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D r i l l i n g / April 2017 D r i l l i n g / April 2017

NewsApril 2017 / Drilling MagazineN

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Rig noor 1Rig noor 2Land drilling rigs (2000 hp)

MAP DRILLER 1

Executing EPDS projects Operation & Management of onshore and oshore drilling rigsDrilling Engineering and supervisory Services

Drilling Services including : Casing RunningCementing and AcidizingMudlogging UnitCoiled Tubing Unit (CTU)Nitrogen PumpingCoringMDST/RTTSFishingSurface Well TestingFull Bore Drill Stem Testing(DST)

No.20, 23th St., Gandhi St.,Vanak Sq., Tehran - 1517935111, Iran, Post Box : 15875-7959Tel: +98(21)23154370Tel: +98(21)23154177Fax: +98(21)23152837

Pouya St., After rail crossway,Industrial area No. 3, Ahvaz, IranTel: +98(61)34427920Fax: +98(61)33923113

Unit 1, Dorris Building, Komail St., Andisheh Blvd, Kish Island, IranTel: +98(764)[email protected]



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Administration Manager:Amir Abedpour

Board of Editorial:Arash Attari, Saber Panahi Shokuh,Hadi Zaerdoust, Salaheddin Toomajpour

Editorial:Yaser Hasanpour Abbas MousaeiMoein Mehrdadian Alireza Sabkdoust Alireza Nasrollah Nejad

Executive Manager:Salaheddin Toomajpour

Planning Manager:Hasan Mousaei

Art Manager:Rina Alexandrian

Translators:Masoud Ghasemi Mehdi HoseiniAmeneh Sobhani Mehran Moradi Mojtaba Norouzi Elham GhodsiNarges Ahangarian

Commerical:Mehdi Saneie Kashanifar

Informatics:Mohammad Saleh Mahlouji

Contributers:Somaye Sharifi, Maryam Abedpour, Samane Pishvaie, Hoda Mahdavi

Published by: Naghshe Neizar

Chapter 1: NEWS

12- Iran News 16-Iran Rigs Fleet

Chapter 2: Iran Drilling Congress & Exhibition

22-4th International Iran Drilling Congress & Exhibition; Symbol of synergy and convergence24-Annual Gathering of Drilling Industry Expert28- New Development & Production Models & Strategies; Requirements & Challenges with special focus on private sector36-Field-Oriented Development Panel42-Technical and Executive System of Drilling Industry;Challange and Requierment46-The Relation of Knowledge Management and the Organizational Body of Drilling Industry48-Introducing Proper Models and Indicators for Risk Management Evaluation in Drilling Industry51-The Weak Place of Crisis Management and Blowout Prevention in Organizations54-Challenges and Problems of Drilling Rigs56- Having a Far Distance from International Standards, in Spite of Suc-cessful Localizations60- The Necessity of Evolution and Classification and Creating a Data Bank for Directional Drilling Service Compnies

Chapter 3: Drilling & Rig Operation

68-Effective Factors to Reduce Human Error in Well Control71-Improvement and Promotion of Drilling Facilities in IRAN Oil Industry72-Drilling Rig Performance; Challenges, Requirements & Solutions to Improve Efficiency 76- The Effect of New Advancements in Drilling rig Technologies to the Iran Drilling Industry78- HSE training courses for workers in drilling industry80- EPDs Contracts, Generating Contracts for Drilling Companies

Chapter 4: Technical

84-Well stimulation Services85-Air & Gas Drilling86-Bit Service, Cementing Service87-Coiled Tubing Service, Coring Service88-Directional Drilling89-Drilling Field Service90-Drilling Logistics, Fracturing Service92-Well Logging Service93-Perforation Service94-Mud Logging95-Well Testing service96-Producing and Supplying Additives98-Novel Techniques for Production Enhancement Purposes: Applica-tions of CFD100-Characterization Requirements from Data Acquisition to Analysis101-New Drilling Fluids Technologies and Related Obstacles in IRAN105-Novel Technologies in Well Testing106-HSEQ Current Situation and the Future Context in Iran Upstream Petroleum Industry108- Radial Jet Drilling110- Latest Technology in Well Logging and Formation Evaluation In Iran

