Horizontal drilling increased by 80% in both KMAD and East Siberia between 2007-2012. The contribution to incremental drilling was roughly the same in both regions.
As a result, horizontal drilling is rising at a steady pace in Russia due to both the development of new fields in greenfield oil producing regions and the development of tight reserves in KMAD.
The authors predict the following change in this trend between now and 2020:
» The contribution of East Siberia to incremental horizontal drilling will drop to 17% due to the completion of drilling operations under large projects in this new region;
» Conversely, the contribution of brownfield projects will rise by 75% due to the need to tap tight reserves in these regions in order to maintain production levels.
Thus, the focus is shifting back to mature oil production regions such as West Siberia and the Volga-Urals.
Gradual deterioration of operating conditions, which includes large scope for horizontal drilling, is forcing E&P companies to reconsider their approach to purchasing oilfield services. An increasingly larger number of oil and gas companies are attempting to operate under Western-style contracts under the terms of which the oil and gas company is liable for well planning and risks, whereas the drilling contractor provides the equipment and commissions the well. Such agreements allow companies to cut costs by reallocating risks and having oilfield services performed on a separate basis.
However, such an approach toward service provisioning requires operating companies to have strong technical and project groups to approve the well design. Some vertically integrated oil companies even have their own research and design institutes for this reason, such as KogalymNIPIneft, which is part of LUKOIL-Engineering.
The rise in demand for drilling deep and horizontal wells is forcing drilling service companies to refurbish their fleets using heavy advanced rigs, with a lifting capacity of over 300 tons. Thus, Eurasia Drilling Company, Russia’s leader by volumes of horizontal drilling, purchased 19 new drilling rigs with lifting capacity of 320 tons or more, with most of these rigs to be used for drilling cluster horizontal wells and extended reach wells from ready-to-use platforms. In addition, most service companies are in the process of upgrading their existing drilling rigs and equipping them to perform additional functions. The purpose of this is to make them capable of drilling more complex wells, including 4-stage fluid processing systems, top drives (or power swivels) and triplex slurry pumps with variable frequency drive.
Thus, the rise in tight reserve production is forcing E&P companies to rethink their approaches to field development and service procurement. Service companies, in turn, are being forced to adapt to shifting market demands by upgrading their rig fleets. One of the key factors driving this trend is increasing demand for horizontal drilling on the oilfield services market, both in brownfield areas (West Siberia, Volga-Urals) and new areas (YNAD, Timan Pechora, East Siberia).
The number of sidetracking operations has climbed by more than 2.7-fold in Russia since 2005. Such impressive growth is due to the aspiration of E&P companies to maximize production at times when oil prices are high by reducing the idle well stock and ramping up flow rates in the producing well stock. Sidetracking has proven effective when demothballed wells are connected to new reservoirs used to develop old wells.
Strong demand for sidetracking has caused prices for this service to balloon by an average 10% per year over the past five years. And even though large volumes of these operations have already been performed, the outlook for this type of service still remains highly promising in Russia. As of year-end 2012, the idle well stock numbered 17,754 wells, down from 18,224 in 2011. Moreover, the share of the whole producing well stock stood at 10.9%, down 0.5% compared to 2011.
The following Western players account for the largest volumes on the open market: Weatherford, C.A.T.Oil AG, SGK (Schlumberger).
The number of sidetracking jobs with horizontal sections is growing at the same pace as the overall sidetracking market. If in 2005 there were 444 sidetracks with a horizontal section, this number rose to 975 in 2011 and 1,200 in 2012.
With the advent of logging while drilling (LWD) technology, the construction of sidetracked wells with a horizontal section became even more effective, as the maximum coverage of sidetracking increased by an average of over 10% for the industry as a whole compared to 2009.
In 2009 the number of measurement while drilling (MWD) operations increased by 8.1% compared to 2008, mainly due to a slump in investment activity on the part of oil companies.
In 2010-2012 the number of operations rose by 29% compared to 2009, while 70% of this increment was attributable to a recovery in drilling volumes in the wake of the economic downturn.
