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8

DRILLING

Reservoir fluids are accessed by drilling a well and then preparing the well for the
production or injection of fluids. In this chapter, we discuss drilling rights and related
issues, describe rotary drilling rigs and the basics of the drilling process, and survey
different types of wells. Well completions are discussed in Chapter 10.

8.1 DRILLING RIGHTS

Extraction of oil and gas from a subsurface formation requires access to the resource.
Drilling is one step in that direction. But before drilling, an operator must have the
right to place equipment on the surface of the drilling site. In the United States,
mineral rights give access to subsurface minerals and fluids and allow reasonable
operations at the surface for extraction.
An operator in the United States must lease the mineral rights from the owner of
the rights before drilling begins. In exchange for the lease, the mineral rights owner
can receive an upfront bonus in addition to regular royalty payments for the minerals
as they are produced. An example of a royalty is 12.5% of gross revenue from
production minus taxes. The operator receives the right to explore and drill, produce
oil and gas, and sell produced oil and gas to the market.
US oil and gas leases include two or more terms. For example, a lease may have a
primary and secondary term. The primary term of the lease may be 1–5 years long

Introduction to Petroleum Engineering, First Edition. John R. Fanchi and Richard L. Christiansen.
© 2017 John Wiley & Sons, Inc. Published 2017 by John Wiley & Sons, Inc.
Companion website: www.wiley.com/go/Fanchi/IntroPetroleumEngineering