Permian Basin Petroleum Association Magazine
In the February issue of PBO&G Rodger Keller, PE discusses the operational costs associated with drilled cuttings.
Solid Drilling Waste and Operational Costs
Today, oil and gas prices are at, below, or barely above breakeven costs in the majority of oil and gas play regions. In order to help restore profitability, it is critical for operators to find ways to reduce the cost of each component that contributes to the total cost of a well. Two items that can impact the cost of a well beyond their face value are the disposal of solid drilling waste and the construction of drill pads and lease roads.
Although solid drilling waste disposal and transportation costs represent a small percentage of total well cost, this expense can significantly cut into an operator’s profit margin. Costs at a conventional disposal facility are typically high and often include numerous add-on expenses. The trucking of solid drilling waste also contributes significantly to disposal costs and can be very expensive, especially when a well site is far from a disposal facility. These are all factors that make costs difficult to predict and budget in an Authorization for Expenditure (AFE).
Overlooking solid drilling waste disposal can increase liability.
Liability costs of conventional solid drilling waste disposal is another area often overlooked. Once an operator’s solid drilling waste is unloaded at a disposal facility, it becomes commingled with waste from other operators, or with other types of waste. This disposal method intertwines the operator’s waste liability with that of every other waste generator that has disposed at the facility. If solid drilling waste is disposed of through landfarming or landspreading, the operator has a significant potential liability through possible land and water impacts, as well as commingling. Disposal practices are a major factor in the calculation of an operator’s liability risk number, which affects costs outside of those typically captured in the total cost of drilling a well.
Oil-based muds are a primary driver of solid drilling waste disposal costs. However, oil-based muds are usually required to achieve the necessary rate of penetration (ROP) and drilling reliability to minimize drilling time, and thus reduce the total cost of a horizontal well.
Delays can be very costly, but are preventable.
Operational delays increase the time to drill and complete a well, resulting in an increase in total well cost. A problem often overlooked among oil and gas operators is operational delays due to poor construction of a location pad or lease road. A poorly constructed location pad or lease road creates difficult operating conditions, especially during and after weather events with precipitation. Rig up and rig down time is increased, as well as drilling time, due to difficulty moving trucks, equipment, and materials to and from the rig. In severe cases, the location pad loses the ability to bear the load of the rig, thus causing drilling operations to temporarily cease in order for the location to be reconstructed.
Completions operations also slowed down when trucks and equipment have difficulty navigating lease roads and drill pads that have structurally failed. Delivery of proppants and completions fluids will also require more time. In severe cases, as with drilling completions, operations are delayed for a location pad or lease road to be reconstructed. Even after a well is completed, poor construction can interrupt routine production and maintenance activities. For example, if saltwater tanks for a well are full and tankers cannot access the location, the well may have to be temporarily shut in to enable the location or access road to be reconstructed, resulting in lost production. In any case, these types of delays to drilling, completion, and production operations are very costly but preventable.
Maintenance or reconstruction costs for location pads and lease roads are also overlooked or poorly tracked. Even though these costs are a small percentage of production costs, they can be reduced by proper construction. The amount of maintenance or reconstruction necessary for a location pad or lease road depends on the quality of the initial construction. A poorly constructed pad or road can result in significant maintenance costs throughout the life of the wells served, often ranging from tens of thousands of dollars to hundreds of thousands of dollars per location.
Scott’s next-generation solid waste management helped an operator increase profitability.
How can an operator reduce costs before, during, and after drilling, while enhancing operational reliability and reducing current and future liability? These goals do not need to be mutually exclusive.
Scott Environmental Services helps operators to achieve these goals by providing the next generation of solid drilling waste management in two fundamental ways:
- Process waste to build engineered pads and/or lease roads using Scott’s Firmus process.
- Process waste on the generating lease to build engineered load-bearing areas of pads and/or lease roads using Scott’s Duro process.
Each of Scott’s processes can be combined or customized to meet an operator’s needs.
Recently, Scott’s Firmus process played a key role in enabling an operator to drill a best-in-class, super-extended lateral for a major play in record time at a significantly reduced completed well cost on a location with severe soil problems.
The operator selected the location to be constructed with drill cuttings using Scott’s Firmus process. Scott personnel evaluated the location and discovered it was spongy, wet, and very sandy. The soils had no strength and could not support trucks and equipment. Construction equipment would sink and get stuck in the mud, with heavy rains aggravating the situation. Additionally, the spud date was quickly approaching.
Scott coordinated closely with the operator to develop the optimum cost-effective solution for the location’s soil problems. One benefit of the Firmus process is that each job is customized and engineered specifically for each site. In this case, the Firmus process was engineered to address the extremely poor soil conditions. Approximately 3,500 tons of drill cuttings from three wells were recycled in the Firmus process to construct the location pad. Scott’s quality assurance and quality control testing program ensured that the final product met or exceeded the design specifications, thus demonstrating the reliability of the pad. In fact, construction of the drilling pad with the Firmus process was completed with time to spare before the spud date.
While reducing construction and cuttings disposal costs, Scott’s Firmus process also eliminated the costs of operational delays due to poor location construction. The drilling pad was designed and constructed for safer and more reliable operations in all weather conditions. This not only eliminated delays to drilling, completions, and production due to poor construction, but also enabled the operator to drill a best-in-class, super-extended lateral well in record time at a significantly reduced completed well cost.
Minimizing all components of total well cost is critical for oil and gas operators in the current economic environment. The costs of solid drilling waste disposal, waste liability, and operational delays due to poor location pad and lease road construction are expensive and often unexpected. AFE budgets can be met by reducing costs during all phases of the drilling process, enhancing operational reliability and reducing current and future liability.