The larger number of MWD operations in 2011-2012 was due to:
» A rise in drilling volumes (including the scope of horizontal drilling)
» A higher number of sidetracking operations in wells
West Siberia and the Volga-Urals accounted for about 94-96% of MWD operations in 2010-2012. The large share of MWD jobs performed in West Siberia and the Volga-Urals was due to the fact that they are the country’s core production areas.
In 2012 the largest number of MWD operations in Russia was performed by Surgutneftegaz (25% of the country’s total), which held leadership among all oil companies in terms of drilling volumes.
However, the share of these operations dropped from 29% to 25% in 2011-2012. The reason for this was a decrease in the company’s production drilling, which peaked at the time when large wells were drilled in East Siberia.
Bashneft saw its share of MWD operations fall from 2% to 1%, as the company had to partially offset the decline in production drilling by using various well stimulation and EOR methods in an effort to maintain output levels.
LUKOIL and Slavneft increased their shares of MWD operations, since these companies used drilling to prevent a decline in their annual production.
TNK-BP reduced its share of these operations to 12% due to a sharp decline in drilling volumes. In all likelihood, the company had begun its pre-sale preparations during 2012, as a result of which it targeted cost-cutting on drilling and well workovers and a larger scope of hydraulic fracturing operations. Such an approach usually means that a company is temporarily attempting to ramp up its production and market cap.
The share of MWD operations remained roughly the same as at other companies in 2011.
According to expert appraisals, the vast majority of MWD operations (90-92%) carried out in 2012 used a fluid passage. No cases involving a wireline cable were noted.
In the pre-crisis period, in 2004-2008, the number of LWD operations rose by 70%. The main growth driver during that time was an increase in the number of sidetracking jobs. In crisis-ridden 2009 the number of operations fell by 13.7% compared to 2008.
During 2010-2012 the number of operations climbed 70% compared to 2009.
This growth, aside from a higher number of sidetracking operations, was due to greater interest by domestic companies in horizontal drilling. In turn, this interest was the result of improvements in logging techniques during drilling in 2007-2012.
The largest number of LWD operations (91-94% of the total for Russia) in 2010-2012 were performed in West Siberia and Volga-Urals, which showed the largest share of wells drilled and sidetracking jobs performed in the country.
The type of logging most in demand in Russia in 2012 was gamma logging (57% of all operations, followed by resistivity logging (about 42%). The proportion of nuclear logging did not exceed 1% in 2011. However, experts surveyed by RPI in 2012 noted a sharp rise in the share of nuclear logging, which accounted for about 3-5% of all LWD operations in the country.
A specific feature of LWD in West Siberia is that gamma logging in this region is nearly always used in tandem with resistivity logging, since local E&P companies believe that the combination of these methods makes it possible to obtain more reliable measurement results.
Conversely, subsoil users in the Volga-Urals, especially in the Orenburg and Samara regions, frequently prefer to limit themselves to gamma logging, citing the need for cost-cutting.
Completion systems for horizontal wells drilled during multi-stage hydraulic fracturing
Russian vertically integrated oil companies started using multi-stage hydraulic fracturing quite recently in East and West Siberia in horizontal wells, drawing on North-American experience. This technology has proven to be highly effective in the United States and Canada when drilling for shale oil and gas, whereas in Russia this technology is used mainly in low-permeability reservoirs. Pilot projects, involving use of this technology to develop reserves of the Bazhenovskaya Suite in West Siberia, were also conducted.
In order to carry out multi-stage hydraulic fracturing operations it is necessary to deploy the so-called special bottom-hole assembly (BHA), through which logging tools pass on their way to the required areas.
The outlook for multi-stage hydraulic fracturing is strong on the Russian market due to the rising proportion of oil extracted from low-permeability reservoirs where drilling simple wells with single-stage hydraulic fracturing is becoming increasingly less profitable.
Over 200 well operations were carried out for the industry as a whole in 2012.