CRITICAL ISSUES IN DRILLING & COMPLETIONS Industry executives share views on business models, workforce, automation and more JAN/FEB 2024 Volume 80 • Number 1 Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Next-gens share personal perspectives on decision to join oil and gas industry Petroleum engineering students cite flexibility, growth and culture as key motivators – p35 New insulated drill pipe enables efficient drilling of ultra-deep geothermal wells Technology shows promise in lowering downhole temperatures, protecting equipment – p38 Celebrate 20 years of Well Control Training excellence with Wild Well Control, the gold standard of Well Control training. In the unpredictable world of well control events, how you react is crucial, safety and training are paramount. Trust Wild Well Control Training to empower your crew with the expertise needed to tackle any situation confidently. As we commemorate two decades of dedication in raising the bar of industry education, join us in ensuring safety while building a legacy of competency for the next 20 years and beyond. Elevate your team, elevate your success. WILDWELL.COM | +1 (281) 784.4700 TAB LE OF CONTE NTS Official magazine of the International Association of Drilling Contractors JAN/FEB 2024 Volume 80 • Number 1 drillingcontractor.org iadc.org ARO Drilling took delivery of the Kingdom 1 jackup in November. The company’s CEO, Mohamed Hegazi, talked to DC recently about his vision for the future and ARO’s ongoing 20-rig newbuild program (see Page 28). CRITICAL ISSUES IN DRILLING & COMPLETIONS 12 Abdulrahman Abdulla AlSeiari, ADNOC Drilling: ADNOC Drilling looks to digital and integrated services solutions to drive better well deliveries BY STEPHEN WHITFIELD, SENIOR EDITOR 16 Carlos José do Nascimento Travassos, Petrobras: Petrobras relying on innovation, close supplier collaboration to keep cost escalation in check BY LINDA HSIEH, EDITOR AND PUBLISHER 18 Molly Smith, Murphy Oil: Scaling up efficiency in a digital future will require better data management, standardization 12 BY STEPHEN WHITFIELD, SENIOR EDITOR 22 Najeeb Al-Abdulrahman, Saudi Aramco: Skilled 31 workforce, innovations in drilling engineering among Aramco’s key tenets for success BY LINDA HSIEH, EDITOR AND PUBLISHER 24 Dan Hoffarth, Citadel Drilling: Drillers seek ways to maintain capital discipline while still investing to keep rigs competitive BY STEPHEN WHITFIELD, SENIOR EDITOR 28 Mohamed Hegazi, ARO Drilling: Old views of drilling, contracting must be shed so industry can drive meaningful improvements BY LINDA HSIEH, EDITOR AND PUBLISHER 31 Samantha McCulloch, Australian Energy Producers: Amid regulatory headwinds, Australia seeks policy stability, growth for gas and LNG markets BY STEPHEN WHITFIELD, SENIOR EDITOR WORKFORCE DEVELOPMENT 35 Next-gen petroleum engineering students: Flexibility, growth and culture among key motivators STAFF REPORT H S E & M E N TA L H E A LT H 36 Seadrill tackles employee mental health and wellbeing amid growing need for action STAFF REPORT D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 3 TAB LE OF CONTE NTS GEOTHERMAL DRILLING 38 Insulated drill pipe offers new tool to enable efficient drilling of ultra-deep geothermal wells DRILLING MARKETS 39 Comparison of different models for integrated services contracts shows how cost savings fluctuate BY STEPHEN WHITFIELD, SENIOR EDITOR BY STEPHEN WHITFIELD, SENIOR EDITOR IADC CONNECTION 41 From the President: IADC project provides new insights to enhance oil and gas recruiting BY JASON MCFARLAND, IADC PRESIDENT 42 IADC Board of Directors elects 2024 officers 43 News Cuttings 44 Wirelines 45 Conference Calendar 46 Editorial Preview DEPARTMENTS 50 6 Drilling Ahead: Industry must evolve its recruiting strategies amid ‘war for talent’ BY LINDA HSIEH, EDITOR & PUBLISHER 7 D&C News 8 D&C Tech Digest 10 11 Oil & Gas Markets 47 People, Companies & Products 49 Advertisers Index 50 Perspectives: Rob Holbrook, News Briefs: Environmental, Social and Governance Rapad Drilling – Relationships, open-mindedness key to long career in oil and gas BY STEPHEN WHITFIELD, SENIOR EDITOR NOTE: Some articles feature QR Codes which can be scanned using your smartphone to access web-exclusive, enhanced editorial on DrillingContractor.org or in our Digital Reader. JAN/FEB 2024 Volume 80 • Number 1 Drilling Contractor (ISSN 0046-0702), the official magazine of the International Association of Drilling Contractors (IADC), is issued six times per year. DC is a wholly owned publication of IADC, which is also the publisher of the annual IADC Membership Directory. Drilling Contractor strives to ensure that the articles and information it publishes are accurate and reliable. However, DC cannot warranty the information provided in its editorial content, and publication in DC is not a guarantee that the material presented is accurate. DC wants to hear from its readers. Send your comments or inquiries to editor@iadc.org or Attn: Editor, Drilling Contractor Magazine, 3657 Briarpark Drive, Suite 200, Houston, Texas 77042 (please include your name, plus an email or phone number). We hope you will enjoy and benefit from DC’s editorial. However, should you wish to 4 complain, please contact the publisher. 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PUBLISHED BY IADC OFFICERS IADC 3657 Briarpark Drive Suite 200 Houston, Texas 77042 USA Chairman Brad James Phone: +1 713 292 1945 drilling.contractor@iadc.org www.drillingcontractor.org Secretary-Treasurer Scott McReaken EDITORIAL STAFF Vice President, Editor & Publisher Linda Hsieh Creative Director Brian C. Parks Senior Editor Stephen Whitfield Editorial Assistant Shaun Ranft Vice Chairman Kevin Neveu Division VP North America Onshore Gene Stahl Division VP International Onshore James “Jim” Nowotny Division VP Offshore Jon Richards Division VP Drilling Services Tim McGarity President Jason McFarland A full list of IADC staff is available here: www.iadc.org/about/staff JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R Toll Free: 855-442-2922 Call: 361-442-2922 Fax: 361-442-2576 P.O. 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GROWING PAINS PIONEER CRITICAL ISSUES IN DRILLING & COMPLETIONS MARKET OUTLOOK: FORECASTING 2022 Activity ramp-up pushes workforce challenges back to center stage JAN/FEB 2023 Volume 79 • Number 1 Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Energy storage, alternative fuels among key efforts to reduce emissions footprint – p12 IADC Chairman Andy Hendricks: Industry optimistic for period of stability Moderated growth can create healthier business environment for drillers – p38 DC_2023_COVER_JANFEB.indd 5 New dual-gradient drilling technique aims to remove limiters for ultra-deep wells Technology combines new surface & downhole systems with current equipment, drilling practices – p33 1/20/2023 12:53:46 PM WWW.DRILLINGCONTRACTOR.ORG WWW.IADC.ORG GOING THE DISTANCE Extended laterals require new solutions for bit guidance, handling excessive torques – p14 MAR/APR 2023 Volume 79 • Number 2 Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Digital tools streamline design, testing process during drill bit selection Digital twins, in-bit sensors shorten iteration cycle, help operators start drilling faster – p28 Drill pipes, BHAs evolve as wellbore geometries push existing boundaries Improvements include greater fatigue resistance for connections, better surface control of BHAs – p20 SHALE INNOVATIONS Technologies target better OCTG supply chains, casing running, equipment service life and corrosion – p20 MAY/JUNE 2023 CCS shows promise but faces challenges scaling up Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Some contractors looking at repurposing rigs to drill injection wells and contributing to blue hydrogen production – p14 Volume 79 • Number 3 New ISP report highlights another rise in LTIs, fatalities Amid market recovery, LTI and recordable rates are up by 15-18% while number of fatalities doubles to 15 in 2022 from 7 in 2021 – p40 NEXT FRONTIER FOR RIG ALARM SYSTEMS Drillers using computer vision, AI technologies to optimize alerts for performance, safety – p16 JULY/AUGUST 2023 Volume 79 • Number 4 Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Industry building circular water economy as operators lean into recycling, reuse Expanded transport infrastructure, advances in water treatment help to reduce freshwater use – p30 ‘Walking’ tool anchors bit to rock to prevent stick/slip in geothermal drilling Prototype of new tool recently tested on Nabors land rig; market launch planned for 2024 – p36 THE NEW WORLD OF DIGITAL DRILLING ENGINEERING Increasingly sophisticated digital platforms become indispensable tools for drilling engineers – p14 SEPT/OCT 2023 As workforce evolves, well control training must too Official magazine of the International Association of Drilling Contractors www.drillingcontractor.org www.iadc.org Training providers focus on adding simulators, improving classroom experience, seamless delivery of virtual classes – p24 Volume 79 • Number 5 One-on-one with Valaris CEO Anton Dibowitz Company keeps focus on people-driven service delivery even as it invests in AI, robotics and sustainability – p38 OFFICIAL MAGAZINE OF THE INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS DRILLINGCONTRACTOR.ORG IADC.ORG DRILLINGCONTRACTOR.ORG/ MEDIAKIT OFFICIAL MAGAZINE OF THE INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS 6 Industry must evolve its recruiting strategies amid ‘war for talent’ BY LINDA HSIEH, EDITOR & PUBLISHER As the drilling industry continues to recover from the previous downturn, employee recruitment and retention has again surfaced as a top priority. However, this time, multiple economic and social factors are making the challenge more dif- ficult than it’s ever been. This means that, if your organization has not taken a good look at your employee value proposition (EVP) lately – which answers the ques- tion of why someone should work for your organization – you are already behind the competition. Speaking at the 2023 IADC Annual General Meeting in November, Diamond Offshore’s Senior VP of Human Resources Amy Roddy urged companies to think beyond the traditional approach of pro- moting pay and compensation . It is still important, of course, but it’s only one piece of a bigger puzzle. “As an industry, we are not as differenti- ated as we have been in the past,” she said during a panel session focusing on recruit- ing and retention. “Pay is not that much higher. A roustabout can go work onshore today for companies like Amazon or UPS; they have other options. There are other heavy industries that are also paying well, so that is not the differentiator for us.” She encouraged employers to take a much more holistic approach as they con- sider their EVP and put more focus on things like career growth and nurturing a sense of affiliation with the organization. “Last but not least, employees value mean- ing and purpose,” Ms Roddy said. “ This includes work-life balance and finding individual purpose in our work.” Ms Roddy also presented recent find- ings from IADC’s Industry Value Initiative (IVI), which surveyed prospective employ- ees to better understand how they per- ceive the drilling industry (see Page 41). When used in conjunction with a well- rounded EVP, the IVI results can go a long way toward helping organizations in the drilling industry craft a more compelling recruiting message. Flexibility is key When thinking about the EVP, it’s also important for an organization to know what its boundaries are, Bianca Richards Agar, HR Director for SLB, suggested dur- ing the panel. “Where are you willing to be flexible and where are you not?” she asked. As companies consider boundaries, however, they should keep in mind that “we are in a war for talent,” Ms Agar said. “We aren’t in a position now where people will line up around the corner to work for you when you have your recruiting days open.” This means that the more flexible an organization is willing to be, the easier it will be to attract and retain top talent. Another strategy organizations can take is to broaden their recruitment scope. For example, SLB is currently trialing the con- cept of a “returnship,” which targets people who had left the oil and gas industry and are currently unemployed . “Think about employees who have left to look after family or other responsibili- ties. Think about people who took career breaks for burnout,” she said. The return- ship puts them through a 12-week pro- gram, at the end of which they can choose whether to return in a full-time capacity. Because these people already know the basics , “they will be hitting the ground running from Day 1” if they come back. Providing the next-gen perspective on the panel was David LaRosa, a recent graduate who just joined the industry last year . He pointed to Tik Tok as the social media platform where oilfield recruit- ers need to focus their efforts, noting its ubiquitous influence among young people today. Especially for those who are not from a state like Texas or Oklahoma, they will be much less familiar with oilfield career opportunities , and Tik Tok videos can serve as a bridge. “With this new era of employees like myself, we’re online and we’re scrolling,” Mr LaRosa said. “Every single guy on my rig that’s from a non- target state, they ended up there because they saw a video on Tik Tok .” DC JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R DRILLING & COMPLETION NEWS • DEPARTMENTS Valaris adds new drillships to its fleet, citing positive outlook for ultra-deepwater floaters Valaris took delivery of newbuild drillships VALARIS DS-13 and DS-14 in December for an aggregate purchase price of approxi- mately $337 million. These deliveries increase Valaris' drillship fleet to 13. The two rigs will be mobilized from the South Korean shipyard to Las Palmas, Spain, where they will be stacked until contracted for work. "Following the successful contracting of six of our stacked drill- ships since mid-2021, the purchase of VALARIS DS-13 and DS-14 increases our operating leverage to the attractive ultra-deepwater floater market," said Anton Dibowitz, Valaris President and CEO. "Based on our positive market outlook, growing future demand and strong customer interest in these rigs, we believe that the pur- chase of these high-specification drillships at compelling prices will generate attractive returns.” Seadrill rigs score Petrobras contracts Petrobras has awarded 1,064-day fixed-term contracts to Seadrill's West Auriga and West Polaris drillships . The con- tracts are expected to commence in Q4 2024 and represent a total contract value of approximately $1.1 billion, inclusive of additional services and mobilization fees. The drillships will transition to Seadrill from the existing third-party managers before undertaking the campaigns with Petrobras. Diamond's Ocean BlackRhino drillship awarded new contract in Guinea-Bissau The Hercules harsh-environment semi was recently mobi- lized to Namibia to drill two wells there for Galp. The fi rst well confi rmed a light oil discovery in January. Galp confirms 'significant' oil discovery with new exploration well in Namibia Galp and its partners NAMCOR and Custos have drilled and logged the first exploration well, Mopane-1X, in block PEL83 off- shore Namibia. The well confirms the discovery of a significant column of light oil in reservoir-bearing sands of high quality. In the coming weeks, Galp will continue to analyze the acquired data and anticipates performing a drill stem test to assess the commerciality of this discovery. In the meantime, drilling opera- tions at Mopane-1X will proceed to explore deeper targets. Upon completion, the Hercules semisubmersible, managed by Odfjell Drilling, will be relocated to the Mopane-2X location to further evaluate the extent of the Mopane discovery. Payara development begins production In mid-November, Hess Corp announced the startup of produc- tion from the Payara development on the Stabroek Block offshore Guyana . The Prosperity floating production, storage and offload- ing (FPSO) vessel is expected to reach its initial production of 220,000 gross barrels of oil per day (BOPD) over the first half of 2024 as new wells are brought online. Production capacity on the Stabroek Block is now approximately 620,000 gross BOPD. In total, six FPSOs with a gross production capacity of more than 1.2 million BOPD are expected to be online on the Stabroek Block by the end of 2027 . Diamond Offshore Drilling entered into a drilling contract with an independent operator to utilize the Ocean BlackRhino for work offshore Guinea-Bissau. The Ocean BlackRhino was awarded a one-well contract with a minimum duration of 30 days, representing $15.4 million of additional backlog, exclud- ing mobilization. Work under the new contract is expected to commence in July 2024 in direct continuation of the rig's cur- rent contract with Woodside in Senegal. Evaluation continues on Suriname Block 52 after new oil discovery by Petronas PETRONAS has made an oil discovery at the Roystonea-1 exploration well in Suriname’s Block 52. The well, located about 185 km offshore in a water depth of 904 m, was drilled to a total depth of 5,315 m. It also encountered several oil-bearing Campanian sandstone reservoir packages. Further evaluation is being undertaken to determine the full extent of this discov- ery and its potential development synergy with the Sloanea-1 discovery, which was made in 2020 within the same block. Sparta deepwater development in US Gulf advances as Shell and Equinor take FID Shell and Equinor have reached final investment decision (FID) for the Sparta deepwater development in the US Gulf of Mexico . Production is expected to begin in 2028 , with expected ultimate recoverable resources currently estimated at above 250 million bbl. The development plan includes eight production wells tied back to a semisubmersible floating production unit. The Sparta platform is a replication of Shell 's Vito and Whale proj- ects, enabling a standardized design approach. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 7 DEPARTMENTS • DRILLING & COMPLETION TECH DIGEST Integrated cementing solution saves 18 hours on subsea well in US GOM Using casing while drilling, Hunt Oil was able to reduce the number of runs required on the Macoveiu 3900 well in Romania, leading to cost and time savings. Hunt Oil and Odfjell Technologies set European depth record for 20-in. casing while drilling in Romania Odfjell Technology recently worked with Hunt Oil to reach a European depth record for 20-in. casing while drilling (CWD) in its Macoveiu 3900 well, located in Bazau, Romania. CWD was selected as the solution to mitigate possible surface hole hazards like shallow gas, formations sensitive to swabbing, tight hole and loss of circula- tion, as well as to achieve time savings for the surface section . A cap was set on the maximum achievable working flow rate due to rig surface equipment limitations. This flow rate ceiling was lower than what was required for optimal operational performance, so this scenario required additional analysis of the drill bit per- formance, wellbore hydraulics and hole cleaning. The existing 20-in. casing by 24-in. bit design was analyzed, opti- mized and validated for the expected conditions. A CWD record-breaking depth of 798 m below rotary was recorded . By implementing Odfjell Technology’s CWD services, Hunt Oil reduced the num- ber of runs required with significant saving on time and cost thanks to the elimination of conventional bottomhole assembly handling and tripping times. The operator was also able to achieve its drilling objectives on this 24-in. section by using Odfjell’s casing running tool , torque turn computers, manual handling tools and hydraulic power tongs with high-torque capacity and power packs. There were also no recordable incidents or accidents recorded during the opera- tion. Expro recently completed a well cement placement project for a large international operator in the US Gulf of Mexico (GOM) . Inner-string cementing was delivered for a subsea well’s 22-in. surface casing in a water depth of approximately 2,000 m in the Mississippi Canyon area. That was integrated with Expro's Cure technologies to allow the operator to overcome ongo- ing offset well challenges. These included prolonged wait on cement (WOC) periods when transitioning directly from the jet string to the 22-in. surface casing, and tasks associated with drilling out a 22-in. shoetrack. The integrated cementing solution helped save approximately 18 hours of cement-related drill-out, clean-out and WOC time compared with offset wells. The Cure technologies also removed the requirement for a shoetrack to be left in the casing string, preventing cement sheath-related challenges. Transocean Norge semi earns DNV notation for greenhouse gas abatement Late last year, the Transocean Norge became the first semisubmersible to receive DNV’s Abate (Power+) notation, following upgrades designed to lower the rig's greenhouse emissions during opera- tion. The notation is designed to reflect the best industry practices in greenhouse gas abatement for offshore units and rep- resents a comprehensive energy and emis- sion management system aligned with ISO 50001 standards. It emphasizes rigor- ous monitoring of energy consumption SLB, Nabors to scale adoption of drilling automation SLB and Nabors Industries are embarking on a collaboration to enable 8 PRECISE or Nabors’ SmartROS rig oper- ating system. and the implementation of operational and technical strategies to reduce emissions. Transocean implemented several key strategies to ensure the rig meets these customers to integrate the companies' “Our collaboration with Nabors will standards : comprehensive monitoring drilling automation applications and provide E&P customers and drilling con- of energy consumption, optimization of rig operating systems . Customers will tractors across the globe with greater operational energy, use of closed bus ties have access to a broader suite of drill- access to high-performance drilling to minimize the number of idle engines, ing automation technologies and greater capabilities, including Neuro autono- and variable frequency drives in rotating flexibility to utilize existing rig control mous directional drilling,” said Jesus machinery to optimally control the power systems and equipment on either SLB’s Lamas, President, Well Construction, SLB. for large rotating machinery. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R DRILLING & COMPLETION TECH DIGEST • DEPARTMENTS Surge Energy uses Latshaw Rig 10 to drill 18,325-ft lateral in Permian in 12.5 days Four years ago, Surge Energy worked with Latshaw Drilling and Pro Directional to drill what it said was the longest known lateral in the Permian Basin at the time, at 17,935 ft. Now, the companies have exceed- ed that lateral distance in another Permian well. In Q4 2023, the companies drilled the Succubus-Rougarou 24-37 7AH well in the Wolfcamp A play in Borden County, Texas, with a total horizontal displacement of 18,325 ft. The well, which was drilled by Latshaw Drilling’s Rig 10, was executed in 12.5 days from surface to its total measured depth of 24,879 ft. This marked a six-day reduction in drilling time from the 2019 well, where the total measured depth of 24,592 ft was reached in 18 days. This drop in time was primarily enabled by the elimination of a planned trip, said Jeremy Christopherson, Drilling Manager at Surge Energy. The 2019 well featured a planned trip at 15,000-ft vertical sec- tion because the operator was unsure if the bottomhole assembly (BHA) could last beyond that distance. The 18,325 -ft lateral in the 2023 well was drilled in one conven- tional directional BHA run – this marked a company record for Pro Directional for the longest lateral drilled in a single run with motor and MWD. “These rigs can only rack back so much pipe in the derrick, and with the well in Compared with a previous well with a 17,935-ft lateral that was drilled in 18 days, a new well with an 18,325-ft lateral has been drilled by Latshaw Rig 10 in just 12.5 days. This time reduction was primarily enabled by eliminating a planned trip at 15,000 ft. 2019, we felt that a 15,000-ft run in the lat- eral was probably all the motor could take, and we should trip and have a planned trip to change out the bit and the motor,” Mr Christopherson said. “We ended up tripping back in, and it takes a long time to round-trip from that depth. With the well we just drilled, we just decided to keep drilling with the BHA.” Christopherson said. The total vertical and counterclockwise to get weight on bit depths (TVD) for wells drilled in the com- during sliding operations to work slack-off pany’s Midland acreage since entering the weight down to the bit. region in 2016 have ranged between 5,500 The operator is currently running three and 8,100 ft. The 2023 well had a total ver- rigs in its Midland Basin acreage – in addi- tical depth 6,794 ft. tion to Latshaw Rig 10, it’s also operating “When we started drilling out there, Latshaw Rigs 18 and 20 in Howard County. we were drilling a lot of 1.5-mile, 2-mile “I find Latshaw very easy to work with,” laterals, and we slowly stepped out to he said. “They have a rig type that’s very drill longer and longer laterals. But it’s suitable for our style of drilling, particular- an area with very shallow TVDs. One of ly being able to go back on existing pads. the things that makes these longer later- The rigs move quickly, and the company als more challenging is that, when you’re has really good hands . They’re the old- Surge Energy holds more than 100,000 looking at around 6,000 ft of total vertical school farm boys who can fix everything net acres in the Midland Basin, with depth, we might not have enough weight with a wrench. You don’t have to get a its core acreage located in Borden and to push 18,000 ft of pipe to TD the well,” Mr computer tech to fix a lot of stuff, and that Howard counties. The acreage presents Christopherson said. To address this, the works really well for us.” major drilling challenges because the res- operator used standard friction reduction ervoirs are located in shallow depths, Mr tools and rocked the drill pipe clockwise Drilling of the most recent well uti- lized conventional mud motor and mea- surement-while-drilling (MWD) technol- ogy, and it was drilled 100% in zone. Surge Energy also reported no lost time due to downhole dysfunctions. The well is expected to be completed and brought online in the first half of 2024. DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 9 DEPARTMENTS • ENVIRONMENT, SOCIAL AND GOVERNANCE Apache lends support to well pad restoration research in Permian Basin By powering the Askepott jackup from shore via the Martin Linge A platform, Equinor expects to achieve a 20,000-ton reduction in CO 2 . KCA Deutag to electrify Equinor’s Askepott jackup KCA Deutag is set to carry out a major project to electrify Equinor’s jackup rig, Askepott, in Norway. The electrification project, which will be delivered by KCA Deutag’s Kenera business unit, will make the Askepott rig the first in Equinor’s portfolio to be powered from onshore when it is completed in Q4 2024. Askepott will receive power from high- voltage cabling via the Martin Linge A platform . The platform is already sup- plied with power from shore through the world’s longest alternating current cable and is located 42 km west of the Oseberg Field on the Norwegian Continental Shelf (NCS). Based on previous records and pre- dicted calculations, it is anticipated the project will result in a reduction of 20,000 tons of CO 2 per year compared with run- ning with traditional diesel generators. As a key part of the project, Kenera will convert the existing mud treatment room on Askepott to an electrical power room and install transformers, variable fre- quency drives and high-voltage switch boards certified to DNV classification requirements. Kenera will provide a turnkey solution, including initial procurement, detailed engineering and installation and com- missioning, before handing the project over to Equinor and KCA Deutag’s team in Norway for the day-to-day operations onboard Askepott. In a previous energy optimization project, Kenera had deployed CO 2 and nitrogen oxides reduction technologies on the Askepott rig, as well as Equinor’s Askeladden rig . Northern Lights collaboration targets CCS digitalization 10 Apache Corp is partnering with the Borderlands Research Institute (BRI) at Sul Ross State University in Alpine, Texas, to launch a well pad restoration research project. Researchers at BRI and Texas Native Seeds, a project of the Caesar Kleberg Wildlife Research Institute at Texas A&M Kingsville, will investigate methods to improve habitat restoration efforts in the Permian Basin . The goal is to publish a science-backed, best practices reclamation document to be shared with other Permian operators. The project will explore how changes in the industry’s collective approach to restoring end-of-service well pads can have broader benefits to local biodiversity and reunite fragmented habitats. Typically, at the end of a well’s service life, the well is plugged and the pad is reseeded and allowed to gradually return to a natural condition. This project looks to accelerate a more vibrant return to nature by considering alternative soil prepara- tion techniques, adding biochar to improve soil fertility, and incorporating undesirable scrub brush as a vegetative cover to hold soil moisture and discourage grassland animals from foraging on the seeds before they germinate. Additionally, the project will measure increases in soil carbon to passively sequester CO 2 in healthy desert soils and will support Sul Ross State University stu- dent research through BRI. ADNOC, Santos to explore global CCS platform ADNOC and Santos have signed a stra- tegic collaboration agreement (SCA) that SLB and the Northern Lights Joint ital platform, which was deployed to outlines a pathway toward the potential Venture have signed an agreement to streamline the subsurface workflows of development of a joint global carbon man- work with Microsoft to optimize integrat- Northern Lights in 2022. agement platform that could support the ed cloud-based workflows for Northern Microsoft will deploy and extend its Lights operations. The collaboration Azure platform to ensure scalable cloud aims to contribute to the development of services that support Northern Lights’ Additionally, the SCA encompasses the scalable and cost-efficient digital solu- business and the SLB digital CCS work- advancement of critical carbon capture tions for the emerging carbon capture flows. SLB and Microsoft are also collab- and storage (CCS) technologies and the and storage (CCS) industry. orating to develop an Azure-compliant exploration of a CO 2 shipping and trans- In the initial phases , SLB will extend open-source data platform that will portation infrastructure network to enable the digital CCS workflows and numeri- serve as the digital infrastructure for heavy-emitting sectors capture, ship and cal simulation systems on its Delfi dig- Northern Lights. permanently store CO 2 . decarbonization journey of customers throughout the Asia Pacific. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R OIL & GAS MARKETS • DEPARTMENTS Wood Mackenzie: Continued consolidation, caution around upstream spending among key trends in 2024 Key themes to watch for in glob- al and corporate upstream this year, Upstream investment by region according to a new report from Wood Mackenzie, include continued consoli- dation, increased activity from national 600 oil companies (NOCs), reversing decar- tion multiples, easier access to finance for larger companies, lower costs and better execution are some of the incen- tives. “For deals to work, they need to demonstrate improved operational, financial and, for some deals, emis- sions performance,” said Fraser McKay, Head of Upstream Analysis for Wood Mackenzie. NOCs: COP28 has placed greater US$ billion playbooks and an upstream investment Consolidation: Higher market valua- The global land drilling rig market is Middle East Russia and Caspian Europe Oceania a Oceani ambitions in low carbon and emissions abatement . However, upstream growth will still be on the agenda for most NOCs . The Middle East will lead much of the growth, with ADNOC, Saudi Aramco and Kuwait Petroleum Corp increasing their spend to meet domestic capacity targets . They may also target more merg- ers and acquisitions . “The NOCs have reset financial strength and will target M&As to plug strategic gaps in gas, LNG, short-cycle oil and international explo- ration,” said Neivan Boroujerdi, Director, Corporate Research and NOC Lead . Decarbonization: Wood Mackenize forecasts production will rise by 3% in 2024, and decarbonization won’t keep up. Upstream scope 1 and 2 emissions will increase by 12 million tonnes of CO 2 e year-on-year. Shifts in strategic playbooks: There will also be continued adjustments to the strategies of oil and gas compa- totaling an estimated 4,559 in 2023, accord- 4% increase compared with 2022 and 32% compared with the low point of 2020. 300 Westwood also forecast that global land drilling rig demand will average 4,718 2000 20 units between 2023 and 2027. On a regional level, China is forecast to 100 lead the demand, accounting for 28% of the 2020 2021 2022 2023 2024 Source: Wood Mackenzie Lens Upstream The Middle East will continue to be a drilling hotspot this year, driven by an increase in upstream spending. global total. The country will continue to drill deeper wells in shale gas plays and increase activity on mature fields as part of efforts to increase domestic production. In the Middle East and North Africa, demand from the Gulf Cooperation Council (GCC) countries is forecast to grow by almost emphasis on sustainability plans. The effect for some NOCs will be bigger in 2020 and 2021, with demand for rigs December rig market forecast. That is a 4000 40 0 continuing to recover from the lows seen ing to Westwood Global Energy Group’s 5000 50 bonization gains, shifts in strategic plateau. North America Asia Latin America Africa Westwood forecasts positive outlook for global land rig demand through 2027 have to grow cash flow if they want to grow dividends, rebalancing capital allocation toward investment to main- tain sustainable cash-generating busi- nesses.” Upstream investments: Operators will remain focused on resilience, sustain- ability and efficiency. Most will exercise caution in the face of inflation, bottle- necks and price uncertainty, with con- fidence undermined by widening OPEC+ production cuts. Global spend in 2024 will reach just over $500 billion , up just 2% from 2023 after a rise of 18% over the past three years, all in real terms . “Investment will rise in the Middle East but fall in the US Lower 48,” said Ian Thom, Director of Upstream Research. “The new project pipeline remains healthy, with 45 projects vying to take final investment decision – a potential investment commitment of $170 billion to develop 25.5 billion BOE. Around 30 will proceed in 2024. Many of these will 50%. In Latin America, meanwhile, many countries are expected to see declines. Argentina will be the exception there, with development of the Vaca Muerta Shale Basin continuing to support increased demand. In the US, the outlook is relatively flat, as operators continue to prioritize capital discipline. In Russia, the outlook remains negative due to the impact of Western sanctions stemming from the Ukraine conflict. While the overall market outlook is gen- erally positive, utilization is still a rela- tively weak 52%, reflecting the contin- ued oversupply in the market. The global capable land rig fleet was estimated to be approximately 9,000 as of November. However, demand for high-horsepower rigs (2,000-hp or more), which account for less than 1,400 of the total capable rig fleet, is expected to be strong in regions like China and the GCC countries. Westwood believes there is potential for these regions to be undersupplied with high-spec rigs in the later years of the forecast. nies, driven by sustainability concerns, be deepwater discoveries, with the 10 And it won’t just be in those regional stakeholder pressures and low valua- biggest deepwater oil projects requiring hotspots where high-spec rigs will be in tion multiples . “Investors want a reli- $52 billion of investment for recoverable high demand , as operators will continue to able, growing base dividend as a reward resources of 5 billion barrels of oil.” drill more complex wells while aiming to for rising energy transition risks,” said Global economic weakness or a loss maximize value from each well. This will Tom Ellacott, Senior Vice President of of unity in OPEC+ are key investment mean more positive outlooks for contrac- Corporate Research . “But companies will wildcards. tors with high-spec rigs in their fleets. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 11 CRITICAL ISSUES IN DRILLING & COMPLETIONS ADNOC Drilling looks to digital and integrated services solutions to drive better well deliveries Automation, decarbonization and accelerated training programs among other key strategies to drive efficiencies, prepare for the future Abdulrahman Abdulla AlSeiari, CEO, ADNOC Drilling BY STEPHEN WHITFIELD, SENIOR EDITOR What do you see as the biggest chal- lenges that the global drilling industry currently faces? With the current situation of the drilling business globally and in the Middle East, the biggest challenge is the availability of talent. It will be quite difficult for the industry to operate without new talent. The new energies are perhaps more attrac- tive to them than coming into the drilling industry. As industry leaders, we need to work on attracting talent in our direction. That may require us to show off some of the work we’re doing related to technology adoption, digitalization and other things that might resonate more with that talent. What is ADNOC Drilling doing to attract new talent? We have put a lot of investment into different kinds of programs that allow us to secure those people. For UAE nationals, we have dedicated programs for develop- ment where we’re targeting young people for positions within the organization. One of these programs is designed specifi- cally for junior students, and they work full time as a derrickhand for a mini- mum of six months before they move on to another position. We train them in both theoretical and practical aspects of different positions on the rig, and we promote them to different positions over the course of two to three years. They’re assessed at each position, and we see where they fit. 12 We have another program for gradu- ates where we develop their competencies until they’re good enough to become full- fledged drillers – that’s also a three-year program. We’re trying to capitalize on these individuals and push them faster up the ladder – not so fast where they don’t gain the knowledge, but fast enough. We’ve had guys come into our organi- zation as roughnecks, and after going through this training, they’re in the posi- tion of a driller. You mentioned showing off the work our industry is doing with technology and digitalization. Can you talk about some examples of ADNOC Drilling’s digital projects? One example is our real-time monitor- ing center at our headquarters, where we see the performance of wells on a daily basis, and we can work with our clients to overcome any inefficiencies, or invisible lost time, using data. It’s a win-win for the drilling company and for the opera- tor. We’re both benefitting from using that information. We’re also managing some of the oilfield service operations through the monitoring center. That has allowed us to reduce the number of people needed to be onsite because we put our subject matter experts in the center to monitor our operations. These efforts have been focused primar- ily on directional drilling and geosteering, and this has helped us to realize substan- tial efficiency improvements. Moving on to the subject of autonomy, what do you see as the key barriers to achieving fully autonomous drilling? Do you think that’s something we can realistically achieve? I think it is something we can achieve, but we’re always going to require some integration with the human on the rig. When you’re drilling, not every hole is going to require the same method, and you have to interact with the well, deal with certain issues, troubleshoot in some areas. When we talk about offshore, there are opportunities to automate certain process- es. We’ve tried to do this on our jackups in the past where we automate certain activi- ties. It worked, but somehow it was more inefficient than what we were doing before because of the processes we had to work through. Now, there are other technologies that we have to work with, particularly with moving pipe from the deck to the rig floor – that’s something we can look at. With our island rigs, we’ve done quite a lot of automa- tion, and it’s been quite successful for us. The biggest challenge for us has been with land rigs. We’ve found automation has been quite difficult for us to achieve there, simply because we keep changing locations every few weeks from one well to another. We have to dismantle the rig, move it to another location, assemble it again . We’ve found challenges with short circuits damaging some of the equipment on the rig – sometimes we’d have cables and fittings not going together, and then, say, the top drive would short circuit and that would cause NPT. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS Nevertheless, I see there is a big oppor- tunity when we’re talking about the whole process of drilling the well. I think it’s something we can work out, maybe get to a point where we can have a well drilled on autopilot but still have someone around just in case we need to interrupt the pro- cess or something goes wrong. That’s pos- sible, and it doesn’t require major technol- ogy investment. What are some of your main consid- erations when deciding whether to invest in a new digital/automation technology? Do you see that capital discipline and cost are holding the industry back from achieving more technical advances? For us to invest in anything, we have to look at what we’re going to get out of it. What is the end result of the investment? We’re not just going to invest in something and not expect to get something out of it. Look at our investment in remote opera- tions, which is something we can justify and which can make our clients happy. The payback is there. We definitely want to go for those types of investments. But it’s a case-by-case basis in terms of look- ing for opportunities for investment. Beyond remote operations, one area where we’re really looking to invest is in decarbonization of the rig, especially the newbuilds. If I look at investing in electri- fication of the rig, there’s a direct benefit: We can stop burning diesel. There are two elements to that – one, the net-zero ele- ment, and two, we lower our fuel costs. Diesel is very expensive these days. Those are definitely things that attract us. I know that ADNOC Drilling has already invested significantly in reducing its carbon footprint over the past few years. What further efforts can the world expect to see from your com- pany in the next 2-5 years around ESG? The major part for us is the engines that we use to operate the rig. Electrification will be a major solution for that. For the new rigs we have coming in, it’s much easier to incorporate the systems needed to electrify the rigs into the design from While ADNOC Drilling ordered 16 newbuild hybrid power land rigs in 2023, it is also prioritizing the electrification of existing land units like Rig 52. The contractor also continues to seek ways to achieve value through automation on land rigs, which can be challenging due to the frequent moves involved in onshore drilling. day one. For our existing rigs, there will be a lot of work required. Those are going to be focus areas for us. Another area we’re looking at is the amount of waste that gets created in the drilling process. How can we manage that waste in a way that protects our environ- ment? That could mean thermal treatment of the cuttings, reinjection of the cuttings or other different ways for us to look at that. Right now, we have 30 mobile camps for treating wastewater, and because they’re working in remote locations, we have to use diesel engines to power them. We’re looking into using solar power for those camps. If that goes successfully, just imag- ine having all of those camps equipped with a solar system. On top of that, we’re working on battery energy storage sys- tems for our land rigs. So, there’s a com- bination of several different technologies that we’ll continue to work on in the near future. As we move forward, we’re going to see more activity. We’re going to target cer- tain production capacities that have to be sustained. As that happens, the amount of ESG activity within our company is going to increase. We want to deliver 25% emis- sions reduction by 2030 and become net- zero by 2045. We have to deliver. Let’s talk about the rigs some more. You’ve already spoken about electrifi- cation and low-carbon systems going on the rigs, but what upgrades to the rig are you considering in order to improve drilling efficiency in the near future? To me, that is not just a question of efficiency. It’s about improving safety on the rig and protecting our people. We take safety as one of our major priorities – if there’s an area where we can invest that makes people safer, we will not hesitate. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 13 CRITICAL ISSUES IN DRILLING & COMPLETIONS part of the drilling market? Has your work in the drilling services segment changed or enhanced the work you do as a rig contractor? ADNOC Drilling is continuing to seek ways to automate specific activities on its jackups, such as on the Al Yasat jackup located offshore Abu Dhab i (pictured). One opportunity being considered, for example, is technology that automates the pro- cess of moving pipe from the deck to the drill floor. The tools that will make our rigs safer are also going to make them more efficient. We’re looking at how we can better design our rigs to reduce the risks our personnel face, for example, with the management of loads. We’re looking at whether solutions related to digitalization can help. All of our rigs are equipped with CCTVs, and we’ve done a pilot with a computer vision sys- tem where you can identify unsafe situa- 14 tions on the rig, like if people aren’t wear- ing the right PPE. The system sounds an alarm to the driller so he can stop and deal with that. We’re shifting gears with that right now, so hopefully soon we will have a product that can generate additional value. ADNOC Drilling began offering inte- grated drilling services in 2018. What drove that decision to step into this It has definitely helped us. What is every client concerned about? They want the well to be delivered safely, efficiently and cost effectively, and integrating ser- vices brings all of that together under one umbrella. When you have lump sum contracts, you’re contracting with a company to bring the rig in, another company that does the directional drilling, and other companies in the process. Everybody wants to hit their targets, and these targets may differ a little bit, so you’re going to see some inef- ficiencies. But when you have integrated solutions under one umbrella and one leader, you have synergy. You can ensure everyone’s on the same page. Now, drilling companies are in charge of the safety of everyone else out there on the rig. Whether that’s the driller’s personnel or third-party service company person- nel, it’s all the responsibility of the drilling company. To us, offering integrated ser- vices improves those efficiencies. That’s why our market share has been increasing continuously. Today, we offer integrated services for around 45-50% of our fleet. We’re targeting 55-60% within the next two years. We’ve managed to demonstrate the effi- ciency of integrated services to our clients, resulting in savings of around $300 mil- lion since we started the program. So, we’re satisfied, although we’re still looking to improve. We’re looking at increasing the local manufacturing of some of our drilling fluids, for instance. We see this integrated offering as com- plementary to our drilling business. I’ve worked on the driller side and the operator side, and I think both sides need to work hand in hand to deliver the well. That’s why I’ve been very much pushing for us to develop this integrated solution. ADNOC Drilling also handles well com- pletions, which are normally not part of a drilling contractor’s expertise. What is your company working on to improve completions efficiency in the coming few years? JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS There’s a lot that can be done in the completion cycle, provided that we get the right technologies. I’ll give you an example on the unconventional side. We’ve been seeing a lot of unconventional activity in the US, Canada and even China, and there’s a learning curve with the technologies that they’ve gone through, a lot of new technologies they have introduced into the process. For us, the question is how can we bring those learnings into the system and short- en this learning curve? I don’t need to start at step one. I can jump-start from where they are and take the lessons they’ve learned in those regions. There are a lot of good technologies that can be introduced for completions that we’ll be working on. In late 2021, ADNOC Drilling announced an alliance with Helmerich & Payne (H&P). Can you talk about any lessons you might’ve gained from this collab- oration so far and what value has been generated? In 2022, ADNOC Drilling drilled a 50,000-ft well from Umm Al Anbar, one of ADNOC Offshore’s four artificial islands in the Upper Zakum field offshore Abu Dhabi. H&P is well-known for their work in the unconventional space. They came in as partners, and we’ve purchased eight rigs from them so far – we’re probably one of the first companies to own our own H&P FlexRigs. All of those rigs are operational and running very smoothly. We both see value in each other, and we both want to take this partnership to the next level. Definitely, there is more we can work with, and we will do what we can to make this partnership even more successful. DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 15 CRITICAL ISSUES IN DRILLING & COMPLETIONS Petrobras relying on innovation, close supplier collaboration to keep cost escalation in check Safety and sustainability are also seen as critical priorities as the NOC embraces new well control, emissions reduction technologies BY LINDA HSIEH, EDITOR & PUBLISHER From your role at Petrobras, what do you see as the biggest near-term challenges for the drilling industry? In the short term, we are faced with the challenge of successfully executing our entire planned well campaign, given the significant number of projects that need to be implemented in the upcoming years. Looking ahead to the medium term, it is crucial for us to ensure the economic feasi- bility of these projects, taking into account the escalating prices and the high demand from the industry. What impacts has Petrobras seen from global inflation or supply chain bottlenecks on its drilling campaigns? The