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US Department of Energy studies to establish a baseline of information related to the costs of drilling deep wells and the technologies currently employed in the process.
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Spring 2004 • GasTIPS 5
DEEP GAS
D eep formations (defined here asdepths greater than 15,000ft) areone of the sources of natural gas
that will play an important role in meetingthe growing need for natural gas in theUnited States. The Energy InformationAgency estimated 7% of U.S. gas productioncame from deep formations in 1999. Thiscontribution is expected to increase to 14%by 2010. Much of this deep gas productionwill come from the Rocky Mountain, GulfCoast and Gulf of Mexico (GOM) sedimen-tary basins (Figure 1).
The challenges of drilling and completingdeep gas wells are significant. The limits ofconventional well construction technologyare tested and costs increase below 15,000ft.At these depths, the last 10% of a well’sdepth can account for 50% of its total cost.As depth increases, the rock is typically lesspermeable (tight), hot, hard, abrasive andhighly pressured. These conditions of pres-sure and heat exacerbate the corrosive natureof any fluids produced. Control of wellboretrajectory and placement of casing andcement that are relatively easy at shallowerdepths can become significant challenges.And the number of rigs capable of drillingdeep wells is limited, a factor that also addsto the drilling costs.
To help facilitate the economic develop-m e n t o f d e e p r e s e r v o i r s , t h e U. S.Department of Energy (DOE) initiated theDeep Trek Program, which was designed todevelop technologies that improve the eco-nomic feasibility of drilling to and produc-ing from deep oil and gas resources. As part
by John D. Rogers, U.S.DOE/NETL; Stephen W. Lambert,
Schlumberger DCS; and SteveWolhart, Pinnacle Technologies
Benchmarking Deep Drillingand Completion TechnologiesThe U.S. Department of Energy has undertaken two concurrent studies to establish a baseline ofinformation related to the costs of drilling deep wells and the technologies currently employed in the process. This information will help determine the industry’s most important drivers and whereresearch and development efforts should be focused.
Proved Reserves 183.4 tcf
Est. Deep gas Potential 158 tcf
0 100 300 350 MILES
0 250 500 KILOMETERS
MICHIGAN
APPALACHIAN
CENTRAL
COSTAL
BASINS
LOS
ANGELES
CENTRAL
ALASKA
BASINS
Northeast
12.4
55
40.8
24
27.7
24.2
15.7 Mid Continent
Southwest
4
57
50.8
Rocky
Mountains
3.2
West
Coast
18
8.8
Alaska
Offshore
GOM
Gulf Coast
Figure 1. Gas reserves and potential in deep (greater than 15,000ft) U.S. basins.(Source: Strategic Center for Natural Gas)
0
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Offshore Land Total
Deep
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rilled
An
nu
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th
e U
.S.
Year
1995
1995
1997
1998
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Figure 2. Deep drilling historical data and forecast for greater than 15,000ft.
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6 GasTIPS • Spring 2004
DEEP GAS
of the Deep Trek Program, the DOE is sup-porting two studies: one to benchmark cur-rent deep drilling costs and technologies(Schlumberger Data Systems), and theother to specifically evaluate current deepgas well completion technologies (PinnacleTechnologies). The first of these wasdesigned to provide current drilling tech-nology and cost benchmarks as referencepoints in evaluating future cost improve-ments from technology advancements.
For the purposes of these studies, theDOE def ined “deep” as greater than15,000ft (true vertical depth – TVD). Datarelated to shallower wells were also included,provided the wells were located in high tem-perature/high pressure (greater than 350°Fand greater than 10,000psi) environmentsand drilled within the past 5 years to 7 years.
As part of this effort, the DOE licensedthe IHS database to create a database ofdeep wells categorized by TVD, targetedformation, geographic location, completiontechnique and operator. Information alsowas collected from operators on drillingand completion technologies currentlybeing used, data monitoring and manage-ment techniques, well control planning andtubular designs (casing, drillpipe and tub-ing). Information gathered from interview-ing operator and drilling company contactshas been compiled into a condensed formatthat does not identify specific companies or individuals.
The IHS database was used to identify3,015 deep well locations. By selecting onlyoperators that have significant experience indrilling deep wells in a specific geographicalarea, the number of operators included inthis study was confined to 140, representing78% of the IHS deep well population. About50 of these operators drilling in selected geo-graphical areas were contacted by phone andin writing and invited to share informationfor this project. In all, about 12 respondedwith information, producing a total of 22usable data sets.
