With surging oil prices causing many suppliers in the energy industry to ratchet up their fees, exploration and production (E&P) companies have been forced to look harder at making cost efficiencies.

The February 2007 release of the Upstream Capital Cost Index confirmed a substantial rise

The Dynamic De-Sander helps remove erosion and corrosion threats caused by sand before it reaches offshore processing equipment. (Graphics courtesy of AGR Group)
in industry costs — up 67% since 2000, and up 15% in the last 6 months alone.
It is no surprise then that, as oil prices retreat from near-record levels, E&P companies have been refining and in some cases even delaying their plans as they come to grips with rising costs.

The spike in E&P activity brought about largely by sky-high oil prices has placed considerable strain on the entire industry, with demand outstripping supply for human resources as well as materials. In the service arena, a fiercely competitive environment means the highest bidder often secures the supplier.

Despite this, high costs are not a recent oil industry phenomenon. Boom cycles over the years have created peaks and troughs for industry costs and returns, forcing companies to make plans around an oscillating range of prices. In turn, the industry has developed a “can do” approach to overcoming both technical obstacles and business costs in order to deliver
a return.

In all this, the introduction of new technologies has been a key factor for the industry. The riserless mud recovery (RMR) system and the Dynamic De-sander are two technological advances that pass the rate-of-return test.

Not only do they address problems that have plagued the industry since the first offshore platform was constructed 50 years ago, but they also provide a business cost return with a minimal impact on the environment — another key issue for the industry.

Sand control
Sand control has always presented challenges to the industry. At every stage of the production process, companies have tried techniques to optimize recovery rates and maintain high productivity of their wells. Concerns about the problem and efforts to find solutions become more intense as the fields mature over time.

With a range of intrusive and non-intrusive sand measurement techniques, the removal of sand from the hydrocarbons is vital to prevent erosion and corrosion of pipe infrastructure. In high sand content environments, companies can face having to cut back production rates to prevent erosion and corrosion problems.

The AGR Group’s Dynamic De-sander combats the problem by removing sand content from oil and gas before they reach the processing facility.

The technology is based on a cyclone principle, where sand-contaminated fluid is pumped into a two-stage cyclone; particles fall out of the fluid while in the cyclone, with purified fluid flowing out of the top of the cyclone.

Conventional cyclone technology has its drawbacks, however. It needs a pressure drop and a certain flow range to operate; it is at high risk of plugging and can only work with a certain range of solids. Despite this, the technology requires no pressure drop, is totally flow-independent, has a low risk of plugging and can work with particles from 40 microns to fullbore particles.

Indeed, because the de-sander is flow-independent, it is ideal for older wells that commonly
Riserless mud recovery keeps mud out of open water and returns it to the platform for reconditioning and re-use.
experience pressure problems as they age. The technology can also be used in well clean-up applications and to remove drill cuttings so that drilling mud can be re-used.

To date, the technology has been used by BP, Statoil and Hydro Brage. BP used the de-sander when scale milling two plugged wells on its Miller field in the North Sea. The system separated 24 tonnes of scale from the wells and helped boost production by 10,000 b/d.

Both Statoil and Hydro at Brage have used the technology in well-cleanout operations. Statoil performed a cleanout on its Gullfaks C well using the de-sander in place of traditional well intervention tools for sand removal. Not only did this increase production, but it also saved time and money over traditional methods.

Drilling fluids
A major contributor to the financial and environmental costs of drilling is drilling mud, the complex mixture of chemicals, weighting agents and additives that companies rely on for drilling success. For offshore applications in particular, the cost of drilling mud is compounded because of the extra column of mud that exists from the platform to the seabed floor. In addition, some offshore projects use sacrificial mud systems, which discharge drilling fluid into the surrounding water after just one pass through the drill bit. This has meant that in ecologically sensitive regions, drilling has been prohibited to avoid this fluid discharge.

Until recently, when top-hole drilling offshore, companies using sacrificial mud systems often had to choose between using more expensive drilling fluids for a better drilled well or taking a chance with less expensive drilling fluids. The RMR system addresses this issue by re-using drilling fluid and eliminating drilling discharges into the water.

First used in the Caspian Sea and subsequently in more than 35 applications around the world, RMR technology has helped companies improve top-hole drilling performance — and in some cases in deeper parts of the borehole — at the same time as it looks after the environment.

RMR technology lets the operator collect used drilling fluid and cuttings from the seabed and pump them back up to the rig. As a result, companies have found that the technology reduces drilling costs. This is because they can use a higher-quality drilling fluid with RMR (mud is re-used rather than sacrificed), and the fact that RMR is a true dual-gradient system (a mud column in the well bore and seawater column from seabed to surface) means new and more adequate well designs can be drilled with fewer casing sections required.

Experience gained from the Caspian Sea has demonstrated the technology is well-suited to demanding drilling operations at depths of as much as 1,312 ft (400 m) of water. In addition, the technology is now undergoing trials in the Gulf of Mexico by the Research Council of Norway and, when certified at those depths, will mean it is approved in the United States as “best available technology.”

Total was the first commercial user of the RMR technology on its Jura West 3/15-10 North Sea exploration well. The key drivers behind its decision to use the technology were to save time and money. There was minimal online rig-up time required, and Total reported no nonproductive time in more than 4 days of drilling operations.

Other benefits provided by the RMR system include the repeated and continued use of costly mud mixes with high viscosity during the drilling process, the ability to push casing depths deeper and use fewer casing strings, and rapid and accurate kick detection. All of these factors allow financial savings to be made.

The technology also allows drilling to take place where water-based drill fluids cannot be used, potentially opening up further exploration sites in environmentally protected areas.
In an industry where cost pressures can rise quickly and where competition is fierce, the companies that embrace new technologies will be at an advantage. Systems like RMR and the de-sander are proving their value in the field — not only in cost terms, but on an environmental level as well. With all companies in the industry facing those pressures, the time to look beyond conventional ideas is now.