significant impacts are driven by the escalating prices, resulting from the limited availability of rigs in the market and the overall supply chain constraints. Consequently, we have been proactive- ly addressing these challenges through innovation, effective performance man- agement, and close collaboration with our suppliers, with a particular focus on stra- tegic planning. Where is Petrobras looking for cost reductions? Innovation is key. We have several examples to highlight, including opti- mized open-hole well configurations, Drill Through wellhead systems and new bit technologies. These advancements are part of our innovation portfolio, which 16 Carlos José do Nascimento Travassos, Executive Officer for Engineering, Tech- nology and Innovation, Petrobras aims to increase reliability. This will result in higher well productivity, as well as cost and emissions reductions, while main- taining or improving operational safety and integrity. Considering Petrobras did not get the environmental license to drill in the Brazilian Equatorial area, what are Petrobras’ plans to get this authoriza- tion? What challenges has Petrobras seen with rig start-up operations in Brazil? Is there closer collaboration with rig contractors to ensure the startup pro- cess is smooth? The environmental licensing process for the Equatorial Margin is proceeding as expected, with the responsible authori- ties posing relevant questions about our operations and our team providing clear responses to address them. This exchange is a normal part of the process. The good news is that we have suc- cessfully obtained the environmental license to initiate drilling activities in the Potiguar Basin, which is also located in the Equatorial Margin. The drilling operations in the Potiguar Basin began in December 2023. Additionally, we are con- fident in our progress toward obtaining the environmental license to drill wells in other basins of the Equatorial Margin, such as the one located in the Amapá coast. Current startup processes have pre- sented several challenges, such as lack of trained personnel, supplier difficulties – manpower and inventory – and under- estimation of the challenges related to heating up a cold-stacked rig. To overcome this challenge, we are working closely with drilling contractors from contract signing through mobilization and up to the campaign start, promoting the exchange of lessons learned and careful planning. Petrobras is starting up several rigs for operation in 2024. What is being done to make sure that, on the operator side, you will be read y? Immediately after the contract is signed, a rig acceptance and start-up group is formed. In this group, all relevant stake- holders are brought together toward the overall goal of having the unit operating safely ASAP. During this phase, discus- sions and actions related to equipment preparation and readiness, inspections and legal and regulatory requirements take place. What upgrades would you like to see drilling contractors make on their drill- ing rigs? What equipment or technol- ogies would make your drilling opera- tions easier or better? It is common for companies to perform market analysis, projections and prospec- tive evaluations. When it comes to technological aspects, there is no doubt that measures to enhance efficiency and safety must be consistent- ly implemented. Notable advancements JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS include emissions reduction technologies, improved BOP shearing capacity, riserless (open sea) operations, robotics and intel- ligent rig equipment. How is Petrobras using automation/ digital technologies? Can you talk about any projects where they have demonstrated valu e? Digitalization has been a major transfor- mational driver toward higher efficiency and safer operations, with widespread adoption throughout the organization, both in terms of development and user adoption. One notable innovation is the digital twin for real-time well integrity moni- toring (WISLIVE), which has been devel- oped through partnerships between the company and universities. WISLIVE has significantly contributed to improving safety during operation and production, effectively preventing unforeseen integ- rity issues that could potentially result in production interruptions. Currently, all pre-salt wells are under continuous moni- toring with WISLIVE. Furthermore, we can also highlight the POÇOWEB platform, which enables faster and standardized design conception and efficient management of ANP (Brazilian National Agency for Petroleum, Natural Gas and Biofuels) documents. By automat- ing workflows and integrating specialized tools, POÇOWEB improves agility and effi- ciency in these processes. Are there specific areas of well con- struction where you think innovation is most urgently needed? Safety, safety and safety. Safety is more than important. Embracing the possibilities that technol- ogy can offer in this field is the way forward. We must leverage technology to minimize risk exposure, employ artifi- cial intelligence for making complex and reliable decisions, and implement digi- tal monitoring and remote operations, all with the aim of enhancing reliability, integrity and safety. Regarding BOP technologies, Petrobras is leading the market with technical spec- ifications that enhance the equipment’s shearing capabilities. Additionally, the reduction of greenhouse gas emissions is a rapidly increasing demand in our industry, and Petrobras is also foster- ing the market by offering incentives for reducing diesel consumption in new rig contracts. Our long-term vision also comprises some disruptive concepts, such as reel casing and drilling operations that involve alternative rock removal and flex- ible casing. What do you see as the biggest chal- lenges and technology gaps for well completions today? One of the key challenges is to enhance reliability, which in turn leads to improved safety and productivity in pro- duction systems. This can be propelled through the development of technologies such as electrification and continuous monitoring. Petrobras is transitioning toward all- electric systems, incorporating intelligent completion valves and subsurface safety valves to enhance productivity and reli- ability in full field developments. Furthermore, continuous monitor- ing, such as through fiber optics, has the potential to optimize reservoir manage- ment. We know that drilling rigs usually make up a rather small percentage of an E&P’s total emissions. Are drilling rigs a key part of Petrobras’ emissions reduction efforts? What would you like to see drilling contractors do to assist with your efforts? We are facing a time where any and every reduction is necessary, and it is up to all of us to take all possible actions to decrease emissions. Regardless of the scale, every reduction is valuable. In this way, we have been actively promoting the engagement of drilling contractors in developing innovative technologies to reduce diesel consump- tion, incentivizing them through contract incentives. We firmly believe that col- laboration is the most effective path to progress. How do you view the importance of carbon capture, utilization and stor- age (CCUS) efforts in the energy tran- sition? The energy transition process is a movement that does not take place homo- geneously. In reality, we could talk about energy transitions, which are defined from national solutions that respect the history, capabilities and resources of each country. The need for differentiation in the forms of transition and the time in which it will take place is especially true when we think about a fair transition. This requires balancing a transformation of energy systems toward low-carbon tech- nologies, at the lowest possible cost, and expanding the population with access to energy. Thus, there are several pathways for the energy transition, and I see CCUS as one of them. The energy transition requires significant efforts from coun- tries and companies, and CCUS is part of those efforts. Other measures must be taken along this path. Each company must assess its portfolio to operate in a safer, more efficient and environmentally responsible manner. We consider CCUS as a critical enabler to meet the government’s and private sec- tor’s commitment to net-zero targets – CCUS requires collaboration among gov- ernment, industry and the public. The Petrobras CCUS program, which is implemented in the pre-salt fields, was considered in 2021 and 2022 as the larg- est in the world in operation and is also the pioneer in ultra-deepwaters. Based on the lessons learned, new studies are being designed to enable cost reduction and expand the frontiers of CCUS appli- cation. It’s clear that Petrobras expects to reduce emissions in its projects and is investing in technologies and initia- tives for this purpose. Are we only talk- ing about new fields or is there also the perspective of emission reduction in revitalization projects? D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 “Petrobras innovations” continued on page 21 17 CRITICAL ISSUES IN DRILLING & COMPLETIONS Scaling up efficiency in a digital future will require better data management, standardization Recognizing value of data-driven decision making, Murphy Oil is placing greater focus on increasing agility around technology, innovation Molly Smith, General Manager of Drilling and Completions, Murphy Oil BY STEPHEN WHITFIELD, SENIOR EDITOR What would you say are some of the biggest challenges that the global oil and gas industry currently faces, and how do you think the industry should best address those challenges? From Murphy’s perspective, I’d say that advancing our strategic priorities is key to addressing those challenges. For one, we need to deliver to our share- holders and partners. Our primary focus is maximizing free cash flow to alleviate debt and return value to our shareholders. In the past three years, Murphy has reduced its spud-to-production time by 64%. How have we done this? Primarily through an operational strategy that centers around applications and tools that allow for the real-time sharing of best practices across our organization and with our service partners. That’s been really important to us. Our drilling and completions team has also been dedicated to accelerating the well delivery process. Our approach to execution involves deploying two rigs on the same pad, accompanied by frac crews chasing the rigs to put our new wells online early. In doing so, we’ve often encountered inconsistent operations, but we have addressed that by implementing robust measures that mitigate irregular- ity and improve both reliability and effi- ciency. We also need to explore, and Murphy is committed to exploration. In addition to delivering our developmental well pro- gram in the US Gulf of Mexico, we drilled a discovery in early 2023 and are currently 18 drilling another prospect. Our organiza- tional structure and technical planning have allowed for the agility to navigate the dynamic regulatory environments that we’re facing. Murphy’s looking to expand its footprint this year – we’re planning to enter Côte d’Ivoire and drill in Vietnam. Still, there’s a lot more we can be doing. I believe we need to enhance data captur- ing and quality to highlight inefficiencies and delays in project delivery, specifically real-time monitoring. That’s going to help us streamline our operations. We also need to prioritize sustainable practices and adopt proactive measures to mitigate the impacts of our operations on the environment. And we’ve got to invest in upskilling the workforce. The land- scape of the energy industry is constantly evolving, and we need to bridge the gap. You mentioned data capturing. The industry already captures a wealth of data from its wells, and with the increasing prevalence of digitalization, the amount of data available has only increased. Do you think the industry is making the best use of the data it has at its disposal? You’re right – the amount of data is con- stantly increasing with the modernization of devices, the development of IoT devices and sensors, as well as the digitalization of workflows. This brings demands for higher quality and higher quantities of data. As an industry, we’ve been focused on increasing the quantity of data, but now we’re looking to integrate these new tech- nologies together. We’ve got to shift the priority from increasing quantity to solv- ing the challenges involved with integrat- ing these technologies. We need to look at the lack of standardization with our data, and we need to create useful reporting and analytics structures to generate more value. Looking at what Murphy’s doing, we’re trying to find ways to help our data lead to better and more strategic outcomes. Our drilling and completions team has been collaborating with our subsurface and production teams on creating a data infrastructure that’s allowing us to manip- ulate and analyze large quantities of data by applying an intelligent standardization, Murphy Unique Well Identifiers (MUWIs). MUWIs have helped us integrate a diverse system of data, improving data management and increasing data utiliza- tion across our organization. On top of that, our open-source data cul- ture is allowing us to ask better questions about where our data is coming from, how we’re using that data, who the stakehold- ers are within our organization and, most importantly, what the interdependencies are within the data that lead to whatever insights we can glean. What do you see as the next steps for helping the industry gain better insights from its data? I think the answer to this question ties into some other issues we’re seeing in the industry. Right now, we’re struggling with JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS volatile market pricing, upskilling and retaining our workforce, and attracting new and diverse talent. It’s really impor- tant that we have a data strategy that addresses these challenges and allows us to meet our business objectives. With that in mind, I think there are three things the industry needs to focus on with data. First, standardization needs to improve so that we can reduce the time we spend engineering data and increase the time we spend analyzing data. Second, we need to invest in innovating machine learning and artificial intelligence meth- ods so that they can fit with more indus- try-centric datasets and workflows. And third, we must improve the efficacy of our data-modeling methods so that they can give us a more comprehensive under- standing of our operations. Eric Hambly, Executive VP at Murphy Oil, put it best in some of his townhall presentations: As an industry, if we don’t learn to adapt our strategies toward data, we’re going to go extinct. There’s no in- between. Stepping back to a broader topic , we’ve seen the industry significantly increase its adoption of digital tech- nologies in recent years. What kind of value has Murphy Oil derived from digitalization? Can you provide some examples of the benefits you’ve seen? The industry has undergone a shift in recent years, with more widespread adop- tion of digital technologies. Murphy is working to leverage this digitalization to enhance our operations, and that goes back to data: In order to really get the most value out of digitalization, we have to harness the power of our data as best as we can. My vision for innovation to scale up efficiency in a digital future is reflected in many initiatives we have at Murphy, such as enabling a procedure to store data under different tags by classifying via fuzzy logic. I also spearheaded an ini- tiative to digitize our Safety Observation Program, which has revolutionized our safety workflow, in my opinion. The initia- tive also enabled the digitalization of our onshore operations through our Integrated Operations Platform program, and I’ve supported the launch of the Murphy Labs Apps store, which integrates multidisci- plinary data with transparency to drive real-time analytics. Right now, I’m focused on the inte- gration of digital solutions like machine learning and data processing. Overseeing drilling and completions means that safe- ty must be at the forefront of any initiative we undertake, and our approach ensures that we’re all working as one unified team. Do you see the industry embracing the digital mindset as much as it needs to? Embracing technology is an ongoing process, and leaders across the indus- try have started realizing the benefits of adopting technology and modernizing their processes. At Murphy, we recently implemented a structure to adopt tech- DRILL DEEPER. RUN LONGER. SET RECORDS. Don’t take our word for it - the data speaks for itself. CONNECTION DISCOVER MORE AT drillpipe.com/settingrecords D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 www.drillpipe.com 19 CRITICAL ISSUES IN DRILLING & COMPLETIONS Jomax Drilling Rigs 1 and 3 are pictured on a Murphy pad in Canada. Murphy’s onshore approach has focused on deploying two rigs on the same pad, along with frac crews employed onsite, to help bring new wells online early. This strategy has been key in helping Murphy accelerate its well delivery process. nology and drive innovation . Our orga- nization has become more responsive to shifts in the digital landscape by adopting machine learning, cloud computing and robotic process automation. By adopting all of that, we’re driving value for our shareholders and producing more sustain- able operational practices. The industry is focused on more data- driven decisions and supporting more con- trolled risk experimentation – which leads to incremental improvement – versus the more transformational changes that come from pure innovation. This commitment to long-term continuous improvement, with regular assessments and refinements to our protocols, will help us evolve regard- less of the volatility of the pricing markets. However, without standardization across the industry, I think we’re going to be challenged to embrace the digital land- scape in ways that benefit more than just our company. There are several examples where we’ve faced this type of challenge. In 2019, we created a software program called the Global Downtime Report that measures NPT related to drilling, completions and 20 production operations. It was something we came up with while we were assessing existing workflows and tools across our assets at the time. We saw that there was a need for a consistent visualization of NPT to help us identify areas of concern and improve operational downtime. We had another project where we creat- ed a digital app for our Safety Observational Tool. The tool collects and processes safety observations in real time from our employ- ees and contractors, analyzes that data and converts it into various graphs and visuals that can help us identify hazards, predict trends, take corrective action and reinforce desirable behaviors. The app is available on everyone’s cell phones and tablets, so that can really help us speed up the collection of safety data. If someone spots a hazard in the field, they can put that information into the app and give specific details like the date and time of the hazard, the equipment being used, the rig, the vendor, the location. Then there’s the proposed framework we have for normalizing tags for com- pletions data with no standard naming convention, categorization or tracking method. We complete our onshore wells through multistage horizontal hydrau- lic fracturing. A typical well will have between 20 to 40 stages, and the data set we compile for each well is comprised of one Excel file for each stage. Each stage has time series data for around 150 tags. With more than 18,000 stages executed, that’s more than 2.5 million tags. That’s a lot of tags. On top of that, the data quality within each Excel file is inconsistent. Some tags are referenced differently from well to well, and this can cause large variances in the data set. That makes it impos- sible to run any meaningful analytics on our completions data. So, we’ve been working to drive adoption of a standard- ized tagging framework with our service partners. Are there any other innovations you’d like to see around completions? I would say that we’ve been innovating our completions onshore at Murphy. With respect to unconventionals, the majority of our CAPEX lies within completions, and JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS we’ve seen large production gains with easily executable optimizations. In 2023, we implemented a real-time perforation optimization that was spurred by the high treating pressures we saw when pumping 90% recycled produced water in our Tupper Montney asset. This led to record production levels for us in Canada. I’m also optimistic about refracs. We’ve had tremendous success re-entering and pumping our optimized frac designs on parent wells as part of our development program. It’s remarkable that we’re out- performing initial production rates on wells that have been producing for over a decade. Looking to the future, I think there is more we can do to leverage data from existing wells. In the Eagle Ford, we have nearly 1,000 wells drilled and completed, totaling more than 1.925 million ft of lat- erals. In some of that footage, we have permanent fiber optics installed along the wellbore – now that’s big data! You’ve spoken in the past about the importance of oil and gas evolving in the ESG space. What steps do you think the industry needs to take to fur- ther that evolution? At Murphy, we’re fortunate to be able to experiment with various methods that allow us to learn and adapt quickly in this space. Building on our successful dis- placement of diesel with natural gas on “Petrobras innovations,” continued from page 17 We are talking about all projects. Revitalization projects are a great exam- ple of the energy trilemma: more produc- tion, less emissions and lower costs. One highlight is the Marlim field’s revitalization, featuring the replacement of nine platforms with two new FPSOs, which started production in May and August 2023 and present a combined 150,000 BPD oil production capacity and a 560,000 BPD liquids-processing capac- ity. both rigs and frac fleets, we’re now pilot- ing additives and even hydrogen in our onshore business. When these pilots are successful, we can easily translate any learnings into offshore. On top of that, we’re continuing to reduce our water intensity through the creation of an onshore water management app that allows transparency of the full water lifecycle. As an operator, what do you think of the investments drillers have made in emissions reduction technologies like battery energy storage systems? There have been strides on that front. We’re constantly challenging our service partners to innovate within this space, and we’ll support that innovation through a variety of pilot programs and partner- ships. Regarding battery storage systems, Murphy is going to begin utilizing those in our onshore drilling program starting in 2024. Focusing on Scope 1 emissions, specifically power management, we feel there are quick wins that are easy to implement, and we’re continuing to trial technologies that will further reduce our carbon footprint. The recruitment and retention of young talent hat been identified as one of the key factors in helping the industry sustain its future in the long term. What can the industry do better Both new FPSOs feature technologies to reduce emissions, such as high-efficiency burners, nitrogen assistance, cogeneration and low fugitive emissions valves. Additionally, new well construction techniques and designs are being applied, whereby fewer sections are drilled and less tripping is required, reducing con- struction time and, thus, contributing to lower emissions while maintaining safety and integrity. Furthermore, the Marlim revitaliza- tion also includes the decommissioning of nine platforms following the green decommissioning model. to help bring them into the fold and keep them here? I can say from Murphy’s perspective, all of our departments, including drilling and completions, are invested in work- force training, rotational development programs and one-on-one mentorships to support our business strategy. Our teams are designed to attract and retain top tal- ent, both in the office and in the field. We want to empower employees at all levels and foster leadership opportunities. Now, we’re embracing technology to automate routine tasks, but this will allow our skilled workforce to focus on more com- plex activities. In summer 2023, our D&C and subsur- face teams collaborated by hiring two data science interns through the Murphy Internship Program. One participant was a PhD student studying medical data sci- ence. This person had zero energy indus- try experience coming in, but in just 10 weeks they were able to solve a complex data challenge associated with fiber in horizontal onshore wells. I think collabo- rations like this highlight the potential of an important new pipeline of workers. We need to promote diversity across all backgrounds, including but not limited to field of study and experience, gender, race, ethnicity and more. Diversity is key to helping us innovate and solve complex problems, so we’re constantly working to bring talented individuals into our indus- try and retain them. DC Under that model, the focus is on gen- erating value and promoting a circular economy, safety and respect for people and the environment, aligned with the best ESG practices in the global industry. It also involves the abandonment of 90 wells and 1,200 km of pipelines, bringing improvements in efficiency and reliabil- ity. As a result of the reduction in the num- ber of platforms in operation in both fields and the implementation of new technolo- gies, there will be a 55% reduction of green- house gas emissions per year from station- ary production units. DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 21 CRITICAL ISSUES IN DRILLING & COMPLETIONS Skilled workforce, innovations in drilling engineering among Aramco’s key tenets for success On drilling rigs, the NOC would like to see more use of advanced robotics and integration of automation solutions into control systems Najeeb Al-Abdulrahman, VP and Chief Drilling Engineer, Saudi Aramco BY LINDA HSIEH, EDITOR & PUBLISHER From your perspective as Vice Presi- dent and Chief Drilling Engineer for Saudi Aramco, what do you see as the biggest near-term challenges for the drilling industr y? As we try to meet global energy demand, there is a great and immediate need for new talent as the market conditions have improved and operations are scaling up. As we deploy new cutting-edge technolo- gies, it is imperative that we have a skilled workforce that can utilize such technolo- gies and assist Aramco in sustaining its position as a global energy leader. How can innovations in drilling engi- neering help the industry to achieve better drilling performance and better wells? Can you talk about what Saudi Aramco is doing to improve its drilling engineering? Innovation in drilling engineering is a key factor toward enhancing performance and delivering quality wells. As new tech- nologies are introduced and deployed, they can minimize human error, reduce cost, automate repetitive tasks, enhance safety, optimize reservoir performance, and real- ize countless other tangible benefits that holistically contribute toward achieving better performance. As for what we are doing to improve, Saudi Aramco Drilling Engineering has a team of highly skilled, well-motivated talents, both local and expats, that drive a culture of excellence. Development of our people is one of our key success factors. 