With the price of oil steadily climbing and President Obama’s promise to open up more of the United State’s Coastline to offshore oil and gas drilling, I thought it would be fun to explain how oil and gas wells are drilled in the ultra-deep waters of the Gulf of Mexico and beyond.
My goal is to make this series as non-technical as possible so that anyone will be able to understand the basic concepts, challenges, expenses, environmental impacts, and financial risks of drilling offshore oil and gas wells.
If you have any questions on the basics of drilling offshore oil and gas wells, please don’t hesitate to ask a question in the comment box at the end of this article!
How Oil Companies Decide Where to Drill Offshore Oil and Gas Wells:
When it comes to deciding where to drill an offshore oil or gas well, oil companies look at a variety of information and then make an “educated guess” on where the best spot might be to begin drilling.
First, an oil company will hire a survey boat (seismic survey vessel) to scan underneath the sea floor to look at the various rock and sediment formations in the ground.
Scientists on the survey boat fire sound waves from a “gun” towed several miles behind the boat. The sound waves reflect off the various layers of ground underneath the sea bed and echo back to the survey boat. High tech computers on board the survey boat are able to turn these reflected sound waves into an image showing the various features of the earth directly below.
Geologists who specialize in identifying oil and gas look at these images to see if there are any areas where oil might be present. As this technology has improved over the years, survey boats are able to create 3-D images of the ground which has significantly improved the geologists’ ability to identify potential oil deposits.
Environmentalist argue that sound waves used by these survey vessels adversely affects marine life, and there are currently many studies underway to quantify their concerns. Although I sympathize with the activists and more importantly the animals, my personal opinion is these sound waves are nothing more than a momentary nuisance to the marine life.
The Success Rate for Drilling Offshore Oil Wells:
As technology has advanced, and our understanding of oil geology has improved, oil companies are getting much better at finding producible oil reservoirs in the ground. Two decades ago nearly one out of eight exploratory (or wildcat) oil wells was successful. Today nearly 1 in 3 of all exploratory oil and gas wells are successful.
Its a good thing too! As wells are drilled in deeper water, and deeper into the earth, an offshore oil well may cost $70,000,000 or more to drill! Once a well has been successfully drilled, an oil company may spend an additional half billion dollars to get the oil back to a refinery.
How Oil Companies get Permission to Drill in a Particular Area:
The United States has exclusive rights over any oil or gas found up to 200 miles from it’s coastlines. In areas where this 20o mile ”economic zone” overlaps another country’s economic zone (such as the case with Mexico in the Gulf of Mexico), the overlapping zones are split evenly between the two countries.
In the Gulf of Mexico (and other areas of the world) the seafloor is divided into rectangular “blocks” approximately 2 or 3 miles square. There are thousands of these blocks in the Gulf and any company wanting to drill within a particular block must own the mineral rights to do so. So how do they get the rights you might ask?
On the United States’ side of the Gulf of Mexico, the Minerals Management Service (MMS) is responsible for overseeing all offshore oil and gas drilling including leasing the mineral rights to these blocks. MMS is a bureau of the Department of the Interior and collects over $5 Billion in revenue each year from the sale of inland and offshore oil and gas leases.
When oil companies decide they want to drill in a particular block, they must first make sure no one else owns the rights. To manage this, MMS has periodic auctions for any unleased land eligible to be drilled on. Oil companies can submit their bids to MMS to drill in a particular block and if they are the highest bidder, they are usually given the right to do so.
The higher the probability that oil exsists on the block, the more an oil company is willing to bid on the lease. As an example of how high these bids can get, Anadarko and Mariner Energy recently paid over $52,000,000 for one single block (Walker Ridge 793) in the Gulf of Mexico.
The Different Types of Offshore Oil Drilling Rigs:
Once an oil company obtains the rights to drill within a particular lease area, they must find an oil rig that is capable of drilling the well. As the search for oil has expanded into deeper and deeper water, oil rigs have become larger and more sophisticated, and the people operating them are highly skilled.
It’s interesting to point out that most major oil companies do not own their own oil drilling rigs. Instead, they outsource the job of actually drilling the oil well to a drilling contractor who has the people, equipment, and expertise to drill oil wells in the safest, most efficient, and environmentally friendly way possible. The largest of these oil drilling contractors is Transocean, but Diamond Drilling, Pride, Frontier, and Sea-Drill also have a large presence in the industry.
There are several different types of oil drilling rigs. I’ll give you a brief overview here but the two major types involved in deepwater offshore drilling are the last two.
A jackup typically has three or four long legs (up to 350 feet high) that run through the hull up into the air. Once the jackup is over the proposed well location, each leg is jacked down to the sea-floor until they support the weight of the entire unit lifting it out of the water.