Recent historical perspective There are relatively few deep wells beingdrilled. Of the estimated 29,000 wells (oil,gas and dry holes) drilled in the UnitedStates in 2002, about 300 were deep wells.Deep drilling peaked at 425 wells in 1998and fell to 250 wells in 1999 as part of anoverall industry downturn. Because of thecyclic nature of the industry, it is difficult toproject future drilling trends, but the overalltrend of deep drilling activity appears to beincreasing through the industry cycles,according to one DOE forecast (Figure 2).
Current business interest in deep gas tar-gets on the shallow water GOM shelf andnatural gas market pressures in the United
States could help revitalize deep gas drillingactivity. The U.S. Minerals ManagementService has indicated more than 15 recentnew deep gas discoveries in shallow GOMwaters. One company operating in the shal-low GOM has revealed plans to drill at leastsix deep (greater than 25,000ft) exploratorywells this year. Another Outer ContinentalShelf operator has reported it plans to drill orparticipate in four deep gas wells.
Though, the average success rate for deepgas discoveries in the Gulf Coast area is 50%to 60%. Increases in deep gas drilling will notbe sustainable unless sustained higher gasprices overcome costs or costs can be reducedthrough technology.
Group 14 - Rocky Mountain Basins
Group 13 - South California Basins
Group 12 - Permian Basin Region
Group 11 - Western Canadian Basins
Group 10 - Arkoma Basin Region
Group 9 - Anadarko Basin Region
Gulf Coast (3)
Figure 3: U.S. and Canada Deep Drilling Locations 1997–2001
Group 8 - Gulf Coast (Unspecified)
Group 7 - Gulf Coast Quartarnary
Group 6 - Gulf Coast Pilocene / Milocene
/ Oligocere
Group 5 - Gulf Coast Eocene / Paleocene
Group 4 - Gulf Coast Cretatious
Group 1 - Gulf Coast Ordovian
Group 2 - Gulf Coast Permian
Group 3 - Gulf Coast Jurassic
Figure 4: Gulf of Mexico Deep Drilling Locations 1997–2001
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Spring 2004 • GasTIPS 7
DEEP GAS
Deep drilling—1997–2001As part of the ongoing deep drilling bench-mark study, a data set of all deep wells withinthe United States and Canada drilled fromJan. 1, 1997, through Dec. 31, 2001, wasextracted from the IHS well database.Selecting only the wells that met the criteriaof depth and location (greater than 15,000ft
TVD) resulted in a total of 3,015 wells.These wells were subdivided into seven
g roups ba s ed on ma jo r g eo log i c o r geographic play regions (Figures 3 and 4 andTable 1). The largest region, the Gulf Coast,was further divided into a series of subgroupsbased on the geologic age of the deepest for-mation drilled. Fourteen area groupings were
recognized and operator data sets wereobtained from seven of these fourteen areas.
Benchmarking deep drilling costsBecause each company participating in thisproject provided its own form of authoriza-tion for expenditure (AFE), the first majorchallenge to examining and comparing deepwell costs was to establish a data manage-ment system that would categorize costs in aconsistent manner across companies. Inorder to accomplish this, a standard set ofcost categories was established and eachAFE line item was analyzed to determine inwhich category it belonged. Costs could thenbe grouped into the larger components, suchas drilling costs, and subcomponents, such astangible completion-packer and downholeequipment.This system also allowed individ-ual AFE cost components to be associatedwith particular technology areas.
Once AFE costs were standardized, rele-vant deep well scenarios could be established,where significant operator data sets wereavailable and average cost values could beestablished for each scenario. These costscould then be examined by categor y.Unfortunately, because some operators pro-vided more information than others, the sumtotal well costs do not provide an accurateestimate of total deep well costs for everyindividual group. However, they do provide acredible picture of the average costs of manyof the major technology areas benchmarkedin the study. For example, Figure 5 showsaverage cost data for 11 cost categories acrossseven drilling scenarios.
Quantifying the impact of technology advancementsBenchmarking costs of deep wells is impor-tant to enable the industry and the DOE toidentify areas where new technologies canmake the most impact and measure howmuch improvement can be attributed to par-ticular technology advancements.
