Drilling and Completion

Research Coursework Underbalanced vs Overbalanced drilling,

Economic and Risk analysis

2/27/2015

Acknowledgment: MS MARIA ASTRID CENTENO FOR HER HELP AND SUPPORT THROUGHOUT THE

SEMESTER

MSc Petroleum Engineering

Drilling and Production

EAB_7_154_1415)

Group 6

Authors

Talha Ahmed (3328728)

Muhamad Jawad Butt (3328324)

Ali Mohammed (3329269)

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CONTENTS

1.0 Executive Summary……………………………………………………………………..2

2.0 Introduction and Objective ………………………………………………………..……2

3.0 Main Concepts……………………………………………………………………………3

4.0 Case Studies ……………………………………………………………………………..4

4.1. Case Study 1

4.2. Case Study 2

4.3. Case Study 3

4.4. Case Study 4

5.0 General Discussion ………………………………………………………………………13

6.0 General Conclusion………………………………………………………………………13

7.0 References..……………………………………………………………………………….14

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1.0 Executive Summary

This report is about underbalanced (UBD) vs overbalanced drilling (OBD), economic and risk

analysis. The main objective of the report is to study different technical paper and analyse

basic concepts of UBD vs OBD, economic & risk analysis, focusing on problems and

solutions to them. The paper examined show the difference between UBD and OBD with

OBD being more expensive but is safe. UBD reduces formation damage and when

implemented correctly results in enhanced oil recovery and increases the revenue of the

field.

2.0 Introduction and Objective

Introduction

The energy demand in the entire world is increasing as most of the daily life works are

depending on machines and technology. The biggest energy resource is natural energy

whether it is solar energy, wind energy and water energy but still the best energy source

which can operate machines and meets today’s world energy demand is from hydrocarbons.

So to fulfil this demand we need a high production of hydrocarbons and to keep it affordable

we need an economically viable method for the extraction of the hydrocarbons.

As a result of lot of research and studies more cost effective and time efficient methods for

the production of oil has been discovered which can even extract the hydrocarbons from the

formations which were not considered conventional and economically viable in old days. So

due to the advancement in the technology different drilling techniques are now used

(underbalanced).

In underbalanced drilling (UBD) operations the hydrostatic head of the drilling fluid is less

than the reservoir pressure (Fig.1). Under these conditions no wellbore damage occurs and

the production of the well is not impaired.

In UBD, there is no invasion into the reservoir formation so it often eliminates the

requirement for any well cleanup after drilling is completed.

In underbalanced drilling, flow from any porous and permeable zone is likely. This flow

should be controlled and any fluids must be handled safely. Well starts producing as soon as

the reservoir is penetrated. An underbalanced drilled well has the ability to drill infill wells in

depleted fields which can extend the life of a field.

Figure 1: Underbalanced Drilling

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The drilled cuttings are lifted to the surface by the circulating drilling fluid .In conventional

overbalanced drilling operations the hydrostatic pressure exerted by the drilling fluid in well is

designed to exceed the pressure of the hydrocarbon fluids in the reservoir. Since the

pressure in the hole is higher than the pressure in the rock (Fig.2), fluids are lost to the

formation. These losses cause damage to the near wellbore area, resulting in reduced

production. Even a short exposure to overbalance conditions can severely impair the

productivity of a well.

Figure 2: Overbalanced Drilling

Objective

The main objective of the report is to analyse basic concepts of underbalanced vs.

overbalanced drilling, economic & risk analysis. Four different papers were carefully studied,

focusing on problems and solution to them. In addition, general discussion and conclusion

from four different papers have been outlined.

The four papers studied are:

1. Underbalanced Drilling and Completion Operations to Minimize Formation damage-

reservoir Screening criteria for Optimum Application

2. Extreme-Overbalance Perforating Extends Perforations without Vertical Growth

3. Risk and Economics Evaluation in Drilling Operations

4. Optimum Selection of Underbalanced Techniques

3.0 Main Concepts

The main idea of drilling is to extract maximum amount of hydrocarbons from subsurface

maintaining high safety and with minimum cost.

In underbalanced drilling pressure exerted on a formation in a wellbore is below the

formation fluid pressure. This is not a conventional way of drilling as the formation pressure

is high so it can result in kicking and can even result in blowout. The drilling rate increases

as an underbalanced condition is approached during the drilling.