Once the weight of the barge is fully supported and the unit begins to rise out of the water, the legs are jacked down further until the unit is 10-40′ in the air. When all safety checks are complete, and the unit is found to be secured, the unit will switch to drilling mode and begin drilling the well.
Semi-submersibles are what most people think of when they hear the term oil rig. The oil rig shown in the beginning of the movie “Armageddon” was a semi-submersible.
So why is this type of oil rig called a semi-submersible? Well, once these units are over the proposed well drilling location, they flood their huge ballast tanks with seawater and partially submerge below the surface of the water.
What you typically do not see is that most semi-submersibles are built with two huge pontoons on the bottom. These pontoons are what provides the buoyancy to keep the unit floating. Since the majority of a semi-submersibles buoyancy is located well beneath the surface of the water, semi-submersibles are very stable even in 10-20 foot seas.
Semi-submersibles can maintain their position over a proposed oil or gas well two separate ways.
The traditional method of keeping a semi-submersible on location is through the use of anchors. Up two twelve anchors are run out away from the unit and set on the ocean floor. The tension in the anchor chain or cable is increased by use of a large winch and once the oil rig is positioned over the well, only a few minor adjustments need to be made to keep the unit on location.
Semi-submersibles were typically limited to drilling in water depths less than 2000 feet, but today’s advanced semi-submersibles can be anchored in water depths over 8,000′.
The second method of keeping a semi-submersible on location is through whats called a dynamic positioning system or “DP” system.
With a DP system, the semi-submersible uses position information from high tech GPS systems and radio beacons on the ocean floor to constantly monitor its position. If the DP computer detects that the oil rig is drifting off location (either from the wind, waves, or current), huge thrusters underneath the rig will apply thrust to push it back over the well.
It’s not unusual for a modern dynamically positioned oil rig to stay within 5 feet of a wellhead more than a mile below the surface of the water over a 24 hour period.
While semi-submersibles have the advantage of being very stable in rough environments, they are somewhat limited by the amount of equipment and supplies they are able to store on board.
Over the last 15 years, drillships have been built to meet the growing demand for highly capable ultra-deepwater drilling rigs.
Built on traditional ship bodies, these drilling rigs are massive in size and can stretch nearly 3 football fields in length. Although they are not quite as stable as semi-submersibles, drillships more than make up for it with an a much larger storage capacity.
Today’s generations of deepwater drillships use the dynamic positioning system (mentioned above) for maintaining their position.
Drillships are capable of working for extended periods without the need for constant resupplying.
Another benefit of a drillship (especially those operating in the Gulf of Mexico), is their speed and maneuverability. Where most semi-submersibles are evacuated and left to the mercy of the environment when a hurricane approaches, drillships can secure their operation and sail out of harms way. This simple facted alone has saved oil companies 10′s of millions of dollars over the last 5 hurricane seasons.
The First Step: “Spud-In”
It’s taken a lot of work to get to this point but we are now ready to begin drilling our “hypothetical” oil well. We’ve decided where to drill our well and leased the mineral rights from MMS, we’ve looked at the success rates for drilling an offshore oil well, and we’ve decided on what type of oil rig to use to drill our well (for the sake of this article, we’ll be using a drillship).
The first step in actually drilling a well is called “spudding in“. When drilling oil wells in deep water (>1000′), this involves forcing 300-400 feet of 36″ diameter metal tubing called “casing” into the ground. This 36″ diameter casing will form the backbone of the well and provide the support we’ll need for the remaining phases in our well construction plan.
The 36″ casing is lowered to the seafloor by “drill pipe”. Each section of drill pipe is anywhere from 30-45 feet long and about 6″ in diameter. The drill pipe is connected end to end and gradually lowered down into the well and back up to the surface as needed.
To help speed up the time connecting hundreds of sections of drill pipe together every time you want to lower a drill bit, casing, or other piece of equipment into the well, the drill pipe is stored in the derrick three or for sections at a time. This saves the drilling companies time and money.
Each section of drill pipe is called a “joint“, and when two or more “joints” connected and “racked back” in the derrick they are then called a “stand“.
Fancy Drilling Lingo:
Joint: One section of drill pipe.
Stand: Two or more sections of drill pipe “racked back” in the derrick.
Racking Back:The process of storing one or more ”stands” of drill pipe in the derrick.
Because the seafloor in the Gulf of Mexico is covered in a deep layer of loose sediment (deposited by the Mississippi River), you don’t really need to “drill” the 36″ casing into the ground. In most cases, pumping sea-water through the end of the casing using the ships massive pumps is all you need to do to get the pipe to settle into the ground.
