advanced Methodologies for Effective Well Cost Management

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SPE 173148-MS

Managers crave greater confidence in well construction costs, from the inception of a cost estimate for investment decisions, through cost estimation for budgeting, to cost tracking and control during well construction, and finally, for validity of performance tracking and benchmarking. Shortfalls in well cost estimation and control are due to three main sources: lack of defined processes, lack of discipline, and reliance on outdated or poor methodologies. This technical paper describes advanced methodologies for effective well cost management and documents their benefits to decision-makers and the industry. These include processes from the construction industry for cost tracking / control, best practices for estimating using probabilistic methods and leading to a process that can be applied for any well complexity utilizing modern methodologies. The technical content contributes directly to improved decision making by managers for investment in wells, improved planning for better decision making on choices for well design and drilling / completion operations including applications of various technologies, improved control of costs, and improved confidence that performance tracking and benchmarking are based on valid measures.

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The Drilling Business Model: Broken or Not? View Article...


The drilling business model is not broken; it is ineffective. It is the root cause of much inefficiency in well construction, i.e., drilling and completing wells.

In the early years of the industry, oil companies outsourced rig operations to contractors on a footage basis. It was a logical move, as oil companies perceived that the drilling contractor business was a commodity, easily employed when required and easily unemployed when not required. This was the 1930s and 1940s.

The footage model predominated until the 1970s, when deeper drilling and uncertainties in drilling wells caused exclusions to be accommodated that eventually led to the current, predominately day rat, time and material, model. This was a significant transition from a delivered quantity (performance) contract model to a (reimbursable) day rate model.

The drilling contracting business advanced from these early beginnings into the business it is today. There occurred a major transition from performing drilling operations to operating drilling rig assets.

Now the operators are seeking performance from drilling contractors, but there is limited incentive to do this under day rate contracts. Equipment (asset) ownership, and the stock market's drive to price drilling contractor stock based on asset utilization, drives most rig owners to seek revenues, which implies remaining on contract.

Obviously, being on contract requires both a positive reputation to get the contract and the presence of a suitable rig. Improving performance, however, can be a recipe for going off contract sooner, placing revenues from the asset (drilling rig) at risk.

The turnkey drilling contracting business delivered performance at a price; it succeeded for many years then evaporated. The offshore market disappeared while the turnkey business in the land market remains at its historical 3% to 4.5% of total rig activity.

The question I ask is: Why did this model disappear in the offshore market when it had proven successful for turnkey contractors and their clients, and why did it not grow in the land market? The answer may be that the eventual owners of these turnkey businesses preferred the day rate model for their assets and withdrew their capability to deliver turnkey wells. In effect, the contractors defined the market.

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The Drilling Business Model: Driver or Inhibitor of Performance and Innovation View Article...

SPE 167933

The drilling business model has recently become the “elephant in the room” as drilling systems automation advances seek an integrator and technology / performance enhancements seek rewards. The day rate model has been adapted many times over the life of the industry but none of these adaptions has prevailed.

The business model entails a number of key aspects that drive business behaviors in the supply chain; control, liability, risk, revenue. Some companies have the approach that the operations team drives the contracting of suppliers while others draw the whole process under supply chain for process control and pricing leaving the delivery of value often in significant doubt.

This paper describes many of the business model adaptions created over the past 70 years from footage and turnkey through Integrated Project Management and Production Enhancement Contracts. Recently, actions and intentions have surfaced to transpose roles within the drilling supply chain to overcome resistance to change and improve financial performance (vertical integration by operators). This paper makes observations on the various forms of contract and various roles in the supply chain. The conclusions outline a blueprint for developing a business model that can drive performance and innovation throughout the supply chain.

Discussing the current business models and opening the industry to development of more appropriate models has extremely high value and impact. It is a topic often raised and often left un-debated. If a new business model is broadly adopted it will change roles, performance, technology application and revenues throughout the supply chain. Awareness of this potential change will be extremely important to managers and engineers in the drilling business.

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Lack of Progress in Adopting Drilling Systems Automation Shows Contract Drillers Lagging Other Industries View Article...

December 2013 Volume 35, Number 12

Drilling systems automation is a technology development that will significantly change the drilling business; it is not a question of how but when.

