Page 151 - Introduction to Petroleum Engineering

138 DRILLING

and is considered the exploration period. The secondary term of the lease covers the
production period. If the lessee (the production company) does not do any drilling
during the primary term of the lease, the lease may expire and the lessee would have
to renegotiate to be allowed to produce the resource. If a government is the lessor, it
has the opportunity to sell the lease to a new company if the lease expires. Companies
typically prioritize projects based on terms of their leases. Leases may specify how
much fluid must be produced to constitute “production” to satisfy the legal agreement.
The cost for drilling and completing a well can be millions of US dollars. Financing
project costs often involve a joint operating agreement (JOA) with multiple participants.
The JOA defines the rights and duties of each participant. It specifies the operator that
will be in charge of day‐to‐day operations and defines how production is to be shared.
The operator does not have to be a majority shareholder of the agreement.
Consider a situation where several operators produce from the same formation on
several adjacent leases. The operators could benefit financially in joining those sev-
eral leases into one unit with one operator. A big part of a unit agreement is prorating
production to the various members based on the fraction of reserves that is attributed
to each of the separate leases.
Outside the United States, the owners of mineral rights are normally the govern-
ments of the countries. The balance of control between governments and the multi-
national companies that aspire to extract oil and gas resources has been evolving
since the early twentieth century. Today, the countries exert much more control over
their mineral rights. The nature of agreements that moderate the balance of control
between owner and operator continues to evolve.

8.2 ROTARY DRILLING RIGS

Drilling rigs have changed extensively since the first commercial oil well in Titusville,
Pennsylvania, was drilled with a cable tool rig. Cable tool rigs lift and lower a bit to
pound a hole in rock formations. As needed, pounding would be stopped so water
and debris could be bailed from the hole with a “bailer” on a cable, and then the
pounding resumed. Cable tool rigs could routinely drill from 25 ft per day up to 60 ft
per day. Cable tool drilling, which is also known as percussion drilling, was used for
all US fields in the 1800s, but this method is slow, it does not prevent unstable rock
from collapsing into the wellbore, and it does not effectively control subsurface
pressure. Consequently, the uncontrolled production of fluids, known as a blowout,
was common.
Rotary drilling was introduced in the late nineteenth century and became the
primary drilling method by the early twentieth century. A modern rotary drilling rig
is shown in Figure 8.1. A rotary rig has several systems: a power system, a hoisting
system to raise and lower the drill pipe, a rotation system to rotate the drill pipe, and
a circulation system to circulate drilling fluid or “mud.” In addition, a rotary rig has
a system for controlling the well during emergencies.
Drilling rig personnel include the “company man” (operator representative), the
drilling contractor crew, and service personnel. The drilling contractor crew includes
a tool pusher, a driller, a derrickhand, and roughnecks who work as floorhands.