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In overbalanced drilling pressure in the wellbore exceeds the pressure of fluids in the

formation. This is a conventional way of drilling. Excessive overbalance slow the drilling

process as the wellbore rock is strengthened and removal of drilled cuttings are limited.

High pressure and poor mud properties can cause different sticking problems. As the mud is

of constant density while reservoir pressures vary from one formation to another, therefore

overbalance differs from one zone to another.

During the overbalance perforation the wellbore fluid flows into the reservoir formation as the

hydrostatic pressure in the casing or liner will be greater than the reservoir pressure.

4.0 Case Studies

4.1 Case Study 1: Talha Ahmed (3328728)

Authors: Bennion, D. B., Lunan and Saponja

Year: 1996

Title: Underbalanced Drilling and Completion Operations to Minimize Formation damage-

reservoir Screening criteria for Optimum Application

Publication: The Journal of Canadian Petroleum Technology.

Introduction

UBD have been enormously successful in providing added value for companies using the

technology. Unfortunately, there are also some cases in which UBD was less successful, not

because of a lack of basic technology but rather is related to improper application of

underbalanced drilling technology or faulty execution.

Not all reservoirs are an ideal candidate for the process of UBD. In some cases there may

be flaws in an attempt to implement UBD compared with the simpler overbalanced drilling

process. This paper discuss some of the key principles and design consideration that should

be analyzed in order to evaluate well and see if a given formation is feasible for UBD.

Reasons to consider underbalanced drilling

The main reasons using underbalanced drilling are divided into following

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Also, there are advantages and disadvantages to implement Underbalanced drilling

process. These are briefly described in following table

Issues to consider

UBD is not a solution to the poor quality of the reservoir. It doesn’t create/enhance

permeability. However it does help in increasing production where there are problems such

formation damage, differential sticking etc. Several key parameters are considered in order

to decide whether or not to use UBD, some of them are

Taking past experience into account (Can overbalanced drilling be used?)

Is there a technical or economic advantage using underbalanced drilling?

Is it safe to drill a well using UBD?

Does.the.expected.increase in value justify.the increased risk?

Evaluation of UBD

A good study of all the reservoir parameters is essential in choosing UBD (horizontal or

vertical).There is a systematic approach of study which is used to collect vital information in

order to check whether the UBD process (technically and economically) is viable to

implement or not for recovering hydrocarbons. If it’s viable, then the UBD process is

executed. Table 2 outlines the evaluation process

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Limitations

Often operators use UBD technology in an attempt to increase production rate in formation

with poor reservoir quality. The rate doesn’t increase due to permeability limitation and

hence productivity is uneconomic.

Below are some of the limitations of UBD

Often considered as expensive alternative to overbalanced drilling, therefore is only

used where overbalanced approach is not been successful

Economically viable or not.

At the end of day, it all depends on economic whether to choose and implement UBD

or not. Drilling an underbalanced well requires more people and extra equipment

which adds to drilling cost. The company should show the worth of UBD project and

a return to their shareholders to gain there trust and hence money that will be

invested.

Abnormal pressure and Permeability.

Safety and control issues with respect to well control if the pressure exceeds 30Mpa

High Variation in reservoir pressure. (multiple zones of different pressure)

Conclusion

UBD is a very complex process. To obtain full benefit from UBD, accurate pressure of

reservoir and damage mechanism must be studied and examined properly. In addition, the

UBD process must be designed accurately, implemented and monitored properly and

continuously. Failure to do this will result in huge losses of production and hence revenue.

Table 1: Steps in a typical UBD evaluation

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Formations where UBD is implemented correctly results in enhanced oil recovery and

increases the revenue of the field. Keeping in mind that not all the reservoirs are suitable for

UBD for a variety of reasons (economically and safety wise etc.), and therefore it should not

be used because of its trendy approach to difficult problem.

Recommendation to make paper better

Coreflush testing is not discussed in this paper. This is important if the formation is to be

drilled underbalanced to establish compatibility between the proposed drilling fluid and the

produced reservoir fluids

Also the economic part of UBD is not discussed. If benefits can’t be achieved than the

project should be reconsidered. Enhancement from UBD process must balance the

additional cost of implementing a UBD project.

4.2 Case Study 2: Muhammad Jawad Butt (3328324)

Authors: Guoynes, J. C., Palmer, W. M., Grantham, Peters, J. B. and Friend, B. L. (1996)

Year: 1996

Title: Extreme-Overbalance Perforating Extends Perforations without Vertical Growth

Publication: Society of Petroleum Engineers

Introduction

Extreme overbalance perforation was introduced in 1993, process has the ability of higher

initial production, lower treating pressures and rapid evaluation of producing capability of a

well. The process reduces the total well completion cost and also increases net present

value.

Problem

The formation of interest zone appears to be sensitive to water. The formation is also prone

to vertical growth, certain wells have water producing zones within 10feet or less of the gas

zone, which can override gas inflow and also result in uneconomic production.

Wells normally show a skin greater than +7 even after acid ballout treatments. If the skin

damage could be eliminated, many wells would not require a fracing job. Fracturing could

result in irreversible well damage, as there is the risk of connecting the water intervals above

or below the zone of interest.

To lengthen the overall completion, combine the customary procedures and extended clean-

up times. Due to this extra time, costs of rig and equipment rent increases and as a results

production revenue gets overdue.

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Solution

As the formation of interest zone was water sensitive, alleviative act at this point would be

the use of little water and less amount of time the fluid is in contact with the formation. so by

using the process of Extreme overbalance perforation water damage minimized in two ways

1) Use insignificant amount of methanol diluted acid.

2) Start the production within 9 hours from the well after perforation.

Negative skins can be achieved when EOP is used the process also reduces the vertical

growth during acidizing and fracturing.

Acid spotting, tripping guns, and installation of the production tree were done by the first day.

On the second day well was perforated, stimulated, and was selling into the pipeline

because of the speed of the process the costs were minimized approximately $24,500 less

than the previous completion procedure costs.

Value

Contributions associated with this case are as follows:

The extreme overbalanced perforating eliminated the skin damage, so negative skins

can be achieved when EOP is used.

With the EOP process vertical growth associated with hydraulic fracturing should not

be a concern.

If EOP is done before hydraulic fracturing than Lower treating pressures are possible.

Application

In water-sensitive sands and formations that might not otherwise be stimulated because of

their proximity to water bearing intervals the EOP process can be used successfully.

Economic incentives of EOP make it applicable in many lower productive intervals, as it

includes lesser risk of damage from completion, less completion time, production increase,

and higher net present value.

Conclusion

Due to near-wellbore damage the formation experienced many production problems over the

years. Additional damage caused by the introduction of water or water-based fluids during

the drilling and completion phases. Gas and condensate production was constrained

because of the skin damage with the formation. With the EOP process vertical growth was

limited and negative skin damage achieved after the completion of process with minimized

procedure costs.

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4.3 Case Study 3: Ali Mohammed (3329269)

Authors: Alajmi, S. and Schubert, J.

Year: 2003

Title: Optimum Selection of Underbalanced Techniques

Publication: Society of Petroleum Engineers

The Economic Analysis model

The fundamental objective to employ any technology including the UBD to generate

profitability and the misuse of technology will not only damage the perception of technology

but also the project economics. The outcome of UBD gives the high end of engineering cost

along with the effective rate and gain from the additional cost by employing technology and

it also gain the profitability with

The minimize direct drilling cost through increment of ROP and life bite

Eradicate the fluid system which is expensive

To reduce the cost of stimulation

To reduce the difficult time duration

To maximize the deliverability of the well

While drilling value the produced fluid

Maximize the recovery from the reservoir

There are number of component that impact for the underbalanced project. The evidence of

experience shows that the bit life and ROP will support to enhance when the UBD is

working, it also support to minimize the differential sticking issues and the lost circulation. It

also realized that if the drilling were underbalanced it will minimize the magnitude for the

change that has been expected. It is easier to quantify the cost of underbalanced, the cost

analysis not only support to the cost of equipment, personnel but also to the pre-engineering

training. project management of the organisation and the application of UBD for the first time

support to add the degree of complexity over the drilling conventional and it is improperly

design for the managed project to enhance the risk of accidents, failures and increment of

risk. The cost has been exaggerated through the application of the remote application or

offshore.

The formation of UBD mode, while drilling hydrocarbon and fluid flow of reservoir from the

borehole and formation of productive capacity are immediately cannot be accomplished

through the adequate preplanning. Specialized and additional equipment has been used in

UBD which includes multiphase separators, nitrogen membrane, rotating head control;

diverter/rotating BOP along with the specialized personnel and it also give importance to the

incremental cost which can be more than conventional drilling operation. It actually trade-off

the cost with UBD and the advantage of the UBD planning to detect the flow of

hydrocarbon in control manner which actually occurs In the real time and the formation has

been not masked with the invaded fluids but to allow the flow in the wellbore. The fluids

which have been produce and the cutting the drill were separated at surface, measured

adequately and independently. it also realized that the hydrocarbons has been detected with

further drilling which supposed to enable the completely potential of reservoir to make the

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borehole and the equipment used on the well site ,fluid sampling, testing. other features can

instantly analysed and the most important the increment cost used for the UBD vs DST were

commonly negligible while framing the value of immediate knowledge through the flow data

from the without damaged reservoir which considered to be the twice more than the obtain

through the drilling conventionally and it also o felt that UBD considered as most productive

reservoirs which support to operate directly into the pipeline and potential revenue through

the bank before the drilling has been completed and it not avail while drilling

The main advantage of the UBD, it supports to minimize the damage in formation. Thus the

process of evaluation of productivity consider as the indispensable for the estimation of cost

and it also support to evaluate the possible gain the productivity of a well and it necessary to

estimate the possible reduction in the mechanical skin and for that it better to evaluate the

productivity index and volume of production for every horizontal and vertical case and the

equation which has been used were mention in the system

For the vertical whole the productivity index was mention below

With the use of equation which has been mention above, the production and expected P1

rate could be calculated and it also focus to evaluate the possible earning through the

activities of UBD, the conventional drilling skin from the same well drilled consider as the

unbalanced but the present models don’t able to estimate the minimize skin which has been

expected and one of the option to model the system with zero skin while analysis the system

of unbalanced and it essential to the compare to the outcome of the skin which is usually

related to conventional system and but zero skin consider as zero skin in the theoretical

aspect and support minimize which supposed to analysis and underbalanced evaluation has

been analysis and project drilled in the city of Indonesia and the unbalanced with the

originated it essential to wellbores that has been conventional along with acidized the

positive skin after the second skin among the 3 and 5 as compare the unbalanced and it

positive skin and afterwards acidized the well had the skin among the -3 and- 5 as compared

to the positive med well that has been unbalanced drill and not the acidized and the

unbalanced well has the two-fold increment in the deliverability

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The net present value

While producing the wells, it’s important to maintain the time sequence for the investing the

money and also to receive the return the investment which has to take into account and the

money has been invested in the current situation has consider as more value than profits

which has been received at the some point in the future and it true due to the money

situation in the present circumstance which has been invested and it will support to grow

more than the future and the most accepted method deals with the accounting for the time

value of money, is the net present value(NPV) and it take into account of the profit made or

investment along with the discount rate and the NPV equation has been used in the system.

The risk based economics

The risk based economics analysis support planner to gain additional range of cost and

benefits related to the underbalanced drilling and the support of the risk based economics

we can analysis the time of completing the project. it also impact for the long term benefits

which could be determined stochastically, through using the predictive model which support

to function on Excel-based program. It enhances the ROP, productivity, trouble time

reduction, bit life and modelled through using the distribution art from the fixed value and

clear explanation of risk based economic model has portrait in the flow chart

As the system determines the cost of UBD has quantify the productivity and it support to

calculate the net present value and it use the risk based simulation and it also modelled in

the simulator which includes the ROP and bit life modelling as it enhanced them and based

on the formation of the permeability and hardness for the formation and it also use the UBD

technology and it also estimate the historical data along with the distribution of ROP and its

impact on the distribution of reduction in skin as combined with calculate the steady to

estimate distribution of production and at last it determine the probability distribution of

previously and it combined the net present value with cost of project then it compare to the

net present value of the same well by using the practices of conventional drilling.

4.4 Case Study 4: Ali Mohammed (3329269)

Authors: Willis, J. B. and Johnson, S. M

Year: 1990

Title: Risk and Economics Evaluation in Drilling Operations

Publication: Society of Petroleum Engineers

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The abstract

To perform the risk and economic evaluation for alternative drilling plan it is essential to

focus on time and cost modelling program. Its outcome reflected to have information about

the speed as it assist to evaluate the quality. As it is considered to be the comprehensive

analysis and then the acceptance focus on the quality and conclusion

The introduction

The paper gives importance to the evaluating drilling procedures and operations along with

the guidelines. It also deals with the cost analysis, it is also necessary to have the

operational experience. Advanced engineering simulator for drilling used to perform the

