DOE Announces R&D Funding for Microhole Technology Projects

The Department of Energy has marked another key milestone in its research and development (R&D) initiative to develop "microhole" technologies aimed at slashing the costs and reducing the environmental impacts of drilling America's oil and gas wells.

DOE announced the award of funding for 10 projects that are designed to push microhole technology another step closer to commerciality and widespread adoption by the U.S. oil and gas industry. The initiative involves developing technologies associated with drilling wells smaller than 4-3/4 inches in diameter and related downhole micro-instrumentation.

The ultimate result of industry broadly embracing this technology could be a sea change in the way that the Nation's oil and gas producers explore for, drill, and monitor wells.

Expectations are that widespread adoption of microhole technology could spawn a wave of "infill development"—drilling wells spaced between existing wells—that could tap potentially billions of barrels of bypassed oil at shallow depths in mature producing areas.

At the same time, microhole and related micro-instrumentation technologies offer the opportunity to dramatically cut producers' exploration risk to a level comparable to that of drilling development wells.

Together, such efforts hold great promise for economically recovering a sizeable portion of the estimated remaining shallow (less than 5,000 feet subsurface) oil resource in the United States. The Energy Department estimates this targeted shallow resource at 218 billion barrels. Recovering just 10 percent of this targeted resource would mean a volume equivalent to 10 years of OPEC oil imports at current rates.

In addition, the smaller "footprint" of the lightweight rigs utilized for microhole drilling and the accompanying reduced drilling waste disposal volumes offer the bonus of added environmental benefits.

The microhole initiative is in line with the Bush Administration's goal, set forth in the National Energy Policy, of promoting "dependable, affordable, and environmentally sound" energy production.

The projects will be managed by the DOE Office of Fossil Energy's National Energy Technology Laboratory (NETL).

The total value of the projects is nearly $14.5 million, with DOE providing $7.7 million and industry partners contributing $6.8 million. The industry cost share of about 47 percent demonstrates the petroleum industry's strong commitment to these advanced technologies and suggests strong future support for their commercialization and adoption.

"With the microhole technology program, DOE has tapped into an area of significant industry need," said Roy Long, Exploration and Production Technology manager for NETL. Long cited evidence that the U.S. oil industry has been hit hard by drilling cost overruns in the deepwater Gulf of Mexico, the most promising near-term province for significant near-term domestic oil production gains.

"Microhole technology is the only real solution . . . that offers the potential to lower exploratory risk to that of development risk," Long noted. "The entire scope is to drive down drilling costs and reduce exploration risk."

DOE analysis shows that microhole technology has the potential to cut exploratory drilling costs by a third or more and to slash development drilling costs by more than 50 percent.

The technology centers on adapting conventional coiled tubing drilling techniques—in which a drill motor and bit are deployed on the end of tubing coiled around a spool on a trailer pulled by a standard pickup truck—to ultrasmall-diameter holes. Savings in drilling costs come from being able to utilize a smaller drill site, much smaller equipment for handling pipe and tubing, and a major reduction in drilling and well completion materials. To develop a complete, cost-effective microhole drilling system, industry must develop a full spectrum of subsurface sensors, motors, logging tools, and other borehole instruments small enough to fit into the micro-wellbores, yet rugged enough to survive the harsh downhole environment.

The need to cut drilling costs and reduce exploratory risk is seen in mature producing areas outside the United States as well. Norway, for example, has expressed an interest in microhole technology as part of the solution to slashing drilling costs with its OGJ21 Cost-Effective Drilling Initiative and PETROMAKS research program.

Promoting technology that helps expand sources of global oil supply also dovetails with the goals of the National Energy Policy, Long noted: "Helping to spread this technology internationally aids DOE's goal for diversity of supply in assisting other countries to develop their own resources."

An earlier round of solicitations under DOE's microhole technology initiative, announced in June 2004, involved six projects valued at nearly $5.2 million. This latest round takes the evolution of the microhole initiative a major step further, with field demonstration projects being implemented in addition to technology development projects.

"This is the first solicitation round for demonstrations of advanced technology that might become the future of significantly reduced costs for exploration and development," Long said. "Within 3 years, we'll know whether we have commerciality for most of these technologies."