22 We consider ourselves industry leaders so we go the extra mile. You see in-house developed Aramco SMEs on the board of industry bodies such as the American Petroleum Institute involved in major deci- sion making that steer the industry. We pay attention to quality in our well design and construction so that our wells can last long, which ties into our drive for sustain- ability. We also pay careful attention to the environment with a drive toward zero impact, which also ties to the company’s and Kingdom’s Net-Zero vision. Additionally, we leverage quality pro- cess such as Operational Excellence and are in the forefront of innovation and technology deployment. This is reflected in the amount of intellectual property and granted patents we have achieved over the years, many of which are in the process of being commercialized. An example is the retrievable ESP sys- tem, JumpStart, that we developed from concept to reality. We have several cus- tomized solutions developed in-house, in addition to extensive collaboration with industry technology giants. Our optimiza- tion process includes drilling real-time monitoring, prediction and mitigation tools that are built on AI, robotics and Big Data platforms – all of which help to enhance the safety and efficiency of our operations. Where will Saudi Aramco be looking in the next one to two years for cost reductions in its drilling programs, now that rising rig demand is pushing up dayrates and there is inflation throughout the supply chain? I would like to emphasize that we have always strived to optimize our well plan- ning processes and drilling programs. In the next one to two years, we intend to continue with enhancing our drilling pro- grams through implementation of new technologies and AI solutions aimed at helping us improve our well quality and to optimize resources. When you spoke at the IADC Advanced Rig Technology Conference in Sep- tember 2023, you mentioned that you place great focus on collaborative team building. Can you talk about that approach ? In our industry, collaboration is the cor- nerstone of progress. Our approach is to break the silos by having partnerships with service providers, rig contractors and rig manufacturers to share knowledge and expertise, and work together to create new opportunities for them in order to reach win-win situations. One example is the JumpStart project mentioned earlier and the patents commercialization efforts we are pursuing. The Saudi Arabian market is among few places in the world where we are seeing a significant rig newbuild pro- gra m. What innovations would you like to see on these newbuilds to make them “rigs of the future”? JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS Building “rigs of the future” is something that all of us aspire to in Saudi Aramco, and we are working with our partners to achieve that. For the newbuilds, I would like to see automation systems and rig robotics, and smart power management systems to help reduce carbon emissions. Are there any upgrades that you would like to see drilling contractors make on existing rigs? Start with low-hanging fruit such as process automation. As mentioned ear- lier, I would like to see the existing global rig fleet being retrofitted with automation systems that are integrated with the rig control system to automate drilling and connection activities, along with rig robot- ics, to ultimately improve performance, enhance safety and ensure consistency. A lot of new AI and machine learning- based systems have been developed to help improve the efficiency of well planning and drilling operations. What do you see as the biggest roadblocks to the widescale implementation of these technologies ? I believe that rig compatibility with new AI and machine learning-based systems is one of the main roadblocks to implement and scale up these technologies. This also applies to vendor-to-vendor system inte- gration challenges. The industry needs to adopt new standards for integrating digital systems to speed up the adoption of these novel AI and machine learning-based sys- tems. AI and rigs automation will comple- ment each other to achieve the best of all. Can you talk about any projects in which automation and digital tech- nologies have demonstrated value in your work at Saudi Aramco? I can highlight two projects that have had an impact and demonstrated value in our operations in Saudi Aramco. The first one is drilling automation systems; these systems have been deployed on some of our rigs and enabled us to drill better, safer and more consistent wells. In addition, we have a digital stuck pipe prevention solution, which was developed Saudi Aramco believes the integration of AI and machine learning-based tech- nologies with the rig control system, as well as vendor-to-vendor system integra- tion, remains a significant challenge. Having standards for such integration could help to speed up the adoption of those new technologies across the industry. in-house to have real-time monitoring and insights of downhole conditions, which will improve the decision-making process to avert possible stuck-pipe incidents. If we look at well completions specifi- cally, what do you see as the biggest challenges and technology gaps? The biggest challenge is the time it takes to deploy completion systems with smart technologies in deeper extended- reach wells and the challenge to de-com- plete them in case of failures. A good example of this is the recent installation of modified level 5 completion in some of our fields with dual PDHMS (permanent downhole monitoring systems) and ESPs. How can drilling contractors assist with your carbon reduction efforts? We would like drilling contractors to adopt the latest technologies for measur- ing and controlling carbon emissions. This can be done through deploying smart power management systems, proven fuel catalysts and energy storage systems. What is your vision for the future of drilling, say, 20 years from now? How would you like to see drilling engineer- ing change during that time? In the coming two decades, the drill- ing industry will undergo a revolution- ary transformation, where foundational principles will merge seamlessly with pioneering technologies. The core values of safety, environmental stewardship and operational efficiency will remain para- mount, while cutting-edge innovations such as automation, robotics, AI and ener- gy integration will revolutionize the drill- ing industry. As for drilling engineering, I see this domain evolving significantly, where engi- neers will embrace new well completion methods utilizing non-metallic materials, harnessing advanced real-time simulation tools and embracing autonomous drilling practices. Further, as the industry transi- tions into the digital era, our industry must cultivate an environment conducive to attracting and retaining diverse talent, focusing on long-term career growth for professionals with strong STEM skill sets. The blend of enabled workforce, vision- ary leadership and global responsibility will define the future of drilling. DC JumpStart is a trademark of Saudi Aramco. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 23 CRITICAL ISSUES IN DRILLING & COMPLETIONS Drillers seek ways to maintain capital discipline while still investing to keep rigs competitive Despite market optimism, drilling contractors remain wary of focusing on growth when it doesn’t translate into shareholder return Dan Hoffarth, CEO, Citadel Drilling BY STEPHEN WHITFIELD, SENIOR EDITOR What would you say are some of the biggest challenges the industry faces in the unconventional space, and how do you think the industry should address those challenges? I think the biggest critical issues for us are still going to be focused on utilization and people, but I believe that 2024 will be a better year than 2023 – or at least, the back half of 2023. I think we need to go back and look at what happened in 2022 and 2023, so we can figure out where things need to go in order to have a more desirable outcome in 2024. What we’ve seen is decreased gas prices really hitting in places like the Haynesville, the SCOOP/STACK and the Eagle Ford. That drop in rig count has a direct impact on everyone’s books. It’s a major key indicator to understand that we need both consistent gas and oil prices for drilling contractors to have a decent busi- ness model. We have a bunch of super-spec rigs sit- ting on the sidelines because of the drop in gas prices. That creates market pressure, which creates pricing pressure and a loss of jobs. You’ve got 15 to 18 people per rig, and then you add on the associated servic- es, so we’re talking around 150 jobs per rig. Where do those people go during a period of inactivity, and what does the industry do when gas prices recover? I believe they will recover in 2024, and we’re going to have to go back to the mar- ket and try to find some of these people. A lot of them will say they’re not coming back to the oilfield because they found another pretty decent job without the ups and downs. As an industry, how do we continue to fight the cyclical nature of our business where we are putting people to work and then letting them go? I guess the cycles are just part of the industry, aren’t they? 24 I mean, that is the industry. We have to be able to manage our assets based on a cyclical outcome. We’ve never had anything other than cycles in the drilling space. More than just people, that also cre- ates challenges around equipment. How are we going to meet operators’ equipment needs when we don’t have a confident view on utilization? More importantly, how can drilling con- tractors be expected to invest the capital required to improve and maintain top level equipment if there is not a clear path to both payout and profitability? That’s going to continue to be another major challenge for the industry as we move forward. You mentioned the super-spec rigs. As gas prices go back up, how important will it be for drillers to have those rigs ready to work quickly? The best rigs in the market get picked first every time. Super-spec rigs have prov- en time over time to create the greatest degree of production per day of any unit of machine. To me, that’s paramount. For any operator, if you have that choice, you’re going to want the higher pump capacities. You’re going to want the high- er torque capacities out of the top drive. You’re going to want the greater racking capacity. You’re going to want to have a moving system, a handling system for the BOPs and the most advanced fluid han- dling systems. And then you’re going to want all the digital applications. When we take a look at production per rig year over year, and why we need fewer rigs to produce more than we did 10 years ago, it’s the quality of the equipment. It’s also important to look at the quality of the people, the quality of the digital assets, the quality of the engineering – but none of that can shine if you don’t have the machine behind you that has the capacity. You cannot race a Formula One race in a stock car. It doesn’t matter who your driver is, or who your pit crew is, or what the track is. You will finish last in every race. For the past few years, we’ve seen a focus on capital discipline from E&Ps, and that’s had a trickle-down effect throughout the industry. Even now, the most recent quarterly reports from E&Ps have touted returning cash to shareholders. As we see a gas price recovery, do you think capital disci- pline will still be the MO for the industry moving forward? If so, how does that affect your business? We need to maintain a balance with regards to every part of our business. On one pillar, we need to have balance with our equipment – keeping our equipment at a super-spec level and in top shape. On another pillar, we need high-quality JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS employees who can thrive in this busi- ness. The leadership team is the third pillar – having leaders who can see where the business needs to go and how to evolve that business. But then there’s a fourth pillar, which is shareholder health. If we don’t have shareholder health, I don’t see how you can succeed. The shareholder requires a mar- gin on their investment. I can’t think of a shareholder out there in a personal or cor- porate capacity that will knowingly invest in any company without the expectation of a full return on that investment plus a premium. There’s a very basic expectation of getting a return on your investment, and that’s rarely happening, if at all, in the contractor space. I am also not saying it’s been happening that much at the operator level either, but in today’s world when the typical inves- tor makes a choice to invest in the energy space and they can choose between a drill- ing contractor or an oil company – rarely do they choose the driller. It’s always great to focus on growth, but if that growth isn’t translating into share- holder return, you need a different model. So, I think capital discipline is going to be a continued focus for everyone moving forward. From a spending perspective, how do you maintain the balance of being disciplined while still investing in the equipment that keeps your rigs com- petitive? Are there any areas where you see a bigger bang for the buck? The number of newbuild rigs have always been the canary in the coal mine telling us whether we’re successful in maintaining that balance. We aren’t seeing a single North American land-based drill- ing contractor building new rigs right now, and they haven’t for years. Obviously, that balance was not there, and it continues to not be there. What are our options, then? For those of us that are in the super-spec rig space, the key priority is maintaining super-spec status. We went from the three-generator to the four-generator models. We’re con- tinuing to increase racking capacity. Drill pipe selection has continued to evolve. We’re looking to increase pumping capaci- Citadel is working to incorporate more automatio n into its rig fleet, including on Rig 5 (pictured ), especially in terms of turning manual tasks into mechanized pro- cesses. The company has also invested in its own operating system to allow for more flexibility and better integration with digital technologies. ties across the board. And then we started looking at all the areas where we can become more streamlined in our opera- tions. On top of that, we’re continuing to drill wells faster and faster. For Citadel Drilling, between 2019 and 2022 we drilled an extra 37 wells year-over-year on average. The average days per well went down from 23.8 days to 18.4 days in that time frame. Our total footage drilled in 2022 was 320,000 ft higher than what we drilled in 2019. We’re not staying flat. We’re still finding ways to increase production. The equipment is not taking a break, so you have to take main- tenance extremely seriously. In 2022, we worked our rigs every single day. In 2023, the only days our rigs didn’t work was dur- ing the recertification process. However, going back to what I said ear- lier, shareholder value has to stay in the forefront. We can’t spend every dime we have on upgrades. We have to generate returns. What are you doing on the digitaliza- tion front? One of our primary focuses has been the integration of digital products and equipment. We didn’t know what that was going to look like, but we had to have the flexibility to go down those roads. So, owning our own operating system was a key element for us to maintain that flexibility. We’re one of the few drilling contractors that has its own software for an operating system. On one side, we focus on programmable drilling features, such as auto driller, MPD, ECD management services, as well as other inter-program things like auto-downlink for RSS tools, auto trip, auto pipe working features and anti-collision. On the other side of digital assets, we partner with companies that excel in that space and integrate that technology into our rigs to ensure we provide our clients with the most modern and optimal solu- tion the industry has to offer. We’re seeing an increase in lateral lengths in unconventional wells, and now three-mile laterals are becoming more commonplace. Is today’s rig equipment capable of consistently drilling these longer laterals, or are we going to need upgrades? I think we can continue to push the thresholds there, but we’re always going to find a new weak link in that equation. At one point, with the three-mile lateral, the weak link was the drill bit. Then it was the fluids that we were using to maintain wellbore stability. Then it became a ques- tion of whether we can effectively frac at that distance. And we started checking off those things. So, then it comes back to the drilling rig. What’s the full capacity of the der- rick? Can we rack the vertical depth plus three miles of 5½-in. drill pipe in that der- rick? I do believe there is a potential need in the future to have new substructures, new derricks and new racking boards with additional capacity. Pump pressure continues to be important, and pressure D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 25 CRITICAL ISSUES IN DRILLING & COMPLETIONS requirements are almost definitely going to go up. We’re also starting to look at whether to evolve from 10,000-lb to 15,000- lb pressure-pumping systems and what type of substantial upgrade to drilling rigs that would require. Can this all be done? Absolutely. Is there a cost to it? Absolutely. Is there an expect- ed return on that cost? Absolutely. I don’t believe drilling contractors can continue to foot the bill for these upgrades without a return to their shareholders being an outcome of that equation. Are drilling contractors and operators aligned on who should bear what costs, or is that a conversation the industry still needs to have? It depends on what level that conversa- tion is happening, and which companies are having that conversation. Everybody has a different view. This is a conversation that requires a high degree of emotional intelligence. This isn’t about being adversarial. The operator’s shareholders can easily be the same shareholders that drilling contrac- tors have, and if that shareholder doesn’t get the same degree or likelihood of return on their investment, in both places, they’re going to choose one company to back. As soon as one of those companies runs out of shareholders, we become challenged with the inability to create the outcome desired by the other company. This is where you go back to the disci- pline of those companies. Some compa- nies are going to have that discipline, and others may just need the cash flow to keep working so they might make a different decision. In the long run, the companies that maintain capital discipline and don’t take an emotional approach to these con- versations are going to be the ones left standing. Going back to digitalization, what’s your opinion on whether the industry is making the best use of its data ? If you don’t think that’s happening, how can the industry get better at that? I think the industry is still trying to figure out how to scrub the data for value, or what is relevant data they should be 26 looking at. There are also legal challenges around data ownership. One of the big disconnects I see of new technology being brought to market – you can maybe call it a criticism – is the con- dition under which it was developed. Was it developed under a condition where you have good relevant data, where you truly understand the dynamics of the prod- uct and the operator’s needs combined with the drilling contractor’s needs? That’s where you see a lot of the shortcomings in data and data transfers. How does this data directly translate to the tools we’re using? As we go up the ladder, how do we integrate that tool onto the drilling rig or into the process to generate a desired outcome? Another disconnect I see is that many of these companies developing data-reliant tools don’t own drilling rigs and never have. Without that level of understanding of the day-to-day operation of the drill- ing rig, how do you know what to imple- ment? Many times, a tool will look like a great plug-and-play model in the shop, but when you get to the rig site, who actu- ally attaches it to the drilling rig? Who’s responsible for the maintenance of that product? Where is the labor going to come from to manage it? The drilling rig moves a lot – different sizes of rigs that move from every few days to once or twice a month. When we’re moving the rig, who becomes responsible for the third-party equipment? How do we bring your tool down? How do we bring it up? Where does it sit? As a drilling contractor, we see hun- dreds of service companies approach the E&P company with a doghouse proposi- tion, and we’re left on the outside getting something handed to us that we have to use. And yet, we weren’t a part of the con- versation. That makes it really difficult for that digital asset or new technology to be adopted with open arms. That begs a question about standard- izing digital interfaces. Citadel has its own OS, and you’re having to work with all these different systems, some of them coming from the E&Ps with little input from you. Do you think the industry is embracing some kind of standardization? If not, do you see that as a problem? It is a problem, but it can also be a dif- ferentiator for a company. We’re in a free market. We don’t have standardization across drilling rigs. There are different pumps on the market that we can all buy. There are different top drives, different drill pipe. We get to make a free choice in regard to how we see our future play out, and that’s our bet to make. If we had built the same rig that any of the most respected drilling contractors in the industry had, they would beat us senseless just with the volume of rigs that they have versus what we have. I can’t come to the market with the same product; I have to have a differentiated product and service. This is a competitive industry, and I think that’s one of the things that keeps the industry moving forward the fastest. Standardization might seem like a really great concept to the digital provider, but to the smaller companies that are trying to get in, it limits our ability to exist or grow. Standardization is the fastest way to get something adopted by the most amount of people, but it cuts out new ideas, concepts and new entrants to the market. As automated systems become more prevalent on the rig, where do you see the driller fitting in? Do you share the view that automation is there to enhance the role of the human on the rig, not replace him or her entirely? I share the view that continuing to trans- fer tasks from human hands to more of a mechanized or semi-automated process is a good thing. Sequenced tasks, like a drill pipe connection, are the low-hanging fruit. However, I do see humans continuing to play an extremely critical role on the rig. It goes back to that disconnect around inte- gration with the rig – many of the compa- nies bringing in high-level automation to the market don’t own or operate drilling rigs. Is it now another screen that has to be added because it doesn’t work inside the rig’s OS, and the driller now has one more thing to be trained on. If the result is to just bolt on another operating system, this now becomes an additional risk. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS Every sales pitch says, “plug and play and walk away.” That’s great, but we then have to be able to ensure we can quickly develop competency among our drillers to use that equipment. You can’t expect the drillers to run everybody’s equipment, and that seems to be the expectation right now. We’re putting the driller into sensory overload. The goal with automation is to create a more consistent outcome, but if we are creating task saturation, then we’ll actu- ally create the opposite outcome. Citadel offers fully automated man- aged pressure drilling (MPD) systems through your subsidiary, Opla Energy. What value do you think MPD will pro- vide for the industry in the near-term future? I look at MPD in two specific categories, and they’re opposite of each other. One is kick control and one is performance- based. On the kick control side, this is a cautionary equipment measure to just take on flow when we don’t want it to happen. This is a very large slice of the business out there today. The future of MPD, to me, is performance-based, and I don’t even know if you call it managed pressure any- more. It’s a performance-based business that leverages managed pressure drilling techniques. I see these as two completely sepa- rate business segments. One is merely a flow control device that is utilized when problems are encountered. The other is a sophisticated combination of equipment, software and behind-the-scenes engineer- ing that has a primary focus on well optimization and performance. With per- formance-based MPD, the goal is increased ROP, decreased fluid losses, decreased fluid costs, improved hole stability, and repeat- ability from well to well. We’re moving toward a greater adoption rate of this equipment and, as the opera- tors learn more about it, they’re going to see the need for this to evolve their well- bore delivery programs in a more efficient manner, as well. The industry has seen a lot more focus on reducing rigs’ carbon emissions in recent years. What is your view on this, and has the energy transition had any impact on Citadel’s business? It’s had a very big impact. Being a pri- vate company, we have private sharehold- ers. Private equity sponsorship is depen- dent on competing for capital, and that capital comes from global sources, which demand you invest in an aligned sustain- ability approach. If you don’t do that, you’re not going to have access to that capital. Access to capital, combined with it being the right thing to do, is why sustainability is a big part of our business. The trend of operator consolidation is also going to impact us. One example is Oxy’s acquisition of CrownQuest (a sub- sidiary of CrownRock) in December. While both companies have been focused on environmental performance and sustain- ability efforts, you now have two compa- nies coming together under one entity and an even higher expectation on sustain- ability due to the public lens and nature of such a large deal. As a drilling contractor, we have to take these types of consolidations into account and create that focus on sustain- ability. This goes back to what I said about maintaining the super-spec rig, including investing in dual-fuel engines. If you don’t have them, you’re out, or you’re going to have to buy them. That’s going to be a price tag to entry. By our calculation, we saw a 54% reduction in CO 2 generated per foot drilled by utilizing dual fuel compared with diesel engines from 2019 to 2022. While we have had all engines with dual- fuel capabilities on all of our rigs from day one, we are now reaping the benefits of this decision. Speed is another tool we have. For a drilling contractor, continuous improve- ment on ROP is going to be important. That goes back to my point about having the best equipment that’s going to drill the fastest, and having the best people who are going to drill the fastest. By reducing the time to drill per well, we may be generating the same emissions over the course of a fully utilized year, but we create more wells. If we increase the level of performance, we also increase our sustainability. The end result is a higher well production count per emissions out- put year over year. The young workers coming up have placed an increased value on sus- tainability. How do you reach out to people who have serious concerns about the industry’s role in climate change? I have those concerns. I had those 30 years ago. Honestly, I think the best con- duit to change is not to fight that system, but to join that system and become a part of the improvement from within. We need this energy, and this energy is going to be produced regardless of who does it. My pitch to the young people is, if you have a moral connection to this and you want to improve it, the best place to do it is inside these companies. Become a drilling engineer that has the focus on creating the lowest carbon footprint per well possible. Become a superintendent in a drilling con- tractor company and ensure the moral performance of that company. That can only happen from the inside. What are your main concerns around rig safety right now? To me, it’s the level of care. I’ll go back 30 years to the early parts of my career. Where did we get our roughnecks from then? Well, they were brothers and cous- ins, they were from the family two farms over, they were a best friend of somebody that they knew. We didn’t have formalized HR departments. A lot of times, the drill- ers and rig managers were responsible for staffing their own rigs. You invested your time in this person to keep them safe because you had a moral obligation to them, their family and your family. To me, that’s still the primary way for us to impact safety around a rig. It is a per- sonal target. It is a personal goal. It is about people. We can add on all the wearable technology, and we can have the comput- er-generated training programs, but those are all just tools to assist. Creating safety is just a deep amount of caring for people, and that has to be a cultural achievement of your company. To me, that’s where the industry has failed the most, and that’s where the industry could increase our per- formance to the greatest degree. We’ve got to continue to care for each other at a level like we’re related. DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 27 CRITICAL ISSUES IN DRILLING & COMPLETIONS Old views of drilling, contracting must be shed so industry can drive meaningful improvements By adopting new contracting strategies, as well as automation and AI, ARO Drilling seeks to push for true step changes in rig performance Mohamed Hegazi, CEO, ARO Drilling BY LINDA HSIEH, EDITOR & PUBLISHER From your perspective as CEO of ARO Drilling, what do you see as the big- gest near-term challenges for the drilling industry, both for your com- pany specifically and for the global drilling industry? I think the challenge is twofold. The first is around how the public perception of our industry is changing as people are increasingly exposed to social media and messaging from different bodies, whether government or non-government, on cli- mate change and sustainability. That will have an impact on our industry. Second is attracting and retaining tal- ent. We need to make sure that people understand that this industry has both longevity and stability, because hydrocar- bons will be a part of the world’s energy mix for many years to come. The energy transition is not an on/off switch ; it will be gradual . I think that operators and even compa- nies like ARO Drilling have to start reach- ing out to the general public, like regular commercial brands. Instead of thinking about being B2B (business to business) or B2C (business to consumers), we have to think in terms of B2H – business to humans . We have to try and make sure people understand how our industry con- tributes to the world and how we’re taking steps to help with the transition . Is workforce attraction and retention as difficult a challenge in the Middle East as it is in other parts of the world? 28 It is definitely becoming increasingly more difficult to attract top talent . Here in the Kingdom of Saudi Arabia, for example, there is an ongoing transformation, and many new sectors are being built up, such as financial services, media and tourism. That’s putting a lot of pressure on the labor market, even though those sectors aren’t necessarily recruiting people with the same technical expertise as we are. But our industry needs more than just engi- neers – we also need people in support functions throughout the supply chain . For ARO Drilling, we have committed to building 20 new jackups in the Kingdom with our partner, International Maritime Industries (IMI) in Ras al Khair . This is a multibillion-dollar project, and it’s almost like building a new city. You need to create a whole new supply chain ecosystem that encompasses logistics, medical services, food & catering, training – everything you can think of. This is creating tremendous job opportunities. As you mentioned, ARO Drilling is in the early stages of a significant newbuild program, which is rare in the industry today. Since you have that opportu- nity to build new jackups, can you talk about how ARO intends to evolve rig design and/or technologies to create “rigs of the future”? Because the IMI yard i s a brand-new shipyard, it’s going to have a learning curve. For our first two rigs – the Kingdom 1, delivered in November, and Kingdom 2, scheduled for delivery in March – we’ve opted for designs that are modern, yet have high compatibility with existing rigs . As we kick off Kingdom 3 and Kingdom 4, we’ll be looking at different designs to make the rigs even more mobile and more environmentally friendly . We’ll be work- ing to adopt a lot more emerging and new technologies around automation, the inte- gration of data and artificial intelligence. B y the time we reach midway through this project, we want to be building rigs that are not only fit for Saudi Aramco’s operations but that also embody all the newest tech- nology advances available on the market. As you mentioned, this is really the only major offshore newbuild project hap- pening in the world today. I think we’ll definitely attract a lot of the innovators to contribute to it. I would imagine you’re already seeing a lot of companies wanting to enter this market. Yes, we have met with a lot of com- panies that want to be a part of this big ecosystem being built up in the Kingdom. However, I see that a lot of them have not taken the decision to set up their business here in Saudi Arabia. I think that, if you believe in this mar- ket , you need to be here physically. This kind of business cannot be done remotely. There’s a very high level of involvement required, from engineering to planning to having a very detailed supply chain loop . For companies that want to be involved, they need to come and physically be here in Saudi Arabia. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS The industry has been through signifi- cant volatility over the past decade. For a company like ARO, which is in the heart of one of the busiest and most dynamic markets in the drilling indus- try, what are your considerations when balancing between investing for growth and exercising capital disci- pline? The nature of our newbuild project is that it’s a two-way commitment: It’s a very CAPEX-intensive project, and it’s going to take place over a long period of time. Projects like this – you cannot switch them on and off . To circumvent the challenges you typi- cally see associated with the up and down business cycles, we engaged in offtake agreements between ARO as a client to the ship builder, and Saudi Aramco with ARO as the client to us . Basically, that means we commit to building the rigs, and Saudi Aramco commits to contracting them. In a way, this Kingdom series is shielded from any potential ups and downs in the mar- ket, so it gives us the bandwidth to focus on innovation rather than having to spend time on opportunistic business. Is this type of operator/contractor partnership something that compa- nies could emulate in other parts of the world? They can, but it needs a very high-level commitment from the government. In the Kingdom, the project is underpinned by the government’s strategy to secure ener- gy, food and medical resources – three things that were very tested during the COVID pandemic . So this project is playing a big part in their strategy to secure their own manufacturing and supply of rigs to be able to develop oil and gas fields, as well as to undertake carbon injection and stor- age in the future. So, yes, I think it can be done, but it needs a very high level of government commitment, which is present here in the Kingdom. What is your view on the value of automation and digital technologies in terms of drilling performance? For the Kingdom 1 jackup, which was delivered in November, ARO Drilling opted for a design that has high compatibility with existing rigs. However, moving forward with its newbuild program, the contractor aims to incorporate more features that will allow for much more advanced automation, data analytics and AI. My view is that automation, the use of data and even things that people some- times talk about in a joking way – like ChatGPT – are inevitable . They will make their way into the industry , and you can decide whether you want to manage it, or you want them to manage you . I firmly believe that automation will help the industry to improve efficiency, as well as lead to better safety by reducing people’s exposure to hazards . Moreover, it will make our operations more predictable and reduce our carbon footprint . Data analytics, I think, is still one of the most underutilized technologies in the drilling contractor business. Look at the aerospace industry, for example, and how they use data to analyze their jet engines, predict potential failures and plan for maintenance . Our industry is still very far from deploying that kind of predictive analyt- ics, which is good and bad. It’s bad because we’re late, but it’s good because it means we have a lot of potential to really change things in a short period of time. And we don’t need to reinvent anything – we can copy what’s being done in other sectors. What’s the biggest obstacle to making that change? I think it’s related to people’s mindsets. Some people still question the value of those technologies ; they still believe the traditional way of doing things is the only way and that drilling is more art than sci- ence . But science, data analytics, artificial intelligence and things like ChatGPT are all like co-pilots on a plane . The stronger your co-pilots, the better the whole flight can be. That’s where the industry is still talking a lot but not really acting very much. Why is that? I think that’s related to what you men- tioned earlier about the industry’s volatil- ity and the need for companies to think about how they’re committing their capi- tal. I think most drilling contractors think much more about that question of, what happens if there’s another cycle? The dif- ference with ARO – where we are unique – is that we’ve eliminated that uncer- tainty from the equation . We’re able to D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 29 CRITICAL ISSUES IN DRILLING & COMPLETIONS The agreement under which the Kingdom 1 jackup was built – and under which 19 other new jackups will be built – allows ARO Drilling to avoid the pitfalls associated with the drilling industry’s up and down cycles. This type of long-term partnership can also lead to better alignment between operator and contractor interests. think more strategically about how rigs are going to look in 10 or 20 years without worrying about having to really downsize in any major way . Since ARO is in such a special position, is there any advice you can offer around how operators and drilling contractors can better align their interests so they can create more value or forge better partnerships? I think there’s a lot of overlap between what operators and drilling contractors want , especially when you look at safety, operational efficiency and consistency . But, for drilling contractors who are not in a joint venture situation, the challenge is always going to be around competi- tiveness and commercial attractiveness. I think that having more long-term, com- mitted projects can make a difference, where the operator and drilling contractor each take some risk but also have some opportunity for rewards . You know, the format and the spirit of contracts in the drilling business is the same as it was probably 70 years ago – fundamentally dayrates, fundamentally 30 short term. That creates a certain behav- ior, both from drilling contractors and from operators. The challenge lies in the con- tract ing strategy ; it’s too volatile . Is that changing at all? I see some operators beginning to offer more integrated projects where they give a contractor a multi-year scope of wells to drill. I think these kinds of projects could trigger a change in contracting practice and give both sides more assurance. They might also help solve the labor and talent acquisition issue, because both sides are trying to hire the same kind of people right now. If the operators offer more integrated contracts, that might par- tially solve that problem. Going back to technology – if you had unlimited R&D funding , what would be your dream list of technical innova- tions that you would like to work on? As I mentioned earlier, a lot of work can definitely be done on automation . In addition to automating well construction processes, we should also look at automat- ing o ther processes that people don’t think about as much. For example, using drones for inspection s so we can eliminate the need for human interaction. We should also be looking at differ- ent power sources for operating the rigs. Maybe we can power a drilling operation with liquid gas, or maybe we can make more use of batteries. Batteries are not where they need to be for an operation like ours, but they’re evolving . Maybe some of the rig’s instrumentation can be powered by battery because they’re lower consump- tion and more predictable. We also haven’t looked into how rig moves can be powered differently – there may be a better way to do that rather than using diesel. Finally, we really need to look more at how to get artificial intelligence and things like ChatGPT much more involved in our business . There are companies look- ing at using ChatGPT for supply chain, for writing up contracts and policies and procedures , and even to do arbitrations . People often don’t approach technologies like this with an open mind , but in fact, these things progress very quickly. Before you know it, a lot of arbitration will be done through ChatGPT, and a lot of HSE policies will be written by ChatGPT . I don’t mean to dwell on ChatGPT itself because there are multiple variations of the same concept, but I think it’s an area we should explore in drilling. Anything else you’d like to see for the future of drilling in the coming years? I’d like to think that our rigs can be remotely operated , very reliant on data and more accepted globally as a reasonably clean way of prospecting for energy, which the world needs. Today, a jackup rig needs maybe 100 to 110 people in order to operate. In 20 years, can we reduce that number to just 10 ? Why not? We have to dream big and take big steps rather than keep making small incremental improvements . The industry hasn’t really evolved that much in the last 50-60 years, and the way the rig functions is still more or less the same. We need a step change in the industry, and we’re going to work on driving that change at ARO. DC JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS Amid regulatory headwinds, Australia seeks policy stability, growth for gas and LNG markets Industry must continue to position itself as a key player in energy transition, but needs broader support to attract the necessary investment Samantha McCulloch, Chief Executive, Australian Energy Producers BY STEPHEN WHITFIELD, SENIOR EDITOR What was the motivation behind your recent name change from APPEA to Australian Energy Producers? We were the Australian Petroleum Production and Exploration Association for more than 60 years, so it was a name that held us in good stead for decades. But when we looked at the role of our indus- try today and the role of the industry in our future, it’s actually broader. Of course, we’re exploring for and producing oil and gas, but our industry is key to net-zero technologies, and it’s key to the invest- ment in and deployment of low-emission fuels. We wanted a name that reflects that broader role of the industry. What do you see as some of the big- gest challenges facing the industr y in Australia? And what roles can organi- zations like yours play in helping the industry address those challenges? It’s a challenging environment as we transform our global energy systems to net zero. Australian Energy Producers has committed to net zero, and we see tremen- dous opportunities, particularly with the role of natural gas in that transformation, in terms of partnering with renewables to provide power to Australian homes and businesses. Gas will also play an important role in supporting manufacturing and new industrial opportunities. In Australia, we talk about critical minerals manufacturing opportunities, and gas can be a key partner in that. Even in a net-zero pathway, we still need oil and gas, so communicating that understanding and translating that into policy settings and support is critical. In Australia, it’s been a very challenging and dynamic policy environment for the past 12 months. We’ve had a range of interven- tions and policy reforms that have added to the cost and complexity of the operating environment and the investment envi- ronment for the industry. That’s had an impact in terms of our reputation. We’ve had some of our key international investors and customers raising concerns publicly about whether Australia is still a reliable supplier of energy. That’s some- thing that we, as an industry, are very concerned about. For example, we have seen court deci- sions overturning approvals for projects that had been approved by the nation- al regulator. We need new regulations to ensure meaningful consultation with Traditional Owners – Aboriginal and Torres Strait Islander people – as well as certainty for business. We need to ensure we have stability in policy setting and a policy environment that attracts new investment and enables us to continue to be a reliable, secure sup- plier of energy to the region. That’s really central to the work that we’re doing. What do you say to those investors who might be a little skeptical of Aus- tralia’s energy position? This all has been the result of months of policy interventions and change, and it has been concerning to the industry and the broader international investment com- munity. There are challenges in Australia’s operating environment, but we think we’ll see greater stability going forward. As an industry, we’re calling on the gov- ernment for policies that will encourage new domestic supply to ensure our energy security. We have abundant gas resources, but we are in a situation where energy authorities and the energy analysts are forecasting supply shortfalls. Also, we play such an important role in terms of regional energy security. Our LNG exports underpin many of our stra- tegic relationships in the region and sup- port decarbonization efforts. We want to ensure that we’re able to service the grow- ing demand for LNG and gas in our region. Can you provide some examples of regulatory changes that have had this negative effect on operating costs in the region? What kind of impact have they had, exactly? In our East Coast market – the largest market in Australia in terms of popula- tion density – price caps were introduced on the wholesale gas market toward the end of 2022 without industry consulta- tion. That created a lot of uncertainty, and it took quite a few months for us to just work through the details of how this was going to work in practice. It’s meant that projects have not been able to move forward. Investments that were aiming to supply gas to the domestic market have not been able to progress. Some gas supply D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 31 CRITICAL ISSUES IN DRILLING & COMPLETIONS A pair of workers inspect a turret on the Pyrenees FPSO, located in the shallow-water Pyrenees field offshore Western Australia. The Australian Energy Producers has pressed for an increase in the development of Australia’s gas field s, noting the signifi- cant role that natural gas will have to play in the energy transition. The association is focusing much of its efforts on com- municating that message to policymakers and hopes it will translate into supportive reforms. agreements were not able to be made dur- ing this period because of the uncertainty. That’s had a really big impact on the East Coast market. In parallel, we’ve had changes to the Australian Domestic Gas Security Mechanism, which provides the govern- ment with the option to interrupt LNG export contracts if supply to the domestic market is considered inadequate. These changes have caused some concern for interna- tional partners who rely on our gas to keep their lights on. We’ve also had changes to the Safeguard Mechanism – this is about industrial emissions reductions that apply to LNG facilities – and to the taxation and environmental approvals regimes. There has been a whole suite of changes and reforms in a relatively short span of time that have added to the uncertainty and the cost of operations in Australia. 