Many people have spoken eloquently on the need for drilling to adopt automation; however, it remains a struggle through misunderstanding, negative reactions, and inadequate financial rewards. The case for automation in land drilling, especially in the USA, is huge. According to an IADC publication, the turnover of personnel in the land drilling business is 50% in every two years.

Why does the contract drilling business in North America choose to remain non-automated when such huge value has been demonstrated in similar industries? The answer to this question probably lies in a number of barriers that include return on investment, reliability, ability to maintain higher technology equipment in the drilling environment, and the day rate business model adopted by the drilling industry.

Why are we so far behind usual industrial measurements and practices? It must be the business model; anyone who upgrades the mud measurement system to modern technology will not be rewarded under the traditional day rate contract.

The drilling industry will change; drilling rigs will become machines that correctly measure the state of their operations, automatically undertake some operations using algorithms, and provide frequent, timely, accurate, and relevant information to the drillers such that they are able to perform to the highest safety and performance standards possible. The only question is when and how this will occur.

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Drilling Systems Automation

Current State, Initiatives and Potential Impact

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SPE 166263

This paper examines and defines drilling systems automation, its drivers, enablers and barriers, and its current state and goals. In particular, the paper looks at the vision of drilling systems automation, and the role played by open collaborative initiatives among all segments of the drilling industry. Although commitment to automation by the drilling industry appears by many to lag other major industries, there are segments of the drilling industry that have reached a high level of automation on a commercial basis. There is also significant collaboration among interested parties in creating a standardized, open environment for data flow to foster the development of systems automation.

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Drilling Systems Automation - Preparing for the Big Jump Forward View Article...

SPE/IADC 163422

This paper presents results and knowledge shared from the SPE Applied Technology Workshop held in Vail, Colorado USA in July 2012 titled Well Construction Automation: Preparing for the Big Jump Forward.

Automation in drilling and completion operations is coming quickly, and its rapid adoption will leave many industry players behind if they are not aware of the future it will bring. Advances in control and automation of the whole drilling and completion process will increase improvements in safety, performance, quality, reliability, consistency and interoperability. This progressive application of automation will also create shifts in skills and competencies, and transform the role of the driller, rig crew, and service specialists along the way. Advances in automation are being made on multiple fronts, and many lessons are available from its adoption in other industries and the transformation industrial automation afforded in the 1990s.

This workshop included important lessons learned from other industries and provided an update on the latest advances in automation developments. It explored the applications of such technologies as robotics, machine learning, and autonomous task performance without continuous human guidance, along with the speed with which these technologies can be applied.

This was the first workshop that has actively brought people involved in automation from other industries into the discussion on drilling systems automation. The workshop involved key speakers and participants from leading edge applications including academia and the Defense Advanced Research Projects Agency (DARPA). These organizations are automating things that the drilling industry has not yet heard about. The workshop participants developed plans for adopting these technologies into drilling systems and created a vision of rapid automation adoption into drilling operations.

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Industry Analogies for Successful Implementation of Drilling Systems Automation and Real Time Operating Centers View Article...

SPE/IADC 163412

Industry analogies provide excellent insight to finding the optimum balance among manual, automatic and remote operations. They can also provide excellent insight into data displays and decision making.

It is very important to define current state and future desired state for data acquisition, processing, decision making and work flow in high performance drilling operations. Understanding the difference between these two states provides the opportunity to guide the successful implementation of Drilling Systems Automation (DSA) and Real Time Operations Centers (RTOCs). Aviation and space flight have been offered as appropriate analogies for the future application of drilling systems automation. Formula One (F1) motor racing offers a highly competitive analogy for managing data flows combined with control systems.

Various industry analogies are reviewed for their applicability to DSA and RTOCs. The benefits and drawbacks of each are highlighted. An assessment utilizes insights from other analogous industries to provide the opportunity to define best practices and relevant application for various well types from these analogies.

Advanced application of DSA and RTOCs will change the role of the driller as well as the competency make up and location of the drilling team. Maximum benefit from DSA and RTOCs can be achieved through carefully planned implementation based upon relevant learning from other industries.


