Demand and technology set to increase drilling activity

Exploration for oil and gas through geological studies and seismic surveys can point the way to a hydrocarbon prospect. Once this information is gathered, there really is only one way to know if that prospect contains oil or gas, and that is to drill a well.

The drilling industry and each operation has three major priorities; safety, providing a fit-for-purpose well, and cost minimisation.

Globally the oil and gas industry places the highest importance on the health and safety of personnel during operations. Health and safety considerations supersede all other goals, including incurring additional costs or delaying operations.

Regardless of the initial purpose of drilling a well, whether it be for exploration, prospect appraisal or field development, it needs to meet the original needs that initially led it to being proposed. At the very least, it should be drilled and completed without damage to the borehole or potentially producing formations and should be suitable for formation testing, data gathering, oil and gas production and any other post drilling activities.

Despite the continued volatility in oil and gas prices, recent capital investment approvals suggest that the industry has reached a level where offshore projects are becoming viable again, according to Jacob Taylor, Head of Commercial Asia/Pacific, Maersk Drilling.

The oil and gas industry pays huge amounts of attention to improving drilling efficiency and reducing drilling time in order to control well costs. It is through innovation and new technologies that the industry, not just in Australia, but worldwide can continue to modernise and evolve through this changing industry.

The 2019 Australasian Oil & Gas Conference & Exhibition (AOG), to be held at the Perth Convention and Exhibition Centre 13 – 15 March, will this year feature a dedicated drilling and completions zone, featuring products, services and new technologies related explicitly to drilling and completions, downhole tools, reservoir evaluation, intervention and production. The conference program will also include a showcase of Australian drilling and completions technology, organised with the support of National Energy Resources Australia – NERA.

New technologies in the drilling arena not only make previously economically unviable oil and gas deposits feasible for development but can also revitalise existing wells. Continued investment in drilling and completions technologies becomes more and more critical as wells become deeper, longer and more geologically complex and as we extract hydrocarbons from more challenging environments.

For Maersk Drilling their newly outfitted Mærsk Deliverer now has the capacity to leverage resources not used in conventional drilling to drill wells that were once deemed ‘undrillable’ while also benefitting from the improvements in safety.

“The Mærsk Deliverer established a long-term free-placement agreement with Weatherford in 2017 for the installation of a Managed Pressure Drilling (MPD) package on the rig,” continued Mr Taylor from Maersk Drilling, a key sponsor of AOG in 2019.

In its first campaign after being upgraded with MPD, the Mærsk Deliverer successfully deployed pressurised mud cap drilling (PCMD) at 2855 m depth offshore Malaysia, setting a record for the deepest water deployment of PCMD in the industry to date.

Australia has more than a sound unconventional gas resource potential. However, while thousands of wells have been drilled in the Surat and Bowen Basins, outputs have been lower than expected. In 2018 the six trains built on Queensland’s Curtis Island by three project owners operated at an average of 82%. A recent EnergyQuest report questions whether there will ever be sufficient gas availability for the three plants to reach full-scale production.

New technologies, such as radial drilling may be a game changer in Australia's oil and gas industry. Technology recently brought to the Australian market by V2H International is gaining traction in local markets.

“Radial drilling can be viewed as a workover technology for existing (older wells) or as a completion tool for new wells. Our modelling suggests the sooner you put laterals into a well the better” said Darren Rice, Chief Executive Officer at V2H Australia.

New technologies in offshore drilling are critical to Australia, and indeed offshore drilling is a national priority according to federal Resources Minister Matt Canavan.

Not only is it vital to our energy security, but to day-to-day fuel costs, with Senator Canavan noting that Australia was close to oil self-sufficiency before the decline in Bass Straight production 15 years ago. “The absolute priority of the commonwealth is to get investment in our oil and gas offshore basins,’ Senator Canavan said.

Fortunately, activity in Australia’s offshore exploration industry is increasing, with drilling companies preparing to test for potential discoveries, fuelled in no small way by last year's Dorado oil find made by (now Santos-owned) Quadrant Energy. Two Dorado appraisal wells are expected to be drilled around April 2019.

The mood is positive for offshore exploration in Australia, according to EnergyQuest Chief Executive, Dr Graeme Bethune. “This year will be better than last, which was better than 2017, so things are gradually on the up,” said Dr Bethune.

At a recent Rystad Energy briefing held in Perth, it was noted that exploration activity bottomed out in 2017, with discovered resources dropping even more than exploration activity.

Global energy research group, Wood Mackenzie, agrees with this sentiment, expecting offshore exploration drilling to be the most active for five years, but still less than half the activity which occurred in 2010.

With increased demand, activity and new technologies in drilling, 2019 will be a year to watch anticipation and increasing optimism.

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