32 Still, I believe it’s inescapable that we will need more gas for the energy transi- tion, both domestically and across our region, so I’m confident that we will be able to overcome some of the challenges we’ve seen. We just need to create a more supportive approvals environment as that will be key to attracting new investment and developing that gas supply. Currently, approvals are taking far too long when we consider the timeframe in which we’re targeting our net-zero goals. We just can’t afford to have approv- als processes for our projects take years and years. We need much greater clarity around that. We also need to minimize ad hoc interventions in multi-million-dollar investments. We need policies that provide stability and certainty so that companies have confidence to invest. You’ve been vocal about the impor- tance of the oil and gas industry being leaders in Australia’s energy transition . What would you like to see the indus- try d o? Again, it’s important to recognize that, even when we’re talking about net zero, that doesn’t mean that fossil fuels disap- pear. Even in the International Energy Agency’s (IEA) net-zero pathway, by 2050 we’re still going to see 20% of the energy mix being met by fossil fuels, and gas is going to be a key part of that. In addition to that ongoing role for gas production, there will also be a broader role for our industry in supporting emissions reductions. Low-carbon hydrogen is a key part of that, as well as carbon capture and storage (CCS). These technologies are vital for the transformation, and our industry JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R CRITICAL ISSUES IN DRILLING & COMPLETIONS The Chevron-owned Asia Excellence LNG tanker is one of several VLCCs (very large crude carriers) the operator is using to deliver LNG throughout the Asia Pacific region. LNG exports are a key lever in Australia’s energy policy. However, recent chang- es to the Australian Domestic Gas Security Mechanis m and the Safeguard Mechanism, as well as to tax and approvals schemes, have led to concerns from international investors over the reliability of the country’s energy supply. is well positioned to lead in their deploy- ment. When we look at the IEA pathways, we need to move from the 40 million tonnes of CO 2 being captured and stored today to about 6.2 billion tonnes by 2050. That’s a huge challenge, but it’s also a huge oppor- tunity for our industry. We have the skills and expertise, particularly with the sub- surface, to drive that deployment. CCS looks to be a huge part of Austra- lia’s decarbonization efforts: The country is home to one of the largest commercial CCS projects in the world, the Gorgon project, and the govern- ment announced new offshore green- house gas storage permits in 2022. You’ve mentioned in the past that Australia has unique technical and geological advantages to CCS. Can you elaborate? We have fantastic geology. We’ve done quite a bit of work in terms of mapping that geology and understanding it. We have the skills and expertise of the oil and gas indus- try. We have mature legal and regulatory frameworks – Australia was one of the first jurisdictions to have an offshore CO 2 stor- age framework, and we’re close to meeting domestic demand for CO 2 storage services. We’ve already had strong interest from countries in our region that don’t have the same geological advantages and know they’ll be relying on CCS technolo- gies. They’re looking to export their CO 2 to Australia for storage. This is another oppor- tunity for Australia and for our industry to support regional decarbonization. What are some of the obstacles you see in scaling up Australia’s offshore CCS capability? Going from 40 million tonnes to 6.2 billion tonnes would be a massive undertaking. I would just take a step back with that, though, and say that such a massive scale- up in CCS technologies underscores the challenge of transforming the global ener- gy system to net zero by 2050. The chal- lenges of scaling up CCS are not dissimilar to the challenges of scaling up in other sectors. We’ve got to triple our investment in clean energy. There’s a whole range of scale-up required across the system, and that underscores why we actually need a portfolio of technologies to get there. We know that CCS technology works. It’s been around for decades – there have been projects operating in the US since the 1970s, and Sleipner has been operating in the North Sea for more than a quarter- century, storing 3 million tonnes a year. We know we have the skills and expertise to deploy it. I think the challenge with CCS is just making the business case for it, providing the incentive for companies to actually make that investment. We can see in terms of what’s happening globally right now that there’s huge momentum behind CCS. Once those incentives and that policy support is in place, we’ll see huge interest in investing in projects. Globally, when we look at the projects that were either oper- ating or in development in the early 2010s, there were maybe 50 projects. Today, we’re up to around 400. While the scale-up is a challenge, it’s not an insurmountable one. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 33 CRITICAL ISSUES IN DRILLING & COMPLETIONS IADC has focused a lot in recent years on engaging with the next-generation workforce through our Student Chap- ter program, including a chapter at Perth’s Curtin University, and our Young Professionals Committee. What would you like to see the industry do in Aus- tralia to develop tomorrow’s talent? I think the Student Chapter program is a fantastic program, and it’s certainly important to engage with people early in their careers. With this younger genera- tion, we need to communicate that there are exciting career opportunities available in the oil and gas sector. The key challenge is that we don’t have this understanding of the long-term role of oil and gas in the energy mix, and par- ticularly the importance of our sector in the net-zero transformation. It’s going to be important to communicate that young people can do a huge amount of good working in this industry. It’s not just about energy security and the economic contri- bution that the industry brings, but also supporting that transformation. Additionally, these are highly skilled, well-paying jobs, and in many cases they are opportunities for having a global career. It’s important that we really communicate that opportunity for young people to build an exciting career. You’ve said previously that the indus- try’s role in the community is misun- derstood and that it’s important the industry doesn’t just “talk among our- selves” about the value of oil and gas. What can the industry do to better educate the public about what it does? How can we “win them over,” so to speak? It’s certainly a challenge, but we have an excellent story to tell as an indus- try. Here in Australia, we’ve committed to net zero, and we see ourselves as being key enablers of that net-zero pathway, but many people don’t appreciate the current role of gas today. People associate it with their home heating, but it powers about 40% of our manufacturing sector and plays a broader role with the electricity we gen- erate. Communicating those benefits to the broader community is a great benefit. 34 Also, within our industry, we’re focused on working with other industries to sup- port not just energy security and the eco- nomic benefits of our industry but also decarbonization efforts. We’re working with the Commonwealth Scientific and Industrial Research Organization to look at how we can support regional decarboniza- tion, support opportunities for CCS, low- carbon hydrogen, renewables and natural gas. This is a way that our industry can be working with other sectors on the decar- bonization pathway. A 2022 report – jointly commissioned by the Australian Energy Producers, the National Offshore Petroleum Safety and Environmental Management Authority, and the Offshore Alliance – focused on the mental health of off- shore workers in Australia. Have the findings led to any initiatives to address those challenges? This was a survey of workers that we undertook in 2021, well in the thick of the COVID-related impacts. We wanted to understand the general wellbeing and mental health of the workforce. We think this has been a really important initiative because it’s supporting a baseline for us to do future surveys and reports. We’ve been able to take the learnings from that survey and share them with the industry in workshops and events hosted by us and by the regulator. We need to ensure that our workers are supported, that they feel like they are a part of a community, and that they have access to the services that they need to ensure that their wellbeing is looked after in the workplace. Australia is one of the world’s largest LNG exporters, yet the country has only seen one LNG project reach FID in the last decade – Woodside’s Scarbor- ough project. What role do you see LNG playing in the country’s energy mix moving forward, and how will that affect drilling contractor s? Australia is a huge exporter of LNG. Our LNG exports in 2022 were around $92 billion, so it’s really important to our economy. LNG is also playing that role in our region for energy security and emissions reduction, so there’s a grow- ing need. When we look at countries like The Philippines, Vietnam, Cambodia and potentially even New Zealand import- ing LNG, there’s a huge market and a huge opportunity. But again, Australia has had some challenges in terms of being able to attract that investment. There’s still investment occurring, of course, for ensuring that we can keep the existing LNG trains operating in full so we can continue to meet that demand in the region. From an Australian perspective, we’d like to see another investment wave in LNG. The demand is there in our region. We’re close to these demand centers, and as countries shift away from coal, that reliance on LNG will increase. Australia is well positioned to play an important role. It’s inescapable that we have a strong demand for gas. Domestically, that requires new investment, and that means new drilling. Also, in our region there’s a huge demand growth. It’s a real pathway for drillers to see substantial demand, more investment and more activity. DC » Click to watch DC’s video interview with Samantha McCulloch. bit.ly/3Sq6fi2 JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R WORKFORCE DEVELOPMENT Next-gen petroleum engineering students: Flexibility, growth and culture among key motivators Students share personal perspectives of how they chose their majors and what’s influencing their choice to start an oilfield career STAFF REPORT One of the biggest challenges the oil and gas industry faces today is attracting and retaining younger talent. Even though hydrocarbons are expected to remain part of the energy mix for decades to come, it has become increasingly difficult to get younger voices to buy in. At the IADC Annual General Meeting in Austin, Texas, on 9 November, four petroleum engineering students – from the University of Louisiana at Lafayette (ULL), University of Wyoming, Louisiana State University (LSU) and Texas Tech University – shared their perspectives on how the industry can help address that challenge, as well as their own stories about how they are making their career choices. All four students are currently studying petroleum engineering and hold leadership positions at IADC Student Chapters at their respective schools. For some of these students, even though they knew they wanted to become engi- neers, this industry was barely on their radars at first – perhaps they grew up far away from the oilfield, like Patrick Stapleton from LSU and Clay Ostrander from ULL. For both of them, it was through talking with people who knew about the industry and learning about opportunities for travel and flexible work schedules that brought them into oil and gas. They were also attracted by the diversi- ty in potential careers, even just within the oil and gas sector, when selecting petro- leum engineering as their major. “You’re not siloed into one specific discipline. You can go worldwide, you can do drilling, you can do production, you can do reservoir. It’s up to your personal decision of where you want to go,” Mr Ostrander said. Another student, Cody Zayonc with the University of Wyoming, pointed to the practice of petroleum engineering itself as the thing that attracted him the most. “I knew I wanted to be an engineer, but when I started looking through all the options, quite a few of them seemed pretty boring,” he said. “When I came across petroleum engineering and saw what they do, just from an engineering standpoint, it seemed to be the most exciting. It’s kind of mind-blowing what petroleum engineers can do.” Sarah Qureshi with Texas Tech had a similar perspective, pointing to innova- tion and opportunity as what motivated her to choose this industry. “I also appre- ciate the chance to work with the most hard-working individuals that you’ll prob- ably ever meet,” she added. Ms Qureshi, who has already had two internships with ConocoPhillips, is slated to join the opera- tor full time upon graduation. Seeing the potential While these next-gens are excited about beginning their oilfield careers, they acknowledge that it can be an uphill battle explaining their choices to other people in their generation. “The big thing I always hear, especially from other engineering majors, is that we’re pigeonholing our- selves and that it’s too narrow of a field,” Mr Stapleton said. His personal experience tells him oth- erwise, however. “At Chevron, if you go to a different floor, it’s a completely different world. You can be talking to production or land management or drilling and comple- tions. There are so many skills that can become applicable in other fields that I don’t think it’s nearly as narrow as people tend to think it is.” For Mr Zayonc, whenever he gets ques- tioned by peers on his career choice, he not only takes the opportunity to clear up any misconceptions about oil and gas, but he also flips the conversation and tries to convince them to join. “I know there’s more than enough jobs because of all the people we need, so if I can try and pull them in, that’s good for me and them,” he said. “Even beyond the technical engineers, there are also a lot of people on the support staff side, and everyone I’ve met has been very happy to be in this industry and want to stay in it. I always tell my peers, why don’t you give it a shot?” Personal connections and stories like that have always played a key role in oilfield recruitment, and will likely con- tinue to, but the industry will also have to expand its outreach in order to better engage with the next generation. This may include targeting people in areas that are outside of the traditional oil and gas states like Texas, Louisiana and Oklahoma, Mr Ostrander said. People who don’t live in those areas are much less familiar with this industry and will require more outreach and education in order to understand what opportunities are available. “To get inside that bubble, you kind of have to take a leap of faith,” he said. “I grew up on a farm and I had many other friends who grew up on a farm. They’re hard workers, and they would thoroughly enjoy the adventure of working in the oil and gas industry. They just didn’t know that’s a possibility.” Looking to their own future careers, all the students agreed that they put a premium on positive leadership and cul- ture when selecting their workplace. “For me personally, culture was pretty much everything,” Mr Stapleton said. “I went off of more how they interacted with me personally and not so much the technical side of the interview. It’s more about, is this a friendly person that I’ll want to come in and work for everyday?” DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 35 H S E & M E NTA L H E A LTH Seadrill tackles employee mental health and wellbeing amid growing need for action As industry begins to recognize scale of employees facing mental health challenges, lessons can be learned from existing efforts STAFF REPORT There is an undeniable stigma in society associated with the words “mental health,” yet there is no reason for that negativ- ity. The term is neutral because it simply refers to a person’s psychological, social and emotional wellbeing. You might think about it the way you think about the words “physical health.” “We all have mental health. We all have physical health. It’s just a condition you have, and it can be positive or nega- tive,” said Neil Forrest, VP of Operational Integrity at Seadrill. Yet, due to the associated stigma around mental health, many people find it hard to either talk about or seek help when this aspect of their health suffers – and many are suffering. According to a 2021 report from the International SOS Foundation (“Mental Health and the Remote Rotational Speaking at the 2023 IADC Annual General Meeting in November, Megan Moon, Head of HR Operations, and Neil Forrest, VP of Operational Integrity, discussed the journey that Seadrill has taken over the past few years to improve employee men- tal health. Example initiatives include the company’s BeWell program, support of the RigRun competition and conducting psychosocial surveys to gather data. 36 Workforce”), 40% of the offshore and onshore remote rotational workforce said they experienced suicidal thoughts some or all of the time while on duty. Further, the study found that 29% of survey respon- dents met the threshold for clinical depres- sion while on rotation. Those are shocking numbers, Mr Forrest said. For employers, this can mean unhealthy employees and decreased productivity. Especially for remote rotational workers like rig crews, mental health challenges can be exacerbated by factors associated with oilfield life: the remote and isolated locations; confined work and living spac- es; separation from family and friends; regular and prolonged periods away from home, to name a few. Seadrill recognizes this and has taken steps in recent years to implement policies and procedures aimed at improving its employees’ overall wellbeing, believing it will lead to better productivity and engage- ment, and may even increase employee retention. At the 2023 IADC Annual General Meeting in Austin, Texas, on 9 November, Mr Forrest and his colleague Megan Moon, Head of HR Operations, shared Seadrill’s journey to address mental health over the past five to six years. While Seadrill has been monitoring and categorizing all of the medical consulta- tions occurring on its rigs since before 2018, so it can understand what issues its crews are facing, the company kicked off a more formalized program, BeWell, in 2019. It incorporates the four pillars of emotional and mental health, social health, physical wellbeing and financial security, Ms Moon explained. The program aims to raise awareness among employees of each of those four dimensions of mental health, as well as support them in actively managing those dimensions in their own lives. To make sure that crews didn’t become over- whelmed with too much information all at once, the company would tackle just one pillar in each quarter of the year, Ms Moon added. In 2022, Seadrill stepped up its efforts again by formalizing its Employee Wellbeing Directive. This encompassed the BeWell Program and ensured that men- tal health would be accounted for in the company’s Behavioral Framework, Health JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R H S E & M E NTA L H E A LTH Policy and Diversity Policy. Last year, to make mental health even more visible, it was even incorporated into Seadrill’s over- arching company strategy. Among other goals like eliminating dropped objects and delivering environmental stewardship, the strategy also called for “building physical & mental health resilience.” One example of Seadrill’s efforts to raise employees’ awareness around physical wellbeing is its support of workers’ par- ticipation in RigRun. The global program calls for offshore oilfield crews to compete – both individually and as part of the rig they represent – for prizes by becoming more physically active over a six-week period. While the ostensible target here is physical wellbeing, Mr Forrest pointed out that “there’s also a whole social side to this” when employees come together to focus on something fun and to achieve a common goal. “There is a togetherness in this. It’s encouragement by positivity.” Another way Seadrill is tackling mental health is through psychosocial surveys – psychosocial simply means something that involves both psychological and social aspects. While these surveys had been conducted previously in some operating regions like Norway and Mexico where there is regulator requirement, in 2023 the company standardized the survey process across its global operations. Taking this risk management approach and proactive- ly managing psychosocial risk factors has provided Seadrill with actual data around its employees’ physical and mental health, which are then used to design programs to meaningfully improve their wellbeing. This HealthyWork Survey, first conduct- ed in September to November last year, was based on the Copenhagen Psychosocial Questionnaire, which is freely and publicly available online. Seadrill also referenced WHO guidance, as well as parts of ISO 45003, to develop the survey. “This is not one of those situations where you’re like, there’s nothing out there that fits what we do. If you do your research, there are plenty of pre-existing standards that you can use to support your own programs,” Mr Forrest said. For companies looking to start their own employee wellbeing or mental health programs, Ms Moon stressed that fre- quent communications and consistent messaging is key. “This means sharing information around mental health, hav- ing events and figuring out how often you want to communicate that, whether it’s monthly or quarterly, and ensuring that all employees have access to the same information,” she said. “Creating this sense of community and work envi- ronment that encourages open dialogue and open communication about the topic is going to help to make sure your mes- saging comes off as authentic to your employees.” Another factor for success is how the company’s leaders can role-model well- being behaviors. “Whenever we, as leaders, share our own stories, it’s really impactful,” Ms Moon said , adding that it’s been report- ed that 90% of employees have never heard a senior leader share a personal experi- ence about mental health. “A good first step in promoting mental health aware- ness is to get the leaders onboard to role- model the behaviors that we want seen in the organization.” DC IADC Launches New Tracking System for Incident Statistics Program (ISP) For IADC’s Drilling Contractor Members that do not currently have their own system or database to track incidents and hours, the new ISP system can be used for this purpose at no cost. This new web- based system creates a complete paradigm shift in the way the program operates by putting the individual participant in the driver’s seat. Users now have direct access to upload data into the system, as well as on-demand access to reports containing sophisticated visual analytics. To learn how your company can participate in ISP, please send e-mail to isp@iadc.org. IADC HEALTH, SAFETY & ENVIRONMENTAL PROMOTING SAFETY IN THE DRILLING INDUSTRY SINCE 1940 For more information, visit iadc.org/isp D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 37 GEOTHERMAL DRILLING Insulated drill pipe offers new tool to enable efficient drilling of ultra-deep geothermal wells Testing in New Mexico, Utah FORGE project illustrates pipe’s effectiveness in lowering temperatures, protecting downhole equipment BY STEPHEN WHITFIELD, SENIOR EDITOR To drill the ultradeep, high-temperature wells needed for geothermal applications, it’s critical to make sure that downhole tools are protected. Insulated drill pipes (IDP) have been used in oil and gas drilling to maintain sufficiently low temperatures for the drilling fluid as it moves downhole, and thanks to a recently launched effort from Eavor Technologies, they can now help drillers and operators better navigate the ultra-high temperatures often seen in geothermal wells. “Insulation is really important when you’re drilling hot resources,” said Alex Vetsak, Well Construction Advisor at Eavor. “The geothermal business requires you to drill as hot as possible – we’re talking temperatures downhole exceeding 500°F. When we’re talking about these numbers, it’s critical to be able to deliver cold drill- ing fluid from the surface to the downhole tools. You don’t want to burn the sensitive electronics at the bottom, and if your fluids are exceeding the temperature limit for those tools, they will burn and fail.” The temperature ratings of different bottomhole assembly (BHA) components, such as the measurement-while-drilling (MWD) and rotary steerable systems (RSS), are particularly significant limiting fac- tors, Mr Vetsak said at the IADC Drilling Engineers Committee’s Technology Forum in Houston on 1 November. To address this issue, Eavor developed its IDP as part of a suite of tools aimed at enabling high-tem- perature drilling. By insulating both on the outside and inside of the pipe with several layers of a proprietary coating solution, the heat transfer between the drilling fluid traveling down the drill pipe and the hot fluid traveling up the annulus is reduced. This results in cooler fluid being delivered to the BHA. When used in conjunction with Eavor’s other technologies – the Rock-Pipe drill- ing fluid, its turbogenerator, and its mag- netic ranging technology – the IDP helps create what the company calls an “Eavor- Loop,” a closed-loop geothermal system. An Eavor-Loop is the connection of two vertical wells with horizontal multilateral wellbores that create a closed-loop sys- tem. The company’s proprietary working fluid – the fluid used to generate heat from a geothermal reservoir – is selected and added at surface, then circulated to harvest heat. Eavor-Loops can also be directionally drilled from centralized sur- face pads. The company first manufactured a full IDP string in 2022 and tested its perfor- mance in a geothermal formation in Q3-Q4 that year at the Eavor-Deep project in New Mexico. An 18,000-ft well was drilled, along with a sidetrack, in a granite forma- tion with rock temperatures of around 480°F. The project aimed to demonstrate all the technical elements required to con- struct a commercial Eavor-Loop system in deep, high-temperature hard rock, and testing focused primarily on gathering temperature measurements from MWD tools. In this well, the IDP was able to help the well maintain circulating tempera- tures below 300°F at the bottom. Compared with the circulating temperatures from using a standard drill pipe – which Eavor calculated would be approximately 370°F, according to a transient thermodynamic drilling model – the IDP reduced downhole circulating temperatures by as much as 194°F, with a median of 142°F. Drilling was, therefore, enabled by keeping the tempera- ture below the 300°F tool limit. Alex Vetsak, Well Construction Advisor at Eavor Technologies, spoke about the test- ing and performance of the company’s insulated drill pipe for geothermal wells at the IADC Drilling Engineers Committee’s Technology Forum on 1 November. 