The growth of drilling systems automation is causing the adoption of standards that enable interchange of data. These standards will create an environment of interoperability between all equipment on the rig site regardless of origin and allow data tags that define quality and source of data for enhanced control and analysis.

Real performance improvement from the use of real time operations centers (or remote control centers) requires the integration of all data streams: drilling performance, well bore and equipment condition monitoring. This will happen when operators define the requirement in their contracts.

Many business endeavors require data acquisition from multiple sensors with high data rate transmission. Some endeavors are controlling a continuous process while others are intermittently sending instructions to remote locations. These businesses provide insight for data flow, information and decision making in advanced drilling operations.

Drilling operations are a commercial endeavor that requires a combination of reliability and performance; the former ensures that the objectives will be met and the latter generates competitive advantage. Many of the analogies for automation and remote control centers focus on reliability while having little requirement to differentiate on performance. This combination of reliability and performance is uniquely present in the Formula One analogy. The Formula One (F1) analogy provides a basis to performance improvement through enhanced data flow.

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Well Bore Collision Avoidance and Interceptions - State of the Art View Article...

SPE/IADC 163411

This paper highlights key knowledge that was shared at the SPE Collision Avoidance and Well Interceptions Applied Technology Workshop held in Inverness, September 2012. It was written to raise awareness of critical issues concerning well bore collisions and interceptions.

Planning to ensure well collisions do not occur during drilling is a complex and demanding task which is often not given the high priority it requires in drilling programs. Assumptions are made of the validity and accuracy of historical data which is unfounded. Conversely, planning well interceptions when required in operations such as relief wells / drainage intercept wells requires a sound working knowledge of wellbore positioning technologies and techniques.

Well bore interceptions and proximity placement are becoming critical applications for development of some reservoirs, specifically tar sands and coal bed methane. Well bore collision avoidance is entering the everyday skills requirement of drilling engineers as they plan more infill wells and more cluster (pad) drilling. Ultimately, demonstrating knowledge of the bore hole position during the whole drilling process is becoming more of a regulatory requirement that demands greater understanding by the drilling engineering community and drilling / asset managers. Are drilling engineers trained, competent and adhering to procedures designed to manage the intricacies of well bore surveying requirements as applied to collision avoidance and well interceptions?

The workshop covered the topic under the following headings:

- Survey database integrity.

- Collision avoidance management.

- Practical directional drilling.

- Relief well design.

- Interception techniques.

The outcome of the workshop was to emphasize that wellbore collisions must be treated as high risk events with serious consequences that must be managed through systematic survey management procedures. Borehole position errors are a critical input to subsurface modeling and can have a major impact on field economics. Several members of the workshop committee are also members of the SPE Wellbore Positioning Technical Section that has published two SPE papers providing the industry with the ellipse of uncertainty error models commonly referred to as the Industry Steering Committee on Wellbore Survey Accuracy (ISCWSA) models.

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Manufacturing Wells

Myth or Magic

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IADC/SPE 151051


Manufacturing wells has been proffered as an opportunity to reduce the cost and increase the speed of construction for hydrocarbon production. There are a number of key caveats that must be addressed in order to progress this application of manufacturing techniques to well construction. This paper describes these caveats and the means to address them.


The application of manufacturing techniques has been discussed in the industry for some years under the heading of factory style drilling. The progressive rise of drilling costs against low gas prices, the increase in pad drilling of horizontal wells for shale gas and liquids, the rising uptake of lump sum outsourced project managed wells primarily from NOCs is creating an environment where the uptake of faster, lower cost well construction can accelerate. the application described in this paper takes factory style drilling to the next level whereby the best attributes of manufacturing are applied through the full cycle of the well including the well components (not just the drilling process). results, observations, conclusions lean manufacturing techniques have resulted in significant gains in the manufacturing industry: 50% time reduction and 25% improved quality. similar results are being emulated in other industries that are adopting these techniques. lean drillingtm has set benchmarks in drilling and completion performance across the globe (ref spe27476, spe 59203, spe87117). the rewards are immense and can significantly offset the rising cost of accessing hydrocarbons thus enabling greater exploitation of oil and gas reserves. correctly applied methods of lean manufacturing yield improved safety, functionality, quality, speed of construction and lowered costs. these methods also open the door to the application of automation throughout the supply chain thus gaining additional leverage on performance and cost. significance of subject matter this paper describes the history of lean manufacturing and under what circumstances it can be applied to wells construction. it builds on the differences between project type and various ongoing business type of wells as introduced in spe 128716. it lays out the opportunities and the barriers to this large opportunity for value generation. it describes where it cannot, and should not be applied. A future outlook addresses the industry shift to ever increasing factory style drilling and manufactured wells.