Address: Unit 2-No. 2-East Nahid Dead End-Africa Blvd-Tehran-Iran Phone: +9821-26414493 - 26414485 -22039066 - 22039088

Email: [email protected] [email protected]



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72 Drilling Rig Performance;Challenges,Requirements & Solutions to Improve Efficiency

106 HSEQ Current Situation and the Future Context in Iran Upstream Petro-leum Industry

78 HSE training courses for workers in drilling industry

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Continuity of hope in

Iran upstream oil industry

- A clear difference between Iranian and other nations of the world is the traditions of the New Year which it coincide with positive changes and mutation. By the natures revival, the Persians world and soul also renew the New Year starts and by the evolution and evolvement of the world environment, vitality and mobility rules this ancient country. We hope that in this new year and by this refreshing nature, the condition of our country and its economy also luxuriate greatly and we face with pleasing and orphic days.

- The group of professional drilling magazines group which are published in Persian and English have entered their third year of activity. Although these three years might not come to the sight due to 100 years of Iran petroleum and so drilling industry precedent, but managing more than 400 sessions with membership of nearly 600 people from managers and experts in format of 30 professional workgroup and producing 3000 pages of documents and manuals which the oil industry needs, is a sign of a new step and a firm movement. The reason is that despite the precedent of this industry in Iran, we have never faced with such a professional publication with such continuity. Therefore formation and continuity of such a publication is a significant turning point in this industry. A publication which have moved on the way of supplying the requirements, concerns and the ideas of experts of this industry and only thinks of the desires of its addressees, it comes from the private sector, and

its logic have been independence, from the beginning until now and in the future.

- Perhaps in the beginning, many used to look uncertainly to durability of a professional drilling publication in two languages, Persian and English. The matter that how such a magazine can produce analytical subjects monthly, without getting in trouble of repetition, decrease of addressees by reduction of the quality of its content, and then reduction of financial capability of its directors as its result, was a question for all. There were such doubts in the drilling industry group from the beginning years. The fact that how is possible to hold the quality of the content in high level and also keeping the addressees? How can talk to the general addressees with a professional language and having their attendance? How should we talk in a way that the analytical structure of the magazine is not damaged and the elite addressee is not repulse? These were challenges that make the job more difficult in the beginning, but with an expert and capable team and young staff members, these challenges were solved. The goal was so valuable which the difficulty of the work was tolerable.

- Publication of professional drilling magazines was with the goal of deepening and analyzing the professional science of drilling for domestic and foreign addressees, and also presenting a clear and realistic image of the current climate of the country for foreign addressees. A media for publishing the analyses and ideas of the

managers, experts and elites in a way that it would be useful for both domestic and foreign addressees. A way for combination of experience and knowledge. A clique for presence of both private and governmental experts.

- Drilling magazine has covered a wide range of economical, management and technical subjects of upstream oil industry and it tries to be impartial. I am very pleased that the drilling magazine has more addressees than what its title shows. Because by the name of the magazine it might come to the mind that the only addressees are upstream oil industry experts, but the fact is that the inclusion of different addressees have been increase daily.

- Drilling magazine has tried to conduct rooting and analyzing the structural and management problems of the industry which it is more than 100 years that the industry is facing with them and may face with in the future. We have tried to present a clear image based on the truth and in a scientific framework. A comprehensive pathology from two technical and management aspect of different sectors of this industry is a way that we have started and we will continue it, in order to reach a common understanding of the problems, which its reports have been published in this volume and other volumes. Of course this is the first step of finding a solution stay committed to solve the problems and a very good guide for the international companies which are curious to enter the Iran drilling market.- The other point that the Drilling magazine has been

consistent to reach to it, is futurology. Futurology in a country that prefers starring to the past, rather than looking forward to the future. Futurology with an only goal of responding curiosity and performing scientific investigations will be imperfect and will not achieve the destination. The developments process in different societies have been so accelerated that it is not possible to confine the activities with the short term and medium term plans. The purpose is looking to distant goals and for such purposes, like a car, for a higher speed needs greater car lights to improve the drivers sight. With this point of view, drilling magazine reports the last changes of Iran upstream oil industry news to its addressees and shows them a bridge to the future, simultaneously.

- We have also tried in drilling magazine, to form a wide space for discussions between the young and experienced generations, private and governmental experts and all people who participates in this industry.

- As the last word, for a written media, it is nothing better than having addressees which wait to receive it and after reading it, they feel they have been more informed and more knowledgeable. This is the prospect that has always been our frontispiece. Due to the feedbacks which we received from our venerable and educated, we have made a serious change in the structure and content of the subjects. Drilling magazine knows that it shouldnt get in the trouble of the quotidian. This is the point that not caring about it may result in gradual death for any publication.

Amir AbedpourAdminstration Manager

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NEWSFirst chapter



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Iran set to Increase Oil Recovery from Forouzan Oilfield

Iranian Offshore Oil Company (IOOC) says it will increase

crude oil production from the field by 12,000b/d once

it starts operating a new platform over the field. Hamid

Bovard said his company, which operates offshore oil fields

for Iran, has plans to launch projects that will add a total of

110,000 barrels of crude oil and 300 mcf of natural gas to

the countrys daily production capacity. He said a total of

2 billion dollars will be needed for financing the projects.

The IOOC chief also said that most of the projects are

aimed at stabilizing production level of fields and will be

developed under EPCF contracts.

Iran started loading of a living quarter platforms jacket

destined for Forouzan offshore oilfield in Persian Gulf.

Irans crude oil recovery from the field has reached 763

million barrels, 24% of the fields total oil output. Iran

enjoys only 11% of the field but has so far recovered 24%

of its total crude oil output.

Iran Officially Launches South Pars Oil Layer Project

Iran inaugurated a project to recover crude oil from the oil

layer of the supergiant South Pars Gas Field.

Iranian President Hassan Rouhani launched the project

via a video conference in Irans oil hub Assalouyeh.

Iran is now recovering 35,000 b/d of crude oil from the

offshore gas fields oil layer.

Crude production from the field began on March 20,

the day Iran celebrated anniversary of nationalization

of its oil industry.

The project is one of the few projects directly

administered by the National Iranian Oil Company

(NIOC).

Iran shares South Pars with Qatar in Persian Gulf

waters. The field is estimated to holds 1.5 billion to 4

billion barrels of crude oil in its oil layer.

South Azadegan Crude Output Hits 80 kb/d

Iran has brought oil recovery from South Azadegan oilfield, shared with Iraq, to 80,000 barrels per day after years that

its output was stuck in the 50,000b/d range.

Operator of the fields development project Touraj Dehghani said production from the field hit the 80,000b/d range

on Sunday.

He said early production from the field has started according to the plan and will reach 110,000 b/d in its first phase.

Dehghani expressed optimism that the envisaged production level will be reached by June 2017.

Petroleum Engineering and Development Company (PEDEC) is administering development of the project and over

30 Iranian developers are engaged in the project.

The National Iranian Oil Company (NIOC) has secured a number of memoranda of understanding (MoUs) with

Japans Inpex, Frances Total, Anglo-Dutch Royal Dutch Shell, Malaysias Petronas and an Iranian company for carrying

out studies for developing the field.

The project is one of the over 50 projects Iran has pitched to have developed under the newly-devised model of oil

contracts known as the Iran Petroleum Contract (IPC).

Iranian Minister of Petroleum Bijan Zangeneh says a competitive tender for choosing developers of Azadegan Oil

Project will be held soon.

The total amount of crude oil recovered from Azar Oilfield

has exceeded half a million barrels, an official with the

Petroleum Engineering and Development Company

(PEDEC) said.

Keyvan Yarahmadi, operator of the fields development

project at PEDEC, said production from the field is

expected to reach 30,000 b/d by the end of the month of

Ordibehesht (the second month in Iranian calendar, April

21-May 21).

Crude oil production from the field began last year with

15,000 b/d of output. The field is being developed for

production of 65,000 b/d of crude oil in its first phase

which, as Yarahmadi estimated, will be realized in a matter

of two years. Completion of the projects second phase,

production will reach 100,000 b/d.

The field is the most challenging for the oil industry due

to the stony land conditions. The volume of possible oil

reserves to be extracted from Azar fields is estimate to be

around 400 million barrels.

With 2.5 billion in place of reserves, Azar oil field lie in

common border with Iraq. The shared oil field is part of

Anaran Block in southwest of Ilam Province.

Sarvak Azar Engineering and Development Company is

involved in development of the oil field as operator.

Iran Eyes 100 kb/d of Crude Output from Azar Oilfield



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Shell Opens New Technology Centre in Bangalore, IndiaShell has opened a new major technology hub in Bangalore, India, expanding the companys R&D activities in Asia. The 52-acre, custom built technology center can house up to 1,500 experts working collaboratively on innovative projects worldwide.

Shell Technology Center Bangalore (STCB) brings together R&D staff who previously worked at separate locations in Bangalore and also provides additional space for high-tech innovation and demonstration facilities. By housing all R&D staff in Bangalore in one center, the technology hub will create new opportunities for multi-disciplinary collaboration, and drive relevant and affordable innovations.The new center houses a variety of technical experts, laboratories and technology demonstration units. It is home to a wide spectrum of technical disciplines and specific expertise in fields such as liquefied natural gas, subsurface modelling, data analysis, engineering design, bitumen, distillation and enhanced computational research. The center is also helping to pioneer efforts to turn forestry, agricultural and municipal waste into transportation fuels, with a new demonstration plant being built at the site.Specialists at Shell Technology Center Bangalore work closely with experts from external industrial partners, universities and institutes. These collaborations help

T H Hill Associates launches DS-1 Drill Bit SStandard

T H Hill Associates, a Bureau Veritas company, introduced a new drilling standard in the DS-1 group: The Bit In-spection Technical Standard (BITS). It provides inspection procedures and ac-ceptance criteria for fixed-cutter bits, including PDC, diamond, coring, drill-ing-with-casing, and bi-center bits.DS-1 BITS benefits anyone who is af-fected by the inspection and use of bits for drilling applications. For bit manu-facturers, products will now undergo reliable inspection each time, increas-ing the quality of end products and en-suring consistency in the procedures used by each inspector. For bit users, a quality inspection process provides confidence that each bit has undergone the same rigorous inspection program. Bit inspectors now have a one-stop source for the entire bit inspection process that simplifies training of new employees and providing consistent service.

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Noble Combines Simplicity, Reliability for New Electric BOPIn 2014, Noble Drillings Research and Development team began designing an electrically powered blowout preventer (eBOP) that would have a closing force of 2 million lbs. Since then, the technology has been designed, manufactured and tested, and is now patent pending. At Nobles eBOP Showcase and Live Shear Event at the Noble Advances Training and Collaboration Center in Sugar Land, Texas, on 30 March, the eBOPs shear-cutting capabilities were highlighted in a live demonstration. In this video from the event, Patrick ONeill, Director of Research and Development; Robert Van Kuilenburg, Manager Mechanical Engineer; and Scott Marks, Senior Vice President of Engineering, discuss the advantages and value of the new technology. They also emphasized Nobles core responsibilities as a drilling contractor and noted that it will not be entering the BOP manufacturing business.

North Sea to See 45bn Invested in 30 Projects by 2020

Thats according to research and consultancy firm Global Data, which says the UK will lead the resurgence with 19 projects, followed by Nor-way with 10 and Denmark with a single installation.A new report from the company sug-gests the downturn cycle witnessed in the region over the last few years is now easing slightly.It states projects agreed upon in 2016 cost around half as much as projects finalised in 2013 and says this illustrates how companies have made clear improvements in cost ef-ficiency.Global Data also notes operating costs have halved from nearly $30 per barrel (24) to just more than $15 per barrel (12) and production forecasts are on the rise.The projects are expected to con-tribute around 690,000 barrels of oil per day to global crude production and about 1,255 million cubic feet per day to global gas production.They will require a total capital ex-penditure of $56.7 billion (45.50), of which 54% is expected to be spent between 2017 and 2020.

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ensure a healthy influx of new ideas and speed up the deployment of new technology in our operations.Shell Technology Center Bangalore is one of the three main technology hubs in the companys global network of R&D centers, with the other two located in the Netherlands and the U.S



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The Last Report of Iran onshore Rig Fleet Status

#R ig name OwnerC lientLocationS ituation1FATH20NIDCNISOCMansouriActive2FATH21NIDCNISOCAhwazActive3FATH22NIDCNISOCGachsaranActive4FATH23NIDCNISOCAhwazActive5FATH24NIDCNISOCAb TeimoorActive6FATH25NIDCNISOCKoranjActive7FATH26NIDCPEDECAzadeganActive8FATH27NIDC--Deactive9FATH28NIDCPEDECAzadeganActive

10FATH29NIDCNISOCMarunActive11FATH31NIDCNISOCBala RoodActive12FATH32NIDCAOGCDarkhoyinActive13FATH33NIDCPEDECAzadeganActive14FATH34NIDCNISOCMarunActive15FATH35NIDCPEDECAzadeganActive16FATH36NIDCNISOCGachsaranActive17FATH37NIDCSAEDAzarActive18FATH38NIDCNISOCGachsaranActive19FATH39NIDCNISOCRamshirActive20FATH40NIDCNISOCGolkhariActive21FATH41NIDCNISOCAHWAZActive22FATH42NIDCIOOCKharkActive23FATH43NIDCNISOCAghajariActive24FATH44NIDCNISOCQaleh NarActive25FATH45NIDCNISOCKoopalActive26FATH46NIDCNISOCGachsaranActive27FATH47NIDCNISOCGachsaranActive28FATH48NIDCAOGCDarkhoyinActive29FATH49NIDC--Deactive30FATH50NIDCNISOCGachsaranActive31FATH51NIDCNISOCKoopalActive32FATH52NIDCNISOCRaminActive33FATH53NIDCNISOCAHWAZActive34FATH54NIDCAOGCDarkhoyinActive



35FATH55NIDCNISOCGachsaranActive36FATH56NIDC--Deactive37FATH57NIDC--Deactive38FATH58NIDCNISOCRamshirActive39FATH59NIDCNISOCMarunActive40FATH60NIDCSAEDAzarActive41FATH61NIDCPEDECKishActive42FATH62NIDCNISOCAb TeimoorActive43FATH63NIDCNISOCRamshirActive44FATH64NIDCNISOCKoopalActive45FATH65NIDCPEDECAzadeganActive46FATH66NIDCNISOCAhwazActive47FATH67NIDCNISOCShadeganActive48FATH68NIDCNISOCNargesActive49FATH69NIDCPEDECKishActive50FATH70NIDCNISOCGachsaranActive51FATH71NIDCNISOCGachsaranActive52FATH74NIDCNIOCEXPQaleh NarActive53FATH75NIDCNISOCBIBI HakimeActive54FATH78NIDCNISOCBIBI HakimeActive55FATH79NIDCNISOCKoopalActive56FATH80NIDCNISOCMansouriActive57FATH81NIDCPEDECAzadeganActive58FATH82NIDCNISOCAHWAZActive59FATH83NIDCNISOCKoorit CampActive60FATH84NIDCNISOCLab SepidActive61FATH85NIDCNISOCAb TeimoorActive62FATH86NIDCNISOCLaliActive63FATH87NIDCNISOCAghajariActive64FATH88NIDCNISOCMarunActive65FATH89NIDCAOGCDarkhoyinActive66FATH91NIDCNISOCRag SefidActive67FATH92NIDCPEDECAzadeganActive68FATH93NIDCNISOCMansouriActive69FATH94NIDCNIOCEXPZireng GheshmActive

35FATH55NIDCNISOCGachsaranActive36FATH56NIDC--Deactive37FATH57NIDC--Deactive38FATH58NIDCNISOCRamshirActive39FATH59NIDCNISOCMarunActive40FATH60NIDCSAEDAzarActive41FATH61NIDCPEDECKishActive42FATH62NIDCNISOCAb TeimoorActive43FATH63NIDCNISOCRamshirActive44FATH64NIDCNISOCKoopalActive45FATH65NIDCPEDECAzadeganActive46FATH66NIDCNISOCAhwazActive47FATH67NIDCNISOCShadeganActive48FATH68NIDCNISOCNargesActive49FATH69NIDCPEDECKishActive50FATH70NIDCNISOCGachsaranActive51FATH71NIDCNISOCGachsaranActive52FATH74NIDCNIOCEXPQaleh NarActive53FATH75NIDCNISOCBIBI HakimeActive54FATH78NIDCNISOCBIBI HakimeActive55FATH79NIDCNISOCKoopalActive56FATH80NIDCNISOCMansouriActive57FATH81NIDCPEDECAzadeganActive58FATH82NIDCNISOCAHWAZActive59FATH83NIDCNISOCKoorit CampActive60FATH84NIDCNISOCLab SepidActive61FATH85NIDCNISOCAb TeimoorActive62FATH86NIDCNISOCLaliActive63FATH87NIDCNISOCAghajariActive64FATH88NIDCNISOCMarunActive65FATH89NIDCAOGCDarkhoyinActive66FATH91NIDCNISOCRag SefidActive67FATH92NIDCPEDECAzadeganActive68FATH93NIDCNISOCMansouriActive69FATH94NIDCNIOCEXPZireng GheshmActive70FATH95NIDCNISOCRaminActive71NDC110NDCICOFCCheshme KhoshActive72NDC111NDCPEDECSouth AzadeganActive73NDC112NDCICOFCDehloranActive74NDC113NDCICOFCKhangiranActive75NDC114NDCICOFCKanganActive76NDC115NDCICOFCCheshme KhoshActive77NDC116NDCICOFCDalanActive78NDC117NDCPEDECSouth AzadeganActive79NDC119NDCICOFCDehloranActive80201PEDEX--Deactive81202PEDEX--Deactive82203PEDEX--Deactive83204PEDEX--Deactive84101PEDEX--Deactive85O1GPT Kish--Deactive86O2GPT KishSAEDAzarActive87O3GPT KishSAEDAzarActive88O4GPT KishSAEDAzarActive89301Tadbir DrillingPEDECSouth AzadeganActive91302Tadbir DrillingPEDECSouth AzadeganActive91303Tadbir DrillingPEDECSouth AzadeganActive92304Tadbir DrillingPEDECSouth AzadeganActive93DANA 1DANA--Deactive94DANA 2DANAPEDECSouth AzadeganActive95DANA 3DANANIOCEXPAghar FiroozabadActive96401MAPNANISOCMarunActive97402MAPNANISOCAhwazActive98102IDSCNISOCAhwazActive99106IDSCNISOCAhwazActive

100107IDSCNISOCParsiActive101301SEPANTA--Deactive102302SEPANTA--Deactive1031IOEC--Deactive1042IOEC--Deactive

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The Last Report of Iran onshore Rig Fleet Status

AOGC4%

ICOFC8%

NISOC58%

NIOEC5%

IOOC1%

PEDEC19%

SAED5%

AOGC ICOFC NISOC NIOEC IOOC PEDEC SAED



70FATH95NIDCNISOCRaminActive71NDC110NDCICOFCCheshme KhoshActive72NDC111NDCPEDECSouth AzadeganActive73NDC112NDCICOFCDehloranActive74NDC113NDCICOFCKhangiranActive75NDC114NDCICOFCKanganActive76NDC115NDCICOFCCheshme KhoshActive77NDC116NDCICOFCDalanActive78NDC117NDCPEDECSouth AzadeganActive79NDC119NDCICOFCDehloranActive80201PEDEX--Deactive81202PEDEX--Deactive82203PEDEX--Deactive83204PEDEX--Deactive84101PEDEX--Deactive85O1GPT Kish--Deactive86O2GPT KishSAEDAzarActive87O3GPT KishSAEDAzarActive88O4GPT KishSAEDAzarActive89301Tadbir DrillingPEDECSouth AzadeganActive91302Tadbir DrillingPEDECSouth AzadeganActive91303Tadbir DrillingPEDECSouth AzadeganActive92304Tadbir DrillingPEDECSouth AzadeganActive93DANA 1DANA--Deactive94DANA 2DANAPEDECSouth AzadeganActive95DANA 3DANANIOCEXPAghar FiroozabadActive96401MAPNANISOCMarunActive97402MAPNANISOCAhwazActive98102IDSCNISOCAhwazActive99106IDSCNISOCAhwazActive

100107IDSCNISOCParsiActive101301SEPANTA--Deactive102302SEPANTA--Deactive1031IOEC--Deactive1042IOEC--Deactive

POGC41%IOOC

55%

KEPCO0%

NIOEC4%

POGC IOOC KEPCO NIOEC

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The Clients Portion from the onshore drilling industry

The Clients Portion from the offshore drilling industry



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# Rig name Owner Operator Client1 Sina 1 PGFK - -2 Paradise 400 PGFK PGFK POGC3 Seaboss PGFK PGFK POGC4 Sahar 1 NDC NDC NIOCEXP5 Sahar 2 NDC NDC IOOC6 Iran Khazar (Elima) NDC NDC torkamanestan7 Modarres NIDC NIDC IOOC8 Slant NIDC NIDC IOOC9 NOAH Arc NIDC NIDC POGC

10 Rajaie NIDC NIDC POGC11 Passargad 200 PEDC - -12 Pasargad 100 PEDC PEDC IOOC13 Alvand NIOC NIOC IOOC14 Iran Amirkabir Kepco - -15 Alborz NIOC - -16 DCI1 DCI - -17 DCI2 DCI - -18 Karoon 1 DANA - -19 Oriental 1 GPT GPT IOOC20 MD-1 MAPNA MAPNA IOOC21 COSL craft COSL DANA POGC22 Superior COSL - -23 COSL force COSL DANA POGC24 COSL strike COSL - -25 CPOE 9 CNPC - -26 CPOE10 CNPC - -27 CPOE15 CNPC PGFK POGC28 Aban 6 Aban Offshore Aban Offshore IOOC29 Aban 8 Aban Offshore Aban Offshore POGC30 Deep driller 2 Sinvest NIDC POGC31 Deep driller 4 Sinvest Sinvest IOOC32 Deep driller 6 Sinvest - -33 Forsight driller 5 Forsight drilling Forsight drilling IOOC34 Forsight driller 3 Forsight drilling - -35 Forsight driller 9 Forsight drilling - -36 Sagadrill 2 Japan Drilling - -37 Snubbing unit Ocean oilfields Ocean oilfields IOOC38 Shengli 10 SMS SMS IOOCSo

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Purchasing Power - Over US $9 billion of contracts were signed during the 4 days of ADIPEC. With 81% of attendees either a decision maker, purchaser or influencer, ADIPEC delivers real business opportunities.

Knowledge Exchange - With over 750 speakers from around the world and over 177 sessions, ADIPEC provides one of the most comprehensive conference programmes in the world.

International Perspective - 21 NOCs, 15 IOCs and 25 international country pavilions along with 2,000+ exhibiting companies make ADIPEC unrivalled.

WHY ADIPEC?

HOST

Host City ADIPEC Organised ByConference Organiser

Supported By

ADIPEC Organised ByConference OrganiserHost City Ofcial Media Partner

Supported By

BOOK YOUR STAND NOWadipec.com/bookastand

ONE GLOBAL INDUSTRY. ONE CITY. ONE MEETING PLACE.

2,000+Exhibiting CompaniesAttendees

100,000+Country Pavilions

25Gross sqm

135,000

ADIPEC FAST FACTS ADIPEC FAST FACTS

8,500+Conference