38 JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R “Insulated pipe” continued on page 40 DRILLING MARKETS Comparison of different models for integrated services contracts shows how cost savings fluctuate Petronas shares its process behind identifying the ‘lump sum cost per hole section’ model as having the highest cost savings potential BY STEPHEN WHITFIELD, SENIOR EDITOR Cost optimization is a critical aspect of any drilling operation. Humam Al Darkazly, Senior Wells Engineer at Petronas, estimated that drilling costs make up between 50% and 70% of the CAPEX for the operator’s typical develop- ment projects. To help mitigate financial risks and uncertainty, the company is increasingly relying on integrated drilling services (IDS) contracts, both to achieve cost efficiencies and to allow for greater adaptability to changing market condi- tions. “We’re trying to maximize cost savings. We want to ensure profitability regardless of any volatility we may see in oil price, ensure financial stability and minimize risk,” Mr Al Darkazly said at the 2023 ADIPEC on 3 October. However, there is no one-size-fits-all contracting model that can guarantee the most cost savings. So, Petronas utilizes three cost models in its tendering process for IDS contracts: lump sum cost per well, lump sum cost per meter drilled (as deter- mined by the estimated total depth of the well), and lump sum cost per hole section. In his presentation, Mr Al Darkazly com- pared the advantages and disadvantages of each model based on an evaluation the operator conducted on IDS contracts in the Middle East. As part of the evaluation, the operator compared contract terms for the drilling of various wells in an unnamed Middle East reservoir drilled in 2022. For the evaluation, three separate land rigs that possessed identical specifications were contracted, which Mr Al Darkazly said ensured “consistency and comparability.” Each well employed an identical casing design. Petronas provided the necessary casing, tubing and wellhead, while the drilling contractor was responsible for all other materials and services required for the drilling operation. Of the three models, Petronas noted the most cost savings was achieved under the cost model structured by hole sec- tion drilled – in fact, savings were up to 50% more than the other two cost mod- els. The calculated percentage of saving was based on the prices specified in the awarded contracts, and Mr Al Darkazly said savings from the hole section model were due to the effective categorization of hole section prices based on well inclina- tion. Under the hole section model, the drill- ing contractor has the opportunity to pro- pose lower costs for wells with lower inclinations. This is primarily because, with these types of contracts, the total number of meters drilled is typically less compared with higher-inclination wells. As a result, the contractor can allocate fewer resources while reducing drilling and tripping times, leading to less equip- ment usage, manpower and associated expenses. Additionally, lower inclination wells generally entail reduced drilling complexities and risks compared with wells with higher inclinations. The con- tractor is then able to offer more competi- tive pricing for these wells. The other two models – cost per drilled well and cost per meter drilled – do not incorporate well inclination as a factor, since well inclination is only useful for determining the lengths of a given hole section. However, although well inclina- tion does not have a direct impact on the number of wells drilled or the total depth of a given well, it does mean that the drill- ing contractor assumes the maximum risk regardless of the well’s inclination and are likely to incorporate that into their bid. In such cases, the contractor must account for the possibility of drilling more meters and encountering more challeng- ing conditions downhole, resulting in a higher proposed price to compensate for the added risks. By integrating well inclination into the hole section model, the contractor can assess and evaluate drilling conditions more precisely, allowing for more opti- mized bids based on the specific complexi- ties and risks associated with each well’s inclination. This approach ultimately leads to the additional cost savings com- pared with the other two models. Even though Petronas saw greater cost savings overall with the hole sec- tion model, Mr Al Darkazly noted that the specific savings Petronas saw in a given well depended on external factors. Such factors could make the other two models more palatable to other operators utilizing IDS contracts. For instance, while a contract utilizing the drilled wells model has a fixed budget dependent on the number of wells to be drilled, the hole section model is based on fixed drilling targets, and changes to the well target by reservoir engineers can neg- atively impact the budget estimation. Also, S-shaped wells may increase costs for the hole section model due to increased well inclination, though some operators may opt for shallower kick-off points and high- er doglegs to reduce inclination and lower costs. Well inclination has no impact on well cost for the drilled wells and meters drilled models because it was not incor- porated into either model, so if the inclina- tion category is not specified, the operator may prefer to use one of those models. The drilled wells and hole section mod- els also provide easier invoice processing than the meters drilled model because they are fixed costs. More auditing is required to process invoices in the meters drilled model, as the operator must check D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 39 DRILLING MARKETS the depths of each hole section. Mr Al Darkazly also noted possible disputes if the casing is tagged at different depths than the BHA, or if directional work deviates from the plan. Petronas’ review of cost models also revealed several potential areas of improvement for IDS contracts that Mr Al Darkazly said could help minimize dis- putes between operators and contractors. For one, by refining the risk-sharing mechanism in IDS contracts, operators can establish clearer responsibilities and expectations for contractors, minimizing disputes and creating an environment where risks are effectively managed and shared. A potential approach is to transfer the risk fully to the contractor, which may result in an increase in the contract cost. However, this ensures that the operator’s spend is closely aligned with the bud- get. For example, if the drilling contractor bears the cost of mud losses or left-in-hole BHA, that can help mitigate financial risk for the operator. Another strategy may be to share the risk with the contractor based on a calculated percentage, taking into account the probability of encountering issues downhole. Another way to minimize potential disputes may be to avoid specifying the number of rigs in an IDS contract, Mr Al Darkazly said. This is beneficial from the operator’s perspective as it allows for the potential provision of additional rigs when needed to expedite drilling activity or overcome contractor-related delays, ensuring adherence to the delivery schedule. Thirdly, under the per hole section model, true vertical depth (TVD) is gener- ally specified for each hole section with a safety margin. However, conflicts may arise in cases where the total depth criteria are modified by the reservoir geologist to drill a deeper TVD. To address this issue, Mr Al Darkazly suggested two potential mitigations. First, the safety margin of TVD can be increased based on field expe- rience, resulting in a higher cost estimate that can accommodate potential chang- es. Alternatively, a cost line item can be included in the contract for each addi- tional meter drilled beyond the specified TVD depth, ensuring that any deviations from the original plan are accounted for and appropriately compensated. Also, to prevent disputes and ensure compliance with established standards, IDS contracts should include explicit pro- visions addressing contractor practices that deviate from the operator’s practic- es. These practices may include reduc- ing mud quantity, operating with minimal manpower, employing inexperienced per- sonnel and other non-compliant actions. By incorporating comprehensive details and emphasizing adherence to the opera- tor’s practices, Mr Al Darkazly said, opera- tors can set clear expectations. “We have a competitive bidding process, and we’re awarding the contract to the lowest bidder, so we’re aware that some- times the contractor must make decisions to save costs on their end, but we need to ensure that we are clear about our stan- dards,” he said. DC “Insulated pipe,” continued from page 38 An average MWD temperature of 164°F was seen while drilling, which FORGE and Eavor attributed to the positioning of non-insulated pipe near the BHA. Further, it was observed that the average MWD temperature rose to 220°F while drilling in the next run, when no IDP was used. The formation reached a maximum tempera- ture of 450°F throughout all runs. After the IDP was pulled and inspected onsite, Eavor noted that the external coat- ing showed negligible wear from the trial. There was minor damage to the internal coating on a small number of joints, but no damage was found on the MWD tool or the drill bit nozzles. “This learning cycle of finding out how the pipe behaves can be done in the lab, but it’s really hard to compete with field deployment. What we’ve seen with our testing so far is that the thermal out- put, and the performance of the pipe, is matching our expectations,” Mr Vetsak said. He also noted the impact of the IDP in protecting the MWD tools overall. In a previous run without using IDP, one of the MWD batteries – rated for up to 300°F – failed at a recorded temperature of 327°F. This was because the BHA faced height- ened vulnerability during the process of tripping in the hole and at the beginning of drilling a new section due to a lack of circulation. This lack of circulation could lead to the column warming up close to the temperature of the surrounding for- mation. While running in hole, the BHA encoun- ters hot fluid, and without adequate cir- culation it can warm up quickly, requir- ing frequent pauses to circulate and cool down the BHA. If the cool-downs are not performed in time, the BHA is at risk of exceeding its maximum design tempera- tures. As the IDP reduces heat transfer between the hot annulus and the cold fluid in the drill pipe, the risk of exceeding the BHA maximum temperatures is reduced. During the two runs utilizing the IDP, Eavor and Forge reported no failures of the MWD tools. DC In May 2023, the IDP was put to the test again, this time as part of the US Department of Energy’s FORGE project at the University of Utah. Eavor provided 350 joints of internally and externally coated IDP for two bit runs, with the aim to demonstrate the technology’s capacity to reduce BHA temperatures, reduce tem- perature-related equipment failures and observe any potential drilling performance improvement. In the first run, a full string of the IDP was utilized, along with a new motor; a mud chiller was also brought online toward the end of the run, decreasing the inlet temperatures from approximately 130°F to 110°F. An average MWD tempera- ture of 149°F was seen while drilling, a reduction of 31° compared with the previ- ous run in the well. In the second run, a partial IDP string was used, with approximately 70% IDP and 30% regular non-insulated drill pipe. 40 JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R EDITORIAL • IADC CONNECTION IADC project provides new insights to enhance oil and gas recruiting FROM THE PRESIDENT The new year is a great time to contem- plate what’s working for us and how we can amplify the elements of our success. Equally important is identifying areas of potential growth and paving the way for innovative solutions. Within the broader framework of the drilling industry, we benefit from commendable strengths — unyielding commitment to safety, ongoing collaboration for the collective good and the privilege of working in a field that enhances people’s quality of life. Amidst our accomplishments, room for improvement remains. It’s imperative to vocalize our own stories, bridging the gap between the industry’s true nature and public perception. There’s also a need to revitalize our efforts in attracting new tal- ent to this remarkable industry. To main- tain a competitive edge, we have to capti- vate the attention of potential employees, showcasing the dynamic and rewarding nature of opportunities within our field. In response to these sectorwide chal- lenges, IADC launched the Industry Value Initiative in 2022. The mission was three- fold: first, to understand perceptions of our industry among potential employees; sec- ond, to identify what today’s job seekers truly desire in a career; and third, to equip member companies with the insights gleaned from this project to aid them in attracting and securing top talent. To set the project in motion, IADC con- tracted Brunswick Group to design and execute a research plan to help us gain a baseline understanding of perceptions, motivations, misconceptions and oppor- tunities among prospective employees. Brunswick Group conducted a series of focus groups and online surveys among specific audiences in key regions. The identified audience groups included vet- erans, vocational students and individuals currently employed in a relevant industry, among others. Key regions for this proj- ect were the United States, the United Kingdom, Asia Pacific and the European Union. We learned from the research findings that higher familiarity with the drilling industry often correlates to increased interest. When exposed to tailored mes- saging, most groups expressed markedly higher openness to this field. The data also revealed that awareness of the industry is modest, indicating significant opportunity to enhance public understanding. Broad outreach about the industry’s nature and purpose is essential to thrive in today’s labor market. It’s very likely that promis- ing future employees aren’t considering drilling careers presently, whether due to unfamiliarity or misinformation. To make inroads, messaging must align with prospective employees’ aspirations. Those surveyed valued work-life balance, career growth and professional develop- ment above all. Job security, workplace safety and benefits were also viewed as essential priorities. Attracting talented candidates will require finding compel- ling ways to communicate the advantages of working in this industry. Additionally, it’s crucial to directly address prevalent concerns regarding a career in drilling, such as environmen- tal impact, job insecurity and workplace hazards. In surveys, participants selected “risky” and “polluting” as top descriptors for the industry, while considering “safe” and “sustainable” as inapplicable. Many also felt as though a career in drilling was “not for them,” whether from disinterest or perceived lack of credentials. To challenge these notions, messaging should show- case our commitment to sustainability and an inclusive work culture. By highlighting stewardship initiatives, safety innovations and diversity in roles, we can convey that our industry offers dynamic, stable careers for all types of talent. Reassuring narra- tives that combat outdated myths and accurately reflect our values will likely resonate with prospective recruits. On that note, we can also utilize messag- ing around advanced technology to rein- troduce the industry to people. While tech- Jason McFarland, IADC President nology was not the audience’s first associ- ation with drilling, messaging around how we use cutting-edge technology can help drive interest moving forward. By show- casing complex technical capabilities and state-of-the-art tools, we can reshape anti- quated perceptions and set this industry apart as an exciting career option for the next generation. In order to spread any of the above mes- sages, we must utilize the right channels and sources. Company websites and social media platforms are fundamental avenues to educate potential recruits. Furthermore, those surveyed indicated that if consider- ing a drilling career, they would turn first to family, friends and acquaintances with a career in the industry as their most trust- ed sources. This underscores the impor- tance of empowering current employees to be passionate and authentic ambassadors for working in this field. These data-driven insights synthesize more than a year of diligent work to guide our members in today’s recruiting land- scape, yet they represent just a preview of the extensive Industry Value Initiative project findings. IADC invites and encour- ages all members to fully leverage these resources to craft targeted outreach efforts. With compelling, research-based messag- ing, we can capture the interest of the future workforce. Our success depends on conveying what makes this work so meaningful – both to seasoned employees and promising newcomers alike. DC D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 Scan me to access the IVI Executive Summary and research fi ndings. bit.ly/4b5CudB 41 IADC CONNECTION • 2024 OFFICERS IADC Board of Directors elects 2024 officers BRAD JAMES, Chair – Northern Ocean Mr James has served as founding President, CEO and Board Member of Enterprise Offshore Drill- ing since 2016. He previ- ously served as Senior V P Marketing of Hercules Offshore from 2006 through 2016 . Prior to that he held various leadership roles at Transocean , was founding President of Field Drilling Company and VP of Southland Drilling. He obtained a Bachelor of Business Adminis- tration degree from Southwest Texas State University in 1981. M r McReaken was named C EO of the Northern Drill- ing and Northern Ocean Groups in December 2018. He has been a part of the Seadrill group companies since 2012, where he previously served as C EO and Director of Sevan Drilling and Chief Financial Officer of North Atlantic Drilling . Mr McReaken has held various leader- ship roles in the United States, North Sea, West Africa and South America. He began his career at Arthur Andersen and is a Certified Public Accountant and Certified Internal Auditor. He holds a degree in busi- ness administration from the University of Texas at Austin . KEVIN NEVEU, Vice Chair – Precision Drilling Mr Neveu is President, C EO and a Director of Pre- cision Drilling and has held these positions since 2007. He has 43 years of experience in the oilfield services sector, holding various technical, marketing and management positions over his career. Mr Neveu holds a Bachelor of Science degree in mechanical engineer- ing and is a graduate of the University of Alberta . He has also completed the Harvard Advanced Management Program . ANDY HENDRICKS, Past Chair – Patterson-UTI Mr Hendricks has served as President and C EO of Patterson-UTI since 2012 and as a Director of Pat- terson-UTI since 2017. He was previously Chief Operating Officer of the company in 2012. Prior to Patterson-UTI, he served as Presi- dent of Schlumberger Drilling & Measure- ments from 2010 to 2012 and had worked for Schlumberger in various worldwide locations and capacities since 1988 . Mr Hendricks holds a Bachelor of Science in petroleum engineering from Texas A&M University. 42 SCOTT MCREAKEN, Secretary/Treasurer – Enterprise Offshore Drilling TIM McGARITY, Division VP Drilling Services – NOV Mr McGarity serves as Director, Western Hemisphere Offshore at NOV Rig Technologies. During his tenure with NOV, he has worked both land and offshore in operations and busi- ness development. Prior to coming to the oilfield, Mr McGar- ity worked in international shipping for CP Ships as the manager of the its government/ military team. He holds a Bachelor of Sci- ence from Texas A&M Galveston and is a veteran of the United States Marine Corps. GENE STAHL, Division VP North America Onshore – Precision Drilling Mr Stahl was appointed as President, North American Drilling of Precision Drill- ing in 2023 and previously held the position of Chief Marketing Officer . Since joining Precision Drilling in 1993, he has held positions with increasing responsibil- ity, including in contracts, investor rela- tions, engineering, manufacturing, rig con- struction, procurement, field training and development, and HSE . Mr Stahl holds a Bachelor of Arts degree in economics from the University of Calgary and is a graduate of the Harvard Business School, Advanced Management Program. JON RICHARDS, Division VP Offshore – Diamond Offshore Drilling Mr Richards has served as Senior V P of World- wide Operations for Dia- mond Offshore since 2020. He started his career as an Operations Development Trainee with Diamond Off- shore in 1997. In his more than 26 years in the offshore drilling industry since, he has held various leadership roles and responsibilities managing operations in the United States, United Kingdom, West Africa and Brazil. Mr Richards holds a degree in business management from Texas Tech University . JAMES “JIM” NOWOTNY, Division VP Inter- national Onshore – Helmerich & Payne Mr Nowotny is the Vice President International and Offshore Business Development at Helmerich & Payne. He has extensive domestic and internation- al leadership experience in multiple areas of the offshore and land drilling industry, including marketing and business develop- ment, commercial and technical contracts, operations, manufacturing and engineer- ing. He has worked in the energy industry since 1995. Prior to joining Helmerich & Payne, he worked for an international oilfield equip- ment manufacturer and in various roles for Atwood Oceanics . Mr Nowotny has a Bachelor of Science degree in mechanical engineering from Texas A&M University and has completed several executive education courses at Columbia Business School, Harvard Law School and Kellogg School of Management at Northwestern University. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R NEWS CUTTINGS • DEPARTMENTS Bernie Wolford receives IADC Contractor of the Year honors at Annual Meeting Bernie Wolford, President and CEO of Diamond Offshore Drilling, was named 2023 IADC Contractor of the Year in November. The annual award was established in 1988 to recognize an individual drilling contractor’s outstanding lifetime achievement in techni- cal innovation, safety and economic efficiency within the drilling industry. It is the only industry award reserved solely for drilling contractors. A member of the IADC’s Executive Committee, Mr Wolford was essentially born into the industry. Raised in Kilgore in East Texas, his father made a career out of working in the land drill- ing business. After graduating in 1981 with a Bachelor's degree in mechanical engineering from Texas Tech University, Mr Wolford went to work for TransWorld Drilling as an Engineer, eventu- ally serving as Project Manager, Drilling Superintendent and Operations Manager at the company. After TransWorld was acquired by Noble in 1991, he went on to take significant management positions within the company. In 2018, he was named CEO of Pacific Drilling, where he remained until April 2021, shortly after Pacific and Noble announced their merger. One month later, Diamond Offshore named him its new President and CEO, the position he currently holds. Bernie Wolford (right), President and CEO of Diamond Off- shore Drilling, received the 2023 IADC Contractor of the Year award from Joe Rovig, President, Rig Technologies and After- market Group at NOV, at the IADC Annual General Meeting in Austin, Texas, on 10 November. IADC launches all-new ISP database for streamlined data reporting, tracking IADC is introducing a newly revamped system for its Incident Statistics Program (ISP) in January after a year-long devel- opment process. The new system gives users direct access so they can upload data into a web-based system, as well as create on-demand, tailored reports con- taining visual analytics. Scan me to learn more about the IADC Incident Statistics Program. IADC's inaugural 3-Gun Competition, held 20 October in Todd Mission, Texas, featured 108 participants competing in morning and afternoon shooting fl ights. The competition raised money for Camp Hope, a Houston-based interim hous- ing facility for combat veterans and their families suffering from PTSD. IADC supports DrillersPAC, charity benefitting US combat veterans with inaugural 3-gun shooting competition On 20 October, IADC held its inaugural DrillersPAC helps maximize the bit.ly/3U0sQD6 IADC establishes new Geothermal Committee 3-Gun Competition to generate aware- impact of IADC’s advocacy efforts by In December , the new Geothermal ness for DrillersPAC, IADC’s political raising money to support political can- Committee began operation under the action committee, and raise funds to didates aligned with IADC members’ Drilling Services Division of IADC. The support US combat veterans. The compe- policy goals. The competition also raised committee, which is chaired by Scott tition was held at Renaissance Shooting $11,000 for Camp Hope, an interim hous- Farmer of Helmerich & Payne, is currently Club in Todd Mission, Texas. It consisted ing facility. It is operated by the PTSD working on guidelines aimed at providing of a morning shooting flight and an after- Foundation of America, an organization practical guidance for drilling contractors noon shooting flight, with lunch and a that helps combat veterans suffering and service companies involved in geo- raffle in between for all participants. from post-traumatic stress disorder. thermal well construction. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 43 IADC CONNECTION • WIRELINES Lease Sale 261 held after multiple delays, draws more than $382 million in high bids The US Bureau of Ocean Energy Management (BOEM) held the Gulf of Mexico (GOM) Lease Sale 261 on 20 December. The sale generated $382,168,507 in high bids for 311 tracts covering 1.7 mil- lion acres in federal waters. A total of 26 companies participated in the lease sale, submitting 352 bids totaling $441,896,332. Under a ruling from the US Court of Appeals for the Fifth Circuit, the BOEM included lease blocks previously exclud- ed due to potential impacts to the Rice’s whale population from oil and gas activi- ties in the GOM. Lease Sale 261 offered 13,482 unleased blocks on 72.7 million acres in the Gulf’s Western, Central and Eastern Planning Areas. The sale had originally been sched- uled for 27 September, then again for 8 November, in response to judicial orders. In a statement issued on 20 December, API VP of Upstream Policy Holly Hopkins said, "Despite policy headwinds, this sale generated the highest bid amount in near- ly a decade, demonstrating that our indus- try is working to meet growing demand and investing in the nation’s long-term energy security." NSTA awards 27 licenses for North Sea E&P in latest round North Sea UK production received a boost on 30 October with the award of 27 new licenses from the UK North Sea Transition Authority (NSTA) in areas that have the potential to go into production more quickly than others. Additionally, six more blocks, which were also ready to be offered, have been merged into five existing licenses. The 33rd Oil and Gas Licensing Round was launched on 7 October 2022 with 931 blocks and part-blocks. In total, NSTA received 115 applications from 76 compa- nies for 258 blocks/part-blocks when the application window closed on 12 January 2023. This was the highest participation since the 29th Round in 2016-2017. All blocks that were awarded have been through the initial Habitat Regulation Assessment (HRA) and do not require further assessment. There are currently 284 offshore fields in production in the UK North Sea and an estimated 5.25 billion BOE in total projected production to 2050. Oil and gas currently contribute approximate- ly three-quarters of the UK's domestic energy needs. Further, the UK oil and gas industry supports approximately 200,000 jobs and contributes £16 billion to the economy each year. A recommendation for the remaining 203 blocks will be made once the HRA process has been completed. BSEE issues energy infrastructure decom decision In December, the US Bureau of Safety Impact Statement (PEIS) process for Oil and Environmental Enforcement (BSEE) and Gas Decommissioning Activities on published a Record of Decision (ROD) the Pacific OCS. The final PEIS was pub- for the decommissioning of offshore lished on 27 October 2023 and recom- energy infrastructure on the Pacific mended the selection of the alternative Outer Continental Shelf (OCS). The deci- of complete removal of all oil and gas sion provides a systemic pathway for equipment and facilities on the Pacific the removal of obsolete offshore oil and OCS. Twenty-three California oil and gas gas infrastructure following site-spe- platforms, all installed between the late cific environmental assessments and 1960s and 1990, are subject to eventual approved decommissioning plans. decommissioning. The ROD will guide BSEE on all The decision also documents that future decommissioning applications to prior to decommissioning, a facility remove oil and gas platforms, associated must undergo a National Environmental pipelines and other facilities offshore Policy Act review that will assess a vari- Southern California. It is the culmina- ety of potential environmental impacts tion of the Programmatic Environmental from infrastructure removal. 44 She also added, "Although today’s con- gressionally mandated lease sale is a posi- tive step after multiple delays, the lack of any offshore sales in the year ahead is a prime example of the administration’s failure to implement a long-term energy strategy. We urge the administration to reconsider its shortsighted approach and plan today for tomorrow’s energy demand.” In December, the Biden administration issued its final five-year offshore leasing program. However, 2024 is expected to be the first year since 1966 without an off- shore lease sale. US EPA proposes rule to establish fee on methane emissions in oil and gas On 12 January, the US Environmental Protection Agency (EPA) announced a proposed rule that would assess a charge on emitters of waste methane from the oil and gas sector that exceed emissions intensity levels set by the US Congress. The Inflation Reduction Act established a Waste Emissions Charge for methane from certain oil and gas facilities that report emissions of more than 25,000 met- ric tons of CO 2 equivalent per year to the Greenhouse Gas Reporting Program. As directed by Congress, the Waste Emissions Charge starts at $900 per metric ton of wasteful emissions in 2024, increasing to $1,200 for 2025 and $1,500 for 2026 and beyond. It only applies to emissions that exceed the statutorily specified levels. The EPA’s proposed rule addresses details regarding how the charge will be implemented, including the calculation of the charge and how exemptions from the charge will be applied. Facilities in com- pliance with the recently finalized Clean Air Act standards for oil and gas opera- tions would be exempt from the charge after certain criteria set by Congress are met. JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R Scan me to read the EPA's Fact Sheet on the Waste Emissions Charge. bit.ly/47UCkTT UPCOMING IADC EVENTS • IADC CONNECTION IADC DRILLING AFRICA Conference & Exhibition 20-21 FEBRUARY 2024 HILTON W I N D H O E K , HOTEL N A M I B I A IADC DRILLING ONSHORE 6-7 JUNE 2024 WYNN LAS VEGAS L AS VEGAS , N E VA DA Conference & Exhibition 16 MAY 2024 HYATT REGENCY HOUSTON WEST H O USTO N , TE X AS 2024 IADC Conference & Exhibition 18-19 JUNE 2024 NOVOTEL MADRID CENTER M A D R I D, S PAI N To register for these and other conferences please visit us online at www.iadc.org/conferences/upcoming. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 45 IADC CONNECTION • DRILLING CONTRACTOR DON’T MISS OUT ON OUR NEXT ISSUE! March/April Editorial Preview Innovating While Drilling*: ◊ ◊ AD CLOSING: 16 FEBRUARY Managed Pressure Drilling MATERIALS DUE: 23 FEBRUARY Rotary Steerable Systems Hydraulic Fracturing ◊ Market Update: Drilling in the Caspian DISTRIBUTION: drillingcontractor.org/ mediakit SPE/ICoTA Well Intervention Conference [19-20 MARCH, THE WOODLANDS, TEXAS] AADE Fluids Tech Conference & Exhibition [16-17 APRIL, HOUSTON, TEXAS] OFFICIAL MAGAZINE OF THE INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS Videos 46 * “Innovating While Drilling® (IWD)” is a trademark of the International Association of Drilling Contractors and Drilling Contractor. Visit DrillingContractor.org for the latest drilling industry news and videos » Corva, Nabors see early results from partnership on automation system » IADC Southern Arabian Peninsula Chapter continues work on HSE, begins sustainability initiative » IADC signs collaboration agreement with Oman’s OPAL » Service company award caps eventful year for IADC Permian Basin Chapter » Industry champions critical to providing sustainable future for oil and gas » Raymond James: Despite energy transition push, oil and gas expected to remain key part of energy mix JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R PEOPLE, COMPANIES & PRODUCTS • DE PAR TM E NTS Chesapeake, Southwestern Energy agree to merge Chesapeake Energy Corp and Southwestern Energy have agreed to be combined in an all-stock transaction valued at $7.4 billion. The combined $24 billion natural gas company, which will assume a new name at closing, will pull together large-scale acreage in Appalachia and the Haynesville Shale. Together, the companies' assets have a current net production of approximately 7.9 billion cu ft/day, with more than 5,000 gross locations. Mike Wichterich will serve as Non- Executive Chairman and Nick Dell'Osso as President and CEO. The combined company anticipates it will retain Chesapeake's headquarters in Oklahoma City but will also maintain "a material presence in Houston." According to Wood Mackenzie, the merger will create a company that pro- duces 3.3 billion cu ft/day, owns over 20% of Haynesville production and controls over 600,000 net acres. Arabian Drilling orders additional top drives from Kenera Kenera has secured a contract to deliv- er five top drives and five iron rough- necks to Arabian Drilling for newbuild rigs to be operated in Saudi Arabia. The order follows a previous contract for five top drives awarded in September 2023. Kenera's Bentec business unit will deliver the top drives, which will offer remote monitoring and troubleshooting through Bentec's digital service platform, rigCARE, to optimize the drilling process and reduce well delivery times. KCA Deutag, Pruitt join forces to provide MPD solutions KCA Deutag and Pruitt have signed an exclusive partnership agreement to col- laborate globally on managed pressure drilling (MPD) opportunities. The partnership provides Pruitt with access to KCA Deutag’s resources, rig engineering, and supply and manufac- turing bases in Europe and the Middle East, while KCA Deutag will benefit from the inclusion of Pruitt’s MPD solutions in its drilling operations. Pipe manufacturing plant wins LEED certification Tenaris’ Bay City, Texas, plant has received Leadership in Energy and Environmental Design (LEED) certification – the first pipe manufacturing facility in the U S to achieve this designation. The U S Green Building Council has recorded fewer than 10 LEED-certified industrial projects in the US since 2010 . Halliburton partners with Oil States on MPD solutions Halliburton and Oil States Industries are collaborating to develop managed pres- sure drilling (MPD) solutions that provide improved control in narrow pressure win- dows in deepwater. The collaboration will provide operators and drilling contractors with an MPD product-service combination to safely access greater operational effi- ciencies like ease of handling and stream- lined installation. Mark Moffat takes reins from Darren Roos as IFS CEO IFS has promoted Mark Moffat to CEO , taking over from Darren Roos, who has been appointed as the company’s Chair of the Board. Mr Moffat was previously IFS' Chief Customer Officer and held several senior positions at PwC before joining IFS. Mark Ritchie heads up Enteq's new Aberdeen office Enteq Technologies has opened a new office in Aberdeen that will function as the company's support services headquarters . Mark Ritchie, Enteq's recently appointed CFO, will head up this UK office. Research project targets extended-reach needles port Velesto with rig moves to adja- cent countries, including Vietnam, Indonesia or Thailand, over a one- year period. ABL is expected to survey and approve 14-16 rig moves offshore Malaysia for Velesto ’s six-rig fleet dur- ing the period. AGR lands new contract in Guinea-Bissau Aker BP and Fishbones have begun a technology development project focusing on extended-reach needles, small-diam- eter laterals that penetrate reservoirs to increase recovery. The aim is to extend the reach of existing Fishbones needles by 50%, from 12 m to 18 m, which will enable the efficiency of the company's lat- eral stimulation technology. The Research Council of Norway is backing the project with a NOK 1.25 million grant. BIO-UV to supply ballast water system for drillships BIO-UV Group has received an order ABL secures rig moving deal with Velesto Drilling AGR has secured a contract with from an offshore drilling contractor based Apus Energia Guinea-Bissau for a deep- in the United Arab Emirates to supply the water exploration well . AGR will pro- BIO-SEA ballast water treatment system ABL has been awarded a contract by vide consultancy in well construction, to a pair of drillships . The order calls for Velesto Drilling to provide marine war- drilling engineering, procurement, sup- the delivery of a modular version of the ranty survey services relating to rig moves ply chain management and operational system , and the units will provide for flow offshore Malaysia. ABL will also sup- supervision of the drilling. capacities up to 750 cu m/hr. D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 47 DE PAR TM E NTS • PEOPLE, COMPANIES & PRODUCTS Products New completion tools target efficiency, cost savings Native capabilities added to Industrial Work Surface KLX Energy Services has introduced its VISION Suite of downhole completions tools, delivering advanced engineering and customized solutions for downhole operations. The suite includes OraclE- SRT (smart reach tool), Spectra PDC and PhantM dissolvable frac plugs. Spectra PDC, KLX’s downhole thru tub- ing motor system, is designed to eliminate nonproductive time on long lateral runs. The motor bearing pack’s design utilizes PDC inserts with significantly fewer parts than a traditional ball bearing pack. The OracleE-SRT is a downhole thru tubing extended-reach tool that can be fully manipulated from the surface to turn on and off. The PhantM dissolvable frac plugs are designed to minimize the need for interventions . advanced K-Spice and LedaFlow simula- Solution makes treating produced water easier ability of simulations . Adaptive Process Solutions (APS) has introduced its Microbubble Infusion Unit (MiFU) to address challenges related to aging assets and reservoirs to efficiently and effectively clean produced water so that it meets regulatory standards before it can be discharged back into the sea. The APS MiFU is capable of processing between 1,000 and 100,000 bbl/day of water and can remove up to 90% of oil and con- taminants from produced water without the need for downstream filtration. New snapback technology adds to mooring systems Samson has launched Defender Fuse , Kongsberg Digital has added the tion technology natively to its Industrial Work Surface. These tools can now be fully automated with a collaborative and open environment. This integration allows for simulation in the context of all other work tasks, enabling users to lever- age the value of simulation in real time. Users can now easily link simula- tions to time-series data, ensuring their simulations match reality. By perform- ing simulations on real-time data, the Kognitwin platform generates accurate digital replicas of assets, which can be leveraged for near-infinite virtual insights. These insights include virtual sensors, equipment performance analy- ses and sub-system optimizations . The cloud-based platform allows for the scal- Users can present simulation results in the context where they are most rel- evant. Other data sources can be com- pared and leveraged to quickly evaluate simulation results, providing a compre- hensive understanding of asset perfor- mance. Additionally, simulations can be triggered as part of events or workflows, enabling forecasting and look-ahead simulations for daily reporting or shift handovers. Improved mixing technology receives new US patent ProSep recently received official acknowledgment from the US Patent Office for improvements made to its Annual Injection Mixer , resulting in a new patent being issued. The mixer provides an alternative to traditional injection quills and static mixers. The improvements noted in the patent optimize the energy transfer of a result, there is a greater surface area of the process fluid to the injected phase, the additive to be used, reducing the need leading to enhanced additive disper- for overdosing. Field data indicates addi- sion throughout the process stream. As tive savings of 20% to 60% are possible. a product designed to complement stan- dard mooring systems . It is an advanced overload warning system engineered to mitigate snapback situations and can be added to any mooring system without line replacement . The product's trigger deploys at a specific percentage of the ship design MBL (MBLsd). The catch material will continue to elongate until it reaches its final length, up to 150% more than its original, before complete rupture. 48 App helps to streamline wellsite personnel management Intelligent Wellhead Systems has launched Wellsite Watch, an application providing digital and simplified person- nel management for wellsite operations personnel. It can be accessed via per- sonal devices or tablets with an intel- ligent digital sign-in either directly via the application or by scanning a QR code. Digital check-in and -out replaces clipboards and paper. Data is handled electronically with cloud backup and maintenance to provide a consistently up-to-date roster . The app also incorporates digital HSE information and acknowledgement forms for easy sign-off . Digital injury and hazard identification is also avail- able through Wellsite Watch . JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R AD INDEX AADE ....................................................................... 51 Noble Corporation .......................................49 Abaco Drilling Technologies .................52 Total Oilfi eld Equipment & Supply, LLC ........................................................5 Drilling Contractor 2024 Media Kit.......6 IADC Bookstore .............................................. 37 TSC Drill Pipe ..................................................... 19 Intelligent Wellhead Systems ............... 15 Wild Well Control .............................................2 Global Sales Manager For all sales inquiries regarding Drilling Contractor, official magazine of the International Association of Drilling Contractors, please contact: BILL KRULL Phone: +1-713-292-1954 Cell: +1-713-201-6155 bill.krull@iadc.org See the latest issue! Sign up for DrillBits www.iadc.org/ drillbits www.iadc.org/ newsletter-signup Drilling Contractor / IADC Houston HQ LINDA HSIEH - Vice President, Editor & Publisher linda.hsieh@iadc.org STEPHEN WHITFIELD - Senior Editor stephen.whitfield@iadc.org BRIAN C. PARKS - Creative Director brian.parks@iadc.org ANTHONY GARWICK - Director – Web & IT Services anthony.garwick@iadc.org Find us online Stop by our LinkedIn page to join the conversation, keep up with news and conference updates on Facebook and Twitter, then check out our YouTube video channel! 10,920+ Followers 30k+ Followers 5,390+ Followers 3.06K Subscribers 2,364,300+ Views D R I LLI N G CO N T R ACTO R • JAN UARY/FEB RUARY 2024 49 DEPARTMENTS • PERSPECTIVES Rob Holbrook, Rapad Drilling: Relationships, open-mindedness key to long career in oil and gas BY STEPHEN WHITFIELD, SENIOR EDITOR If Rob Holbrook, VP at Rapad Drilling, were to list the key factors behind his three- decade career in oil and gas, curiosity would probably be at the top. He loved math and science growing up and wanted to be an engineer, but he had no connection to the oil and gas industry and never thought of it as a viable career. It wasn’t until he graduated from high school in 1988 and took on summer jobs working for an operator on the Gulf Coast that he truly developed an interest in the industry. Those summer jobs kick-started his love for the oilfield and a curiosity about what an oilfield life and career would be like. This curiosity led him to a petroleum engineering degree, followed by a full- time job roughnecking on land rigs. That job then led him to realize how much he needed to learn about how rigs operate, so he took on another job, and another, and another. Now, Mr Holbrook could not imagine being anywhere else. “The ups and downs are a part of life here, of course, but no matter what some people say, this industry isn’t going anywhere any- time soon,” he said. “If you can work hard, be open minded, think outside the box and learn to be an asset wherever you end up, you will make it in this industry.” Mr Holbrook grew up on a dairy farm in Magee, Miss., hunting and fishing and playing football and baseball. Although he enrolled in Mississippi College, a small institution 50 miles from his hometown, in 1988 on a baseball scholarship, he had his sights on becoming an engineer. Eventually he transferred to Mississippi 50 State University and began a double major in petroleum and chemical engineering. Around the same time, he took on a summer job at UnoCal (now a subsidiary of Chevron), working in Southern Louisiana and in Houston. He came to love life in the field – it reminded him of his time on the farm. So, heading into his senior year, he decided to drop the double major and focus just on petroleum engineering. “I realized that I would need to be one or the other, and the extra degree wasn’t going to help me much,” he said. Upon graduation in spring 1993, Mr Holbrook had a few job offers lined up, but he chose to work for Chelsey Pruet Drilling, a drilling contractor based out of Jackson. It was a local company, with its headquarters just about an hour north of his hometown, and he liked that it was a “strong, family-owned company with a great reputation.” The company initially sent Mr Holbrook to the field, wanting him work the first year as a roughneck on a land rig before coming into the office. Having grown up on a farm, he figured he would like work- ing outdoors on the rig, and as it turned out, he loved the job. After that first year, he asked to stay in the field and spent another year working motors and derricks, then two more years as a driller and a toolpusher: “One year turned into four, and I loved every minute of it,” he said. “If you can work hard, be open minded, think outside the box and learn to be an asset wherever you end up, you will make it in this industry.” - Rob Holbrook In 1997, Chelsey Pruet Drilling sold its rigs to Nabors Industries, and Mr Holbrook began working for Nabors as Drilling Superintendent for the Mississippi/ Alabama region. In 2001, the Pruet family formed a new company, Rapad Drilling, reviving the name of a defunct company the family had owned in the early 1980s. Mr Holbrook joined Rapad the same year. In 2023, the IADC Mississippi and Lafay- ette chapters merged to form the Gulf Coast Chapter. Rob Holbrook, who had previously served as Chair of the Mis- sissippi Chapter, now serves as one of two Vice Chairs for the new chapter. He currently serves as Vice President at the company, which has built up its fleet to nine land rigs, including two 2,000-hp, super spec AC rigs, as of early 2024. Long-term relationships also define Mr Holbrook’s time with IADC. He first became active with IADC in the early 1990s, but he didn’t he agree to take on a leadership role until the early 2000s. In 2003, he became Chairman of the then-Mississippi Chapter, succeeding then-Chapter Chair Rod Freeman. The two have worked together in leader- ship roles with the chapter for much of the past 20 years, primarily organizing social events like luncheons and an annual golf tournament. In 2023, recognizing that there are now fewer drilling contractors working in the region, the Mississippi Chapter merged with the Lafayette Chapter to form the Gulf Coast Chapter. Mr Freeman took over as Chair of the new chapter, and Mr Holbrook took over as one of two Vice Chairs, serv- ing alongside David Cothren. The newly merged chapter held its first golf tourna- ment this past October in Gulfport, Miss. The group is still considering how to proceed for the future, but Mr Holbrook said the aim will continue to focus on providing a forum for members to network and exchange ideas and best practices. “Right now, the focus is on continuing to do what we’ve been doing, and we’ll see what else we can do beyond that,” he said. DC JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R TH E AME R I CAN ASSOCI ATI ON OF D R IL L IN G EN G IN EER S 2024 THE PRE PREMIER REMM IEIEIEIER R RE TECHNN ICICICICICICICICAL AL CONFERENCE C ONF ONFEREN TECHNICAL AND EXHIBITION E X HI HIBB ITI ITIOO N Ap r i l 1 6 - 1 7 , 2 0 2 4 | Ma r r i o t t M a r q ui s | Ho usto n, T e xas The future is fluid - J a c q u e F r e s c o CONFERENCE TOPICS REGISTER TODAY Connect with peers and absorb knowledge from industry front runners on emerging technologies and tactics aimed at generating significant results. The Exhibition and Conference sessions will delve into topics encompassing case studies, enhancements, and pioneering developments in drilling operations. Attend to witness innovation in practice, listen, and gain valuable insights. Find more information on sponsorships, exhibiting and registration: www.aade.org Automation Clear Brine Fluids Drilling Fluids Environmental & Regulatory Matters ESG Initiatives Lost Circulation LC Pills Reservoir Drill-In Fluids Rheology & Hydraulics Shale Inhibition Solids Control Specialty Fluids Test Equipment Well Integrity Wellbore Stability