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Drilling Systems Automation

A technology that is at a tipping point

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This paper covers the recent developments of drilling systems automation and demonstrates that this technology application is at a tipping point. Knowledge of the status and imminent growth of this revolutionary application of technology is vitally important to businesses within the upstream oil and gas industry.

Automated drilling of shallow multi-lateral wells using downhole directional data as surface equipment input has been demonstrated. Improvements in re-entry operations using automation of downhole processes have also been proven. Significant increases in reliability of downhole drilling tools (a doubling of mean time between failure) have been accomplished by improvements in drilling control systems.

The paper provides a review of recent developments in drilling systems automation and describes how this technology is expected to evolve. This information is current, known to a small group within the industry and of huge value to everyone involved in reducing drilling and completion costs.

The subject matter will enable customers to take good decisions on selecting new technology, reduce drilling and completion costs by applying a technology that can consistently operate at best in class performance and offset the limitations in the number of experienced industry personnel available for hire

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FMECA and Commissioning

Guidelines to effectively deliver technology and systems for successful Drilling Automation

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SPE/IADC 140231


Failure Mode Effects and Criticality Analysis (FMECA) is a very powerful tool used in high risk businesses to deliver reliability. This is a known methodology applied in aerospace, nuclear and Dynamic Positioning (DP) systems that can be translated to drilling and completion operations.

Commissioning is the transition process between construction and operation that is widely used in process plants – from onshore chemicals to offshore production installations. It is a known methodology to ensure start up and operation meet specifications.

The drilling business has applied these tools to a very limited extent. When FMECA is used it is typically applied to a single component (i.e. drawworks) not the entire rig or system. Commissioning also tends to be done at the major component level rather than as an integrated facility. As the integration of systems in the drilling process grows these tools become very pertinent to reducing risk especially as wells become more complex and costly. They are the foundation of reliability for Automated Drilling Systems. Without applying tools that can deliver reliability in a manner that is cost effective a lot of value will be lost through unnecessary downtime and failures.

Participants at the SPE Emerging Technologies Workshop May 2009 and the SPE Drilling Automation Workshop April 2010 observed that they had limited knowledge of FMECA; however, after familiarization they concluded that this is a powerful tool that must be used to establish reliability of technologies and systems. The latter workshop concluded that the industry must focus on the application of FMECA and create standards for commissioning.

This paper has been created through a team of experts compiling their knowledge and guidance to provide a knowledge base for the industry to utilize for the benefit of increased reliability and reduced risk.

These two tools, properly and efficiently applied will bring immense value to the industry in terms of reliability. Specifically their application to the control and automation of the drilling process will provide the basis for successful growth of this technology application. Without correct application of these tools, growth of technologies and automated systems in drilling will be inhibited by unacceptable levels of reliability.

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Well Delivery Process

A Proven Method to Improve Value and Performance While Reducing Costs.

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IADC/SPE 128716


A Well Delivery Process defines a set of activities along a time line to plan, execute and close out a well. The most advanced versions of this process include tools and techniques that create robust plans including risk and uncertainty management, technical limit focus and stretch goals, probabilistic time and cost estimating, detailed scheduling, Drill / Complete the Well on Paper and similar group exercises. Stage gates are included that provide review points which are usually matched to a corporate Capital Value or Opportunity Realization Process. The most advanced form of the process incorporates best practices from Lean Manufacturing. The paper describes best practices in the development of a Well Delivery Process.