As the casing gets deeper and deeper into the ground, some rigs use giant “hammers” to pound the casing into the ground to the desired depth.
When the 36″ casing is set to the correct depth, we unlatch the drill pipe from it and pull the drill pipe back to the surface so that we can get the next section of casing and proceed to step 2 of our well drilling program.
The Second Step: Drilling a Hole for Second String of Casing
The next step in our well drilling plan is to lower a drill bit down inside the 36″ casing we just set into the seafloor. Once the drill bit enters inside the 36″ casing we’ll drill 2000-3000′ into the ground. We need to make sure the bit we are using is large enough so that we can run our next section of “casing” into the ground (running the casing inside the 36″ casing).
Although my picture above of a “drill bit” cutting through the earth is a little crude (I’m not a very good artist), I’ll do my best to explain how the drill bit actually cuts through the earth.
As you can see (sort of) in my lovely drawing, the drill bit is connected to the drill pipe which runs all the way back to the surface of the water to the drill ship.
As the bit is rotated in the well bore (the hole that is cut into the ground), high pressure drilling fluids called “mud” is pumped down the center of the drill pipe and out through nozzles in the drilling bit. The drilling fluid is represented by the solid red coloring in the drawing above.
As the drill bit cuts away at the rock formations, the drilling fluid then carries the chipped rock pieces (represented in yellow) out of the hole to prevent them from building up on the bottom of the well.
Drilling fluid, or “mud” as it is referred to on a drilling rig, has several other important functions besides clearing out rock bits from around the bit.
First, it keep the bit cool as it turn through layer after layer of hard rock formations. Second, it keeps the bit and the drill pipe lubricated to help keep it from getting stuck in the ground. Perhaps most importantly, the “mud” helps prevent the well from caving in or “taking a kick”. This is a very dangerous occurrence which we’ll talk about more in a little while.
After you’ve drilled deep enough to “run” your 22″ casing, you bring the drill bit and all the drill pipe back to the surface and then begin lowering the 22″ casing back down to the seafloor. Using an underwater Remotely Operated Vehicle (ROV), we are able to line the 22″ casing up so that it will pass through the 36″ casing and into the freshly drilled hole.
This second section of casing we are installing (the 22″ casing) is usually between 1000′ to 3000′ in length.
The Third Step: Cementing the First Two Casing Sections in Place
Once the 22″ casing is set inside the 36″ casing, the two different sized casings are cemented in place. This is accomplished by pumping cement down the drill pipe (represented in yellow in the picture below) and out through a special nozzle on the end of the pipe.
This is a very critical step in the operation. The cement must be mixed very carefully and every effort is made to ensure the nozzle is lowered to the correct position inside the casing. Once the cement has been pumped down the drill pipe and back up around the sides of the casing (filling in the space between the casing and the drilled well hole (see picture above) it takes anywhere from 4-12 hours for it to harden up or “set”.
If a mistake is made during the cementing operation, it can be very costly to fix.
The Fourth Step: Connecting the Blowout Preventer (BOP) and Marine Riser On Top of the Well Head
Formations in the ground are under tremendous pressure. When you are drilling in areas where oil, water, or gas may be present, there is a possibility this pressure may escape out through the well you are drilling. When this happens its called a “blow out”.
In some ways, the concept is very similar to popping a balloon. Think of the air inside the balloon as a formation of oil. When you poke through the surface of the “formation”, the air escapes out the hole and more often than not, the balloon violently explodes.
To control these formation pressures, a large underwater control valve called a Blowout Preventer (BOP) is placed on top of the wellhead. This is why its very important to have run the first two sections of casing and properly cemented them in place.
The BOP sits directly on top of the wellhead on the ocean floor. In the event a blowout or “kick” occurs, giant valves inside the BOP can seal off the well keeping any oil, gas, and any excessive pressure contained within the ground.
If not for the blow out preventer, oil and gas would escape directly to the sea causing tremendous damage to the environment. Ensuring the BOPs are properly maintained and tested is one of the highest priorities of both the drilling contractor and the oil company involved in drilling the well. BOP testing is also closely watched by the Minerals Management Service (MMS) mentioned at the beginning of this series.
The BOP is rigidly connected to the drilling rig by way of marine riser. Drill pipe can be lowered down through the marine riser, through the BOP, into the wellhead, and then down into the well to drill deeper into the ground. As the drilling fluid or mud is pumped through the drill pipe and out through the drill bit, it circulates all the way around up through the marine riser back to the oil rig.
As mentioned earlier drilling fluid helps clear the rock bits or “cuttings” that are constantly being chipped away as the drill bit drills deeper into the ground. Marine riser allows these “cuttings” to be brought back up to the oil rig to be collected and disposed of.