analysis for drilling extensive analytical model and operation expertise. Engineering which

considered the manual, relies on the time and cost modelling program

The economic evaluation

The major aspect for evaluation of engineering is to quantify the risk of alternatives, cost and

viability. it focus on the question on the “will it work” and “how to do it” along with the

evaluation address such as “how long” and “how much will it cost” it also address about

the risk analysis

The handling risk

The potential for additional cost over the predicted cost were refer as the risk. The risk were

involved in the drilling plan alternative and its significant to demonstrate the risk to manage

the probability of failure and it also determine the cost based realistic downside case and it

fails then it deals to the downside case as it reflect on the time, cost and catastrophic

occurrence by formulating the set of operating criteria which has been expected to maintain

the risk for the new procedures at normal level as consider as the best method to handle the

risk based on cost and it determined through the operating criteria

The conclusion

Thus, the entire information related to the use of modelling with concern to the operation,

drilling, cost analysis and time considered to be the effective to increase the speed, quality,

develop acceptance and additional to that it give importance to the innovative abilities to

evaluate the alternative method to drilling with the estimate factors for better results of

quality. The main advantage of the UBD, it supports to minimize the damage in formation.

Thus the process of evaluation of productivity considered as the indispensable for the

estimation of cost, it also supports to evaluate the possible gain of productivity of a well and

its necessary to estimate the possible reduction in the mechanical skin for that it better to

evaluate the productivity index along with the significance of net present value as it support

the organisation to sustain in the competitive world. When it is compared UBD reduces NPT

by 75% by elimination of time associating to controlling losses, stuck pipe and improved well

control.

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5.0 General Discussion

From the paper studied, we understand that UBD is now used due to the advancement in

the technology. In UBD operations the hydrostatic head of the drilling fluid is less than the

reservoir pressure where as in overbalanced drilling the hydrostatic pressure exerted by the

drilling fluid in well is designed to exceed the pressure of the hydrocarbon fluids in the

reservoir.

Each drilling technique has its own advantages and disadvantages. UBD increases ROP,

production rate, overcome problems like differential sticking and lost circulation but it

requires extra engineering work and hence it is expensive. Also there is more of a risk of

kick, blowout in UBD operation when compare to overbalanced drilling operation which is

more safer. Additionally, in overbalanced drilling, fluids are lost to the formation which

causes damage to near wellbore area, resulting in decrease in production. Even a short

exposure to overbalance conditions can severely impair the productivity of a well.

Also we should keep in mind that UBD is not a solution to the poor quality of the reservoir. It

doesn’t create or enhance permeability. However it does help in increasing production where

there are problems such formation damage, differential sticking etc.

6.0 General Conclusion

The UBD minimizes the damage in the formation although it is a very complex process.

Formations where UBD is implemented results in enhanced recovery and increases the

revenue of the field. Keeping in mind that not all the reservoirs are suitable for UBD for a

variety of reasons like economic and safety factor. Whereas in overbalance the safety risk is

not that high with the Overbalanced drilling process vertical growth can be limited and

negative skin damage is achieved after the initial completion of process with minimized

procedure costs, so the cost of underbalance and overbalance differs for different cases

depending upon the different conditions of the formation.

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8.0 References

Bennion, D. B., Lunan and Saponja (1996) ‘Underbalanced Drilling And Completion Operations to

Minimize Formation Damage-Reservoir Screening Criteria For Optimum Application’, Annual Technical

Meeting. doi: 10.2118/96-75.

Guoynes, J. C., Palmer, W. M., Grantham, Peters, J. B. and Friend, B. L. (1996) ‘Extreme-Overbalance

Perforating Extends Perforations without Vertical Growth’, SPE Eastern Regional Meeting. doi:

10.2118/37325-ms.

Alajmi, S. and Schubert, J. (2003) ‘Optimum Selection of Underbalanced Techniques’, Proceedings of

SPE/IADC Middle East Drilling Technology Conference and Exhibition. doi: 10.2523/85322-ms.

Willis, J. B. and Johnson, S. M. (1990) ‘Risk and Economics Evaluation in Drilling

Operations’, Proceedings of SPE/IADC Drilling Conference. doi: 10.2118/19931-ms

Underbalanced drilling (UBD) - (no date). Available at:

http://petrowiki.org/Underbalanced_drilling_(UBD) (Accessed: 26 February 2015).