The ROGTEC Interview: Peter van Welsenes, Wells Manager, SPD
SPD has reached a massive milestone earlier this year, drilling its 800th well. That’s an excellent achievement, but what are your drilling targets over the next couple of years?
Our existing development will continue in the coming years. The number of wells to drill will depend on the speed at which we can mature new well pads. This becomes harder over time as we are targeting the more challenging parts of our reservoirs. We hope that recent seismic will help us define those areas. At the moment we are looking to continue with 2 to 3 rigs which translates to 60 – 90 wells per year.
Which drilling contractors are drilling the wells for SPD, and what are the average times taken to drill a well? How does this compare to industry standards?
KCAD and SSK are the two drilling contractors that have been with us since day one. Of course these contractors are supported by many additional service companies for directional drilling, cementing logging and so on. Our world class performance is based on SPD’s strategy of “Russia Plus” combining best practices of Russia with international oil & gas experience. We are stimulating fair and honest competition between local and international companies looking for constant optimization of our operations and technologies. It results in mutual improvement of overall performance and competitiveness both in Russia and abroad. The average overall time last year was 9.7 days per well with an average depths of 2950 mtrs of and an inclination of 46 deg. This is pretty impressive considering it includes all the delays related to weather, equipment failures and the like. Based on benchmark data that we have and information from our joint venture partners it confirms that we are indeed top quartile.
With various contractors drilling wells, how do you ensure drilling optimization across the Salym fields?
Standardisation of our well design in combination with the large number of wells has allowed us to realise significant performance improvements. We have implemented incentive contracts where our drilling contractors and service companies benefit from improvements in performance. Each year these norms are revised to reflect the improvements made. We also have a routine to conduct after action reviews to help understand what went well and what room there is for improvement. These learning’s are shared between the rig teams to allow all to benefit.
We also have an improvement plan with several initiatives in which we trial new concepts and technologies, mostly at one rig at the time. If the concept proves useful we will look to implement on the other rigs.
What would you consider as your greatest achievement in terms of delivering a well at SPD?
Of course there have been a few records in terms of days for a well (4.54 days) or meters drilled in one day (1100 m). The biggest achievement however is that we have demonstrated to be able to consistently drill our wells quickly, cheaply and safely, and that we continue to learn and improve (even after 10 years). At this point in time our three drilling rigs have a combined total of close to 3000 days without a lost time injury. It is this safe delivery of these record wells which is the true achievement.
With the depletion of existing brownfields in Western Siberia, some industry analysts are saying that there is a need to develop tight oil in order to make up declining production. What role do you see tight oil playing in Russia’s oil output future?
The oil industry in Russia does not differ from that in the rest of the world. We are developing a resource and are competing at global level to do this on economic terms. We see that the current reservoirs are maturing and depletion results in less production. It is only natural to look for alternatives to make up for this decline. We venture out to new frontiers (e.g. the Arctic) we try harder in existing fields (enhanced oil recovery), or we bring in new technologies. The Liquid Rich Shales (LSR) has become attractive because of technology breakthrough and the concepts proven in the US. It so happens that much of Siberia has this unconventional play present and the advantage that it can benefit from the existing infrastructure.
Amendments to the Mineral Extraction Tax are key to the economical production on tight oil, what are views on the current tax regime and do you see the RF Government changing the law in time for 2014?
The government is taking a fair share of the oil revenues. Willingness to reduce this component frees up money to the oil companies who can use this to pursue more complex and costly developments. As such the government has an important tool to steer investment levels and development of natural resources of a country. Changes in tax regime are always subject to lengthy debates and long considerations. Given the amount of money involved this is understandable. I’m sure that changes will be implemented in due course, however whether this will be in 2014 I cannot say. From a countries perspective timing is not the most crucial. For SPD this is a different story as our existing development has matured and we are coming off plateau production. This brings a reduction in drilling activity and we would like to use our current level of expertise and staff to transfer to the new opportunities rather that to have to build this back up again.
The Bazhenov is understood to have geological similarities with Bakken formation in North America. Can you see the technology used to economically develop tight oil at Bakken being transferred to Russia?
Our first aim is to prove the concept and to demonstrate that we can significantly improve the productivity from Bazhenov wells by application of multi staged fractured horizontal wells. Once we have proven the concept and understand the productivity enhancements we can see how we can make this an economically viable undertaking. We hope to be able to demonstrate a similar learning curve as we have seen on our conventional wells, reducing time and cost to drill and complete a well in combination with the ability to better target sweet spots. We are hopeful that through the implementation of these technologies in combination with the right tax regime we can make the Bazhenov development economic.
Producing tight oil has two major challenges, not only the fiscal regime but also technology. Do you have any specific technology that you will look to employ on you fields in Salym in the near future?
Our current approach is to leverage what has been used and proven elsewhere rather than to develop our own technologies. This in itself is already a huge undertaking since equipment and resources are not readily available. Everything needs to be planned carefully as one cannot assume that resources are available in case of problems. Efficient transfer or technologies has proven to be a complex matter and it will be dangerous to assume that what has been done somewhere else can be simply copied across. We also need to learn and understand what is specific to our setting and how this impacts the technologies we want to deploy. Following the successful adoption of existing technologies we will push the boundaries by looking for further improvements and alternatives.
Horizontal drilling and hydrofracturing are currently used in Russia more for conventional plays, do you see this as a key technology to transfer to tight and unconventional plays?
Hydrofracturing will be the key enabler for development of the unconventional plays. At the moment this is the only effective technology that will provide sufficient contact area with the reservoir to enable sufficient flow to provide economic wells. There still is much to learn about predicting the benefits of these fracs and positioning them better. From the US we see that a large number of unconventional wells are still uneconomic.
You recently attended the 1st Russian Drilling Contractors roundtable, RDCR, did you identify any possible technologies that you would like to explore further from the event?
A thematic approach certainly helps to focus attendance and have meaningful round table. Areas that might be of interest for future events are for instance development of unconventional plays, enhanced oil recovery projects, waste management and arctic frontiers.