In the drawing above, you can see the drilling fluid (red) being pumped down the drill pipe. Once the drilling fluid or “mud” shoots out of the nozzles in the drill bit, it returns back up the marine riser (green) in the space between the drill pipe and the inner wall of the marine riser.
This is especially helpful to the environment to prevent any contaminated cuttings from affecting the local marine life.
Once the mud returns to the drilling rig, the cuttings are filtered out and the mud is reused. Being able to reuse drilling mud is very important because it can be extremely expensive to buy. Oil companies can spend millions of dollars for drilling fluid or “mud” on every well they drill. Who knew that playing with mud could be so lucrative?
Why are Blow Out Prevents (BOPs) and Marine Riser so Important:
We talked a little bit about Blow-Out Preventers and Marine Riser in the last few paragraphs. Now its time to explain why this equipment is so important to the overall well drilling operation.
As we mentioned above, oil well blowouts or “kicks” as they are sometimes called, are uncontrolled releases of pressure from underground formations into the well hole or “well bore“.
These “blow-outs” are not only bad for the well, but they can be extremely bad for the drilling rig and everyone on board if they are not properly dealt with.
Many oil rig workers have lost their lives to explosions and fires when uncontrolled gases from blow-outs escaped from the well up to the surface of the water.
Drilling fluid is much heavier than sea water. In some cases it can be more than twice as heavy as seawater. This is helpful when drilling a well because it’s weight creates enough pressure to keep any pressure in the oil or gas formation from escaping back up through the well.
The heavier the drilling fluid you use when drilling a well, the less likely you are to have formation pressure escaping back up into the well and up your marine riser.
On the other hand, if the drilling fluid you are drilling with is too heavy, you run the risk of breaking or cracking the well. When this happens, your drilling fluid begins leaking out into the underground formation. This is also very bad, because without being able to circulate the mud back up through the marine riser, you will be unable to drill any deeper.
As the well is drilled deeper and deeper, the mud weight operating window gets smaller and smaller.
The Fifth Step: Drilling the Remaining Sections of the Well
The remaining sections of the well are drilled the same way as the 22″ casing was drilled in the earlier step only now the cuttings and mud are circulated back up to the drillship to be processed.
The drill crews will drill deeper into the ground so that the next section of casing can be run and cemented into place. There is no set limit on how long each section of casing will be, this decision is left up to the drilling engineers that have closely analyzed the survey data and any data from nearby or “offset” wells.
As the drill bit continues to make its way towards the oil or “pay zone”, the drilling crew closely monitors the amount of fluid in the storage tanks as well as the pressure of the formation to ensure that the well is now experiencing a blow-out or kick.
If it is determine that the well is experiencing a “blow-out” or kick, the Blow Out Preventer (BOP) control valves are closed off and the drill crew must take measure to stabilize the well. To stabilize a well that has experienced a “kick”, the drill crew is usually able to control it by pumping heavier drilling fluids into the well to “force” the kicked pressure back into the formation.
Determining if a Well has a Produceable Amount of Oil or Gas:
Once the geologists are happy with the depth of the well, a series of test called “logs” will be conducted to determine how much oil and gas (if any) is present in the formation. The process is called logging because the information is “logged” into a database as it is collected.
This is accomplished by sending high tech measurement devices into the hole that can detect various features of the formation.
Using a combination of sound wave tools, electrical wave tools, and radiation measurement instruments, geologist are able to take readings inside the well which will assist them in determining the presence of oil.
However, just because there is oil or gas at the bottom of the well doesn’t always mean it is worthwhile to pump it out. Oil companies must decide whether the amount of oil present in the formation is worth investing hundreds of millions of dollars in additional equipment to pump it out and back to a refinery.
In some instances, an oil company may decide to “test flow” a well to help determine how much oil is there. When test flowing a well, oil is allowed to flow up from the well into storage tanks. The pressure is recorded and if it remains at certain levels over a certain amount of time, the oil companies may decide that investing more money to “produce” the well is worth the costs.
As you can see, the process of drilling an oil well (even when boiled down to the most basic elements) is very complicated and there are many opportunities for things to go wrong. Oil companies can invest over $100,000,000 in a single well only to find out there is no oil present.
There are substantial risks involved with drilling an oil well, but the rewards can be tremendous. One successful oil well can easily cover the expenses of multiple dry wells (sometimes referred to as dusters).
By no means is this article intended to be a comprehensive guide into the various challenges and risks of drilling offshore oil and gas wells, but I hope that it has given you at least a basic appreciation of how they are drilled.
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