The Well Delivery Process applies to all wells in a scalable format where y a longer term, more detailed process is used for exploration wells and a simpler, shorter duration process for repeatable development wells. it covers work processes between departments, especially subsurface and drilling, and between the suppliers and the oil company, as well as between suppliers. an actively maintained well delivery process provides the means to capture lessons learned and to retain knowledge within a company. results, observations, conclusions In a west african offshore operation in a marginal field development with complex wells, the application of a well delivery process resulted in best in class performance in an industry benchmark survey (rushmore review). this included a 77% reduction in non productive time. added value was achieved through increasing the typical well productivity by more than 33%. In the N Sea, a horizontal well drilled from a semi sub achieved an overall drill rate of 171 m / day versus a historic average of 80 m / day. well cost was reduced by 30%. A N Sea operator improved from 3rd quartile to 1st quartile performance while another improved overall drilling performance by more than 30%. Reviews of drilling performance in two different regions demonstrated the correlation with poorer performance when there was insufficient lead time for proper planning according to the Well Delivery Process due to late and frequent drilling sequence changes. Lessons learned are described including the correlation of performance with robust risk assessment Recommendations on the key characteristics for a successful Well Delivery Process are described. Significance of Subject Matter A best practice and robust Well Delivery Process is essential for high cost drilling operations and challenging drilling environments whether exploration wells or infill drilling in depleted reservoirs to small hydrocarbon accumulations. This paper will provide an essential guide to Drilling Managers wishing to develop a Well Delivery process. The paper also introduces Business Process distinctions for different types of wells from project based exploration through factory drilling which impact the application of a well delivery process.

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Risk and Uncertainty Management

Best Practices and Misapplications for Cost and Schedule Estimates

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SPE 97269

Risk management, risk analysis, and uncertainty analysis are still-growing trends in cost and schedule estimating. Engineers and managers alike have been lead to believe that correct application of best practices will ensure that operations achieve their objectives on time and within budget.

Unfortunately, a number of misapplications, misunderstandings, and mistakes have threatened to endanger the continued useful growth of this trend. Insufficient tools and / or incorrect use of the available tools have allowed creation of a false sense of security which is shattered by loss of objectives and time / cost overruns. It is very important that the industry understands and chooses the correct applications, and has realistic expectations.

This paper presents best practices for applying risk management, risk analysis and uncertainty analysis to capital expenditure cost and schedule estimates. In addition to outlining our recommended process, we highlight current misapplications that, in our opinion, are potential barriers to the continued growth of this valuable management tool.

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Deepwater Success Through Predictable and Distinctive Drilling and Completion Performance View Article...

SPE 87117

Benchmarked results on well construction projects show that many projects incurred significant cost over runs. Half of the mega projects since 1993 have been disasters resulting in a destruction of capital for oil companies. Insufficient drilling front-end loading and inadequate team organization have been identified as preventable causes of these over runs.

Deepwater projects involve multiple challenges of new technology, geological uncertainty and, often, a fast track approach. The wells portion of the total project cost often exceeds 50%. The huge price for intervention activities later in the life of these wells requires that the initial completion remain in place and function as planned for a long time.

Predictable and distinctive drilling and completion performance is a must for the high cost projects that typify deepwater.

This paper will describe a methodology that has been successfully applied with repeatable best in class results in the North Sea and Gulf of Mexico. This methodology addresses the need that teams are organized to fit the project (not the other way around) and that systems integration is treated as a high priority. The results typically achieved with this methodology are in the range 20 - 23 days per 10,000 ft - best in class in both regions and 35% better than the average drilling time - with commensurate improvements in production and data acquisition. Short case histories of deepwater exploration and development wells are described - including a horizontal development well.

The paper describes:

- how the projects were organized,

- how the teams were aligned to their objective and goals,

- the processes that support these successful teams,

- how the teams were motivated to perform,

- how web based support can function to create co-location through the virtual world.

The paper also contrasts this methodology with traditional operations.

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Building a World-Class Organization in a Volatile Oil Price Environment.

Part 3 - Value contracting of equipment and services, and true measurement of results are key ingredients necessary for oil companies to compete effectively in today's business environment.

View Article...

The old adage, "you get what you pay for," applies to contract services in the oil and gas business. From the 1970's finance and procurement departments have driven the process to select and contract services. Through their lack of understanding of value, they have focussed organizations on contract prices. Basically - regardless of the hype surrounding the information gathering process on safety, quality, technology and the like - contracts usually are awarded on a price basis. Low bid wins the work.