The 10 new projects are:

Geoprober Drilling Inc. (Houston, Texas)—This project calls for drilling three wells with an innovative composite coiled tubing drilling system. The aim is to confirm the capability to drill low-cost, shallow slim/microhole exploration wells in water depths ranging up to 10,000 feet. Cost savings, projected at 59 percent over that for conventional wells, would come by using a smaller drilling vessel and by eliminating the need to deploy and retrieve a large riser—essentially a large-diameter pipe that is the extension of the wellbore in deep waters. (DOE share: $1 million; Project duration: 12 months)

Gas Technology Institute (Des Plaines, Ill.)—This project entails a proposal to field test a next-generation microhole coiled tubing rig. The MOXIE experimental rig was fabricated by Coiled Tubing Solutions (Dallas, Texas) specifically for coiled tubing and microhole drilling to 5,000 feet subsurface. First deployed for initial testing in a Kansas gas field last year, the rig was able to drill 280–400 feet per hour. GTI will assess field tests and lead a technology transfer program. Expected benefits from this technology include 28–38 percent lower drilling costs per well, decreased waste generation, reduced environmental impacts, and increased production from existing fields. (DOE share: $1 million; Project duration: 12 months)

Confluent Filtration Systems LLC (Houston, Texas)—Researchers will seek to develop a revolutionary elastic-phase, self-expanding tubular technology called CFEX. CFS's goal is to develop self-expanding well casings to any diameter, leading to improved methods and feasibility of monobore drilling and well construction. (DOE share: $1 million; Project duration: 36 months)

Tempress Technologies (Kent, Wash.)—The goal of this project is to develop a small, mechanically assisted, high-pressure waterjet drilling tool. A downhole intensifier would boost the pressure that can be delivered by coiled tubing, maximizing drilling rates. That in turn would overcome the limited reliability, power, and torque of small-diameter drill motors, a major hurdle for microhole drilling reliability. (DOE share: $800,000; Project duration: 24 months)

CTES LP (Conroe, Texas)—Researchers will focus on improving the performance and reliability of microhole coiled tubing drilling bottomhole assemblies while reducing the cost and complexity associated with drilling inclined/horizontal well sections greater than 2,000 feet. This would be accomplished by inducing vibration along the coiled tubing drill string in order to eliminate the need for a downhole drilling tractor to mitigate friction. The goal is to enable operators to economically use coiled tubing to drill microhole sections greater than 3,000 feet in horizontal wells, which typically offer production rates two to three times greater than those for vertical wells. (DOE share: $700,000; Project duration: 24 months)

Technology International Inc. (Kingwood, Texas)—This project entails developing and testing an effective downhole drive mechanism and a novel drill bit for drilling with coiled tubing. The high-power turbodrill will deliver efficient power at relatively high revolutions per minute and low bit weight. The more durable drill bit will employ high-temperature cutters that can drill hard and abrasive rock in 3½-inch boreholes. (DOE share: $800,000; Project duration: 24 months)

Ultima Labs Inc. (Houston, Texas)—This project is intended to combine existing technologies for measurement-while-drilling (MWD) and logging-while-drilling (LWD) into an integrated, inexpensive measurement system to facilitate low-cost coiled tubing drilling of small-diameter (3½ inch) wells at depths shallower than 5,000 feet. MWD and LWD, while costly, have become crucial tools for oil and gas operators in sustaining drilling and well completion efficiencies. Two prototypes are to be delivered ready for field testing. (DOE share: $800,000; Project duration: 36 months)

Baker Hughes Oilfield Operations Inc. (Houston, Texas)—Researchers will seek to provide a critical tool essential for an effective modular coiled tubing drilling system: a wireless system to help steer drilling in a microbore. The use of such "smart" wells—which have grown in acceptance by industry because of their inherent efficiencies and cost savings—might otherwise limit microholes to a smaller range of locations and reservoir types. Plans call for developing a downhole bidirectional communication and power module and a surface coiled tubing communication link. (DOE share: $800,000; Project duration: 24 months)

Gas Technology Institute (Des Plaines, Ill.)—An important goal for advancing coiled tubing drilling of microholes is to improve the rate of penetration by 25–60 percent, thereby cutting drilling costs by up to 40 percent. This project entails designing, developing, and evaluating a counter-rotating motor drilling system ideally suited for reducing costs associated with drilling wells targeting unconventional gas. By concentrating the weight on the drill bit in a smaller area and by addressing the limited torque on a coiled tubing drill string, this research would increase the effectiveness of coiled tubing drilling. (DOE share: $600,000; Project duration: 24 months)

Confluent Filtration Systems LLC (Houston, Texas)—Another major concern for microhole drillers is the damage caused to casing from sand that infiltrates the drill string. This is especially problematic in small-diameter wellbores. Accordingly, there is a great need for downhole sand screens that are versatile and robust while being suited for a variety of drilling environments. This project is designed to prove and develop a concept for a self-expanding, high-flow sand screen that could be constructed from a wide range of materials. Plans call for ultimately deploying the technology in a demonstration well. (DOE share: $200,000; Project duration: 24 months)