Gro
up N
umbe
r
Description
Num
ber o
f W
ells
Ope
rato
rs
Min
imum
TV
D (f
t)
Max
imum
TV
D (f
t) Well Type Prod Type
Vert
ical
Dev
iate
d
Hor
izon
tal
Gas
Oil
1 Gulf Coast -Ordovician 8 6 15,000 17,950 5 3 0 8 0
2Gulf Coast -
Permian11 9 15,000 28,008 6 5 0 1 7
3Gulf Coast -
Jurassic232 84 15,000 23,505 114 102 7 98 34
4Gulf Coast -Cretaceous
541 76 15,000 23,472 81 80 355 232 198
5Gulf Coast -
Eocene / Paleocene303 98 15,000 20,928 198 90 13 125 53
6Gulf Coast -
Pliocene / Miocene/ Oligocene
1032 218 15,000 29,680 419 507 9 522 79
7Gulf Coast -Quaternary
143 45 15,105 29,229 34 80 0 23 17
8Gulf Coast -
Unknown (see map)41 35 15,000 28,665 25 12 0 13 4
9Anadarko Basin
Region372 73 15,000 26,566 187 67 4 305 19
10Arkoma Basin
Region32 12 15,047 17,638 3 26 1 22 0
11 W. Canadian Basins 24 13 15,025 18,291 0 0 0 12 0
12Permian Basin
Region177 77 15,000 28,666 136 20 21 34 31
13 S. California Basins 20 10 15,000 21,769 6 14 0 1 11
14S. Rocky Mountain
Basins79 36 15,000 25,830 42 26 5 43 11
Table 1: U.S. and Canada Deep Drilling Well Data 1997-2001
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8 GasTIPS • Spring 2004
DEEP GAS
Technology advances have a significantimpact in the reduction of drilling time andcosts. This can be illustrated by comparingthe depth-time plots of two deep East Texaswells drilled in the same area to the sametarget, one in 1985 and one in 2002 (Figure6). Drilling time in 2002 has been reducedto less than one-third of the time required17 years earlier (58 days to completion pointin 2002 compared with 185 days in 1985).This improvement is attr ibuted toadvancements in bits, downhole tools,directional drilling capability, fluids andhydraulics, safety systems, as well as tothe effective application of lessonslearned in this particular area.
Bit and downhole motor and turbinetechnology have improved significantlyduring the past several years, leading tofaster rates of penetration (ROP) fordeep wells. Polycrystalline diamond cut-ter bit technology is one of the most sig-nificant technology improvements in thedrilling industry during the past 20years. However, bit vibration is oneaspect of deep, hard rock drilling thatcontinues to give drillers problems, as itreduces ROP and damages bits and bot-tomhole assemblies.
Modern drilling rigs are designed to bemore mobile and modular. The use of
high-pressure rotating heads, top drives,rotary steerable systems, and more efficienthydraulics and fluid delivery systems (biggersurface pumps and larger-diameter drill pipe)have helped increase drilling efficiency andreduce the costs of drilling during the pastcouple of decades. However, continuedreduction in costs will be necessary if deepgas drilling is to realize its full potential.
Current and proposed well construction
methodologies that should continue toreduce costs of drilling deep and extendedreach wells include solid expandable tubularsand the concept of “casing drilling” or “linerdrilling,” where the bit/motor assembly isattached below the casing shoe and a dual-rotary system rotates the casing indepen-dently while drilling. However, these novelconcepts are still evolving.
As these and other new technologies areemployed in the drilling of deep wells,efforts can be made to identify thedegree to which costs have dropped rel-ative to earlier benchmarks.
Further analysisThe cost data accumulated in these twostudies will be compared and correlatedwith information developed from areview of current technologies andpractices employed by operators.
A preliminary assessment of the dataindicates a number of findings, somenot unexpected and others that meritfurther scrutiny.
A complete analysis may require someadditional information to be gatheredfor areas where the data is sparse. Onechallenge in this regard is the variabledegree of interest in participation on thepart of operators. ✧
$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000
Group 4 Gulf Coast Horiz.
Dev. 15,000ft
Group 5 Gulf Coast
Directional Exploratory
16,500ft
Group 5 Gulf Coast
Directional Development
17,000ft
Group 5 Gulf Coast Vertical
Development 16,000ft
Group 6 Gulf Coast
Directional Development
15,000ft
Anadarko Vertical
Development 20,000ft
Permian Vertical
Development 16,000ft
0% 20% 40% 60% 80% 100%
Group 4 Gulf Coast Horiz.
Dev. 15,000ft
Group 5 Gulf Coast
Directional Exploratory
16,500ft
Group 5 Gulf Coast
Directional Development
17,000ft
Group 5 Gulf Coast Vertical
Development 16,000ft
Group 6 Gulf Coast
Directional Development
15,000ft
Anadarko Vertical
Development 20,000ft
Permian Vertical
Development 16,000ft
Borehole Integrity, borehole stability
Cementing
Data Generation / Monitoring
Drill Bits
Drilling / Tripping time
Environmental / Waste handling /
Regulatory
Logging (wireline)
Personnel / management / supervision
Safety
Stimulation
Tubulars
Figure 5: Category cost data for selected scenarios in dollars and as percentage of total
Technology Effects with TIme
0
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2002 well 1985 well
Dep
th-M
D
Figure 6: A comparison of depth-time plot for twowells drilled to the same depth in the same area, 17 years apart, shows the impact of technologyadvancements.
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