What oil companies really want is often different from what they measure and what they ask for. Oil companies must recognize what the values of their businesses are for them, relate these to their operations, procurement and financial staff, and then design contracting practices and measurement methods to meet these goals. Rational thinking and the right expertise can develop a contracting strategy WHERE oil companies can get what they need. an industry forecast is made at the end of this article.

Building a World-Class Organization in a Volatile Oil Price Environment.

Part 2 - The ability to maintain a highly competitive performance rate will be a necessity for oil companies in the 21st century.

View Article...

Crude oil prices have taken a violent ride on the commodity exchange roller coaster, plunging from the $20/bbl range to $10 then rising again, up beyond $20. This volatility is unlikely to disappear, as traders play their perceptions of supply / demand imbalances. Aggressive oil companies are now planning their futures on being profitable at potentially low oil prices, as low as $11/bbl. This means that they will demand low finding and producing costs.

Oil companies will need to meet a string of demands, if they are to be competitive in an aggressive environment. These demands include predictable costs, lower costs than competitors, excellent results from operations, short cycle times and a reduction in unused overhead. These can, and indeed have, all been achieved through understanding the business needs, applying the correct performance measurements, breaking down boundaries between organizations and breaking through performance barriers.

Step Change Improvement in Drilling Performance, Repeatable Worldclass Performance is Possible, View Article...

IADC / SPE 59203

When depletion strategies for BP Amoco's Valhall field on Norway's continental shelf required the drilling of extended reach drilling (ERD) wells, problems appeared which threatened the project economics. Average trouble costs approached 35% and occasionally exceeded 50%, while some wells failed to reach their objectives and the projects were not completed. Sound principles for aligning the operator/supplier team were applied to a very challenging ERD well following successful applications on exploration wells in Norway and development wells in other areas. Starting with a slot recovery that historically took 29 days being completed in 18, the well concluded 31 days (30%) ahead of past performance. It is clear that re-organization of a select group of operating and service company candidates into an aligned team made the difference. This paper will describe the challenge, the transformation and the result.

Building a World-Class Organization in a Volatile Oil Price Environment.

Part 1 - Key to success will be companies' ability to reduce costs of their services while increasing the value delivered to clients.

View Article...

Major oil company E&P managers typically have not been held accountable for meeting performance and cost targets to the same degree as either contractors to these managers or other industries. In today's highly competitive world, there is no room for complacency with performance. As many companies are just beginning to discern, noncompetitive performance in a volatile and low oil price environment leads to corporate failure.

True performance must be achieved in the oil industry. Consolidation, yielding improved economic and operational performance, is likely to occur in reaction to low oil prices. New entrants to the industry could rapidly emerge if the current players do not wake up.

When "No" is the Appropriate Answer to the Customer, View Article...

SPE / IADC 52774

The traditional method of establishing relationships between customers and suppliers in the drilling business is very inefficient and wastes money through consuming resources without adding value. Some new processes have been introduced but low bid is still often the primary determinate of success. These are reviewed, the issues still to be addressed identified and solutions discussed. Two avenues of improvement are described: 1) suppliers evaluating their opportunity and declining WHERE appropriate; 2) customers removing cumbersome systems from the past and using new, more intelligent and efficient methods for selecting suppliers.

Alliances: Are they effective? View Article...

Concern is growing in the oilfield that alliances are not doing as well as they should be. Have they been adopted as a panacea without sufficient understanding of what they are or how to implement them? That question is answered in five sections. A changing industry - two key trend drivers; entering a new era of organizing and managing systems. Types of contracts - alliances versus fixed and incentive contracts; limitations of discounting. Oilfield alliances - new solutions are needed to improve the system. Change / commitment - how changes are being implemented by the innovators; how many really support it. Alliances take effort and time - why it isn't easy to do it right.

Can Alliances Build a Brighter Future, View Article...

Alliances have been variously described as the panacea for our industry to the flavor of the month. What are they, can they be of benefit and how are they being applied? Evidence from other industries clearly shows that alliances create a more profitable environment for customers and suppliers. This same evidence shows that the path to this transformation is not straightforward, but strewn with misdirection, blind alleys and other diversions. The issues affecting change in our industry are discussed.

Operational Realities in the Nineties, View Article...

The realities of the nineties revolve around declining oil prices, rising production costs and evolution of project economic value metrics. A traditional industry cycle of change in hostile times has been followed but will not be completed due to the evolution of a new industrial era. The route to growth is illuminated.

Strategic Alliances - WHERE are we headed View Article...

the history of strategic developments for alliances is discussed and answers to the key questions raised are given. the concepts of lean drilling- are introduced and the need and difficulty of creating the necessary interdependencies is discussed.

Lean Drilling - Introducing the Application of Automotive Lean Manufacturing

Techniques to Well Construction

View Article...

Reprinted in the Journal Of Petroleum Technology, February 1995

Significant improvements in profitability can be achieved by applying the key principles of lean manufacturing to the drilling and production industry. These principles provide the framework for successfully applying the practices of alliances and partnerships. This paper provides the insight for adopting these principles through an analogy of lean manufacturing and well construction.

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Drilling in the Twilight Zone - Some where between dayrate and turnkey View Article...

modified and reprinted in the drilling contractor magazine, may 1994

dayrate contracts have been the normal mode for drilling operations for a long time. the environment is well known and therefore comfortable to the participants. the operator retains control over all aspects of the operations; essentially the operator leases men and equipment. turnkey contracts have been regularly utilized in the usa and have been used to a limited extent internationally. In their simplest and purest form they provide an understandable and usually clear assignment of responsibility to the contractor. dayrate contracts provide little incentive to perform, are professionally unrewarding to contractors' personnel and presently do not offer a profitable return on investment in most sectors. turnkey contracts, by contrast, provide a significant incentive to perform, are professionally rewarding to contractors' staff and can provide an environment whereby the contractor achieves a more profitable return on investment whilst the operator reduces well costs. Unfortunately, the application of the non variable turnkey contracts used today has been limited due to their inability to handle uncertainties and a reluctance of the industry to adopt this form of contracting. As a result a significant movement has arisen towards contracts which fall between the well-known dayrate situation and the non variable turnkey. This is the twilight zone - an ill-defined region of major contrasts in control, responsibility, accountability and price. A region which requires thought and development to provide the mechanisms for successful contracts. A region through which the way forward to more meaningful contracting is being developed. The structure and orientation for contracting drilling operations in the twilight zone is developed in this paper.

Strategies and Structures for Drilling and Service Contracts View Article...

New contractual mechanisms were developed to meet the challenges raised by the "Drilling in the Nineties" initiatives which were introduced to the industry in early 1990. This paper described the strategy for integrating services, the application of "Designated Subcontracts", the application of business process models, the development of incentive payment mechanisms and the techniques for creating co-operative customer - supplier relationships.

Drilling Contracting in the Nineties View Article...

SPE 19902

Drilling in the Nineties was an initiative introduced to reduce well costs and improve the efficiency of drilling operations. The desire to increase operator efficiency lead a change from supervising the contractor to managing the contract. This paper discusses the implementation of this change and reviews the construction and content of a new contract document format selected to support this implementation. The review covers a range of items including liabilities, obligations, scope of work, specifications and equipment requirements. The application of this new format to incentive and turnkey drilling operations is described together with the implications on operator / contractor roles in the execution of these types of contracts.

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Application of Small-Diameter Inertial Grade Gyroscopes Significantly Reduces Borehole Position Uncertainty View Article...

SPE 11358

Initial tests with a new directional survey tool showed a significant enhancement in attainable accuracy over conventional instrumentation. Two prototype systems were tested in a well in West Texas, preliminary results indicated that the original design objective for borehole position uncertainty less than 1.7 feet per 1,000 feet of hole were met. The tool employed an inertial grade rate gyro adapted from the aerospace industry. In combination with its other sensors and electronics, the device sensed the orientation of the earth spin vector at each independent survey station. As a result, the major systematic errors associated with conventional gyros - geographical reference and unaccountable drift - were eliminated. Other sources of inaccuracy were minimized by the system measuring techniques and operational procedures, with additional benefits arising from faster survey speed and increased reliability.

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Borehole Position Uncertainty - Analysis of Measuring Methods and Derivation of Systematic Error Model View Article...

Landmark paper that introduced the change from random error model to systematic error model for borehole surveys. This model became the standard for the industry.

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