Analysis:"If you build it, they will come" is a line from a Hollywood movie about baseball, but it also describes Tesco Corp.'s drive to use automation to cut well drilling costs.
The Calgary-headquartered company has sunk more than C$50 million and close to seven years to perfect its patented Casing Drilling technology, a radical departure from the decades-old way of punching down oil and gas holes.
While the company has secured its first commercial project in South Texas through a three-rig, two-year contract with ConocoPhillips Corp., a key hurdle is to drill an offshore well in 2003. The Gulf of Mexico and other offshore basins are the fields of dreams for Tesco and producers: the former is attracted because of the lucrative potential, while the latter hopes Tesco's Casing Drilling lives up to promises to cut drilling times by 20 to 30 percent.
Details on components of the bottom hole assembly (BHA) and its attachment to the casing through a drill lock (DLA) that provides a running/retrieval interface, mechanical attachment to the casing, and a hydraulic seal are probably best left to forums such as the American Association of Drilling Engineers (AADE).
To simplify almost as much as E=mc2 understates Einstein's Theory of Relativity, Casing Drilling combines drilling and casing into a single operation to make it cheaper, safer, and faster to drill wells.
The BHA, which includes the drill bit, is connected to the casing and rotated via a top drive, which can be mounted on a conventional rig or one custom built for Tesco's technique. When target depth is reached, the BHA is collapsed and drawn up the casing by wireline. Logging and other testing tools are similarly conveyed up and down the hole.
By combining drilling and casing into one step, Tesco eliminates the need for drill pipe, collars, and tripping. Numerous other advantages, such as gains in mud pump efficiencies, pared fuel costs, and reduced capital investment to build a new generation of smaller and lighter rigs, are also touted by Tesco.
The company is relying on automation in the final frontier to cut drilling costs, as efforts to reduce crew size, optimize drill bit design, and chop rig moving times have pretty much reached their limit.
In a recent conference call with analysts, chief executive Bob Tessari said Tesco's future is looking bright. "I think from the Casing Drilling aspect, it (2003) should be quite robust," he stated.
On rigs built just for Casing Drilling, hydraulic power units are used for the mud pump, drawworks, top drive, and wireline unit to reduce equipment weight. The high-tech rigs, which utilize programmable logic controls, are designed to minimize operator error, optimize equipment performance, and enhance data acquisition.
The benefits come at a price. Tesco's Casing Drilling rigs fetch a premium compared with conventional rigs. Specialized and proprietary consumables, such as casing shoes and casing connection torque rings, add to the daily bill.
This means Tesco's method, which does not have direct competition, is not appropriate for all applications. It doesn't make a lot of sense to use it when punching down gopher holes in southeast Alberta, where saving four hours of rig time will not offset higher rental and supply costs.
In the Rocky Mountain foothills, on both sides of the border, where washouts, swelling, and sloughing can prolong drilling times and toss budgets in the toilet, Casing Drilling becomes much more appealing.
Offshore fields probably hold the biggest potential for Tesco. Producers are very interested in a technology that can slash their drilling times by 20 to 30 percent, especially when they are forking out $100,000 per day or more to rent a rig.
Casing Drilling has already been used in offshore applications but never from start to finish of a hole. Ensuring Tesco, the drilling contractor, and producer are all on the same page has taken time, but Tesco expects to book revenue in 2003 as a result of offshore field trials.
"We want to make sure the contractor sees and shares in the upside, that the operator gets a big advantage, and we get a big advantage," Tessari said. "I think there is enough cream here for all three of us to do very well."
It will take some time before Tesco's profits get fat. As company officials said in a paper at the March 2001 AADE convention, the first well using Casing Drilling in a new region is rarely a record-breaker because it is drilled conservatively to minimize chances of a wreck. It usually takes several wells to climb the learning curve and to start the impressive clock shaving.
Time and money spent on Casing Drilling, which sucked up 90 percent of Tesco's R&D budget over the past few years, are leading to other business opportunities. Both its Casing Running System (CRS) and Casing Assist Running System (CARS) are built around automation and utilize tools developed for Casing Drilling.
Replacing power tongs, large casing elevators, stabbing board, working platform, and fill up tools, CRS allows the operator to circulate, rotate, or even ream casing to the bottom of the hole. CARS uses the downhole tools developed for Casing Drilling to provide additional drilling and reaming capability to ensure casing can be run to bottom, even in difficult hole sections.
Tesco attaches one of its casing drive assemblies to a top drive, providing integrated hydraulic handling for casing pickup and makeup. According to the company, the casing drive assembly attaches to the casing tube and transmits full makeup torque and hook load from the top drive without compromising the upper casing connection threads.
The new systems are designed to cut time and costs since they eliminate the process of laying down the casing, picking up the drill string, and reaming or redrilling and reconditioning the hole to get the casing to bottom.
CRS and CARS are a double win for Tesco. They supply needed equipment such as the casing drive assembly and top drive as well as consumables such as torque rings, rotating centralizers, and wear bands.
"I would say by the middle of 2003 we should start to impact the casing running business in a very positive manner, both for the client and our bottom line," Tessari said.
His comments underscore a key point about automation, one that is sometimes forgotten in the excitement of pushing the technological envelope. Unless customers gain real and easily measured benefits, the better mousetrap is not going to win market share. And, as Tesco can attest from its experience, it's challenging and expensive to turn a good idea into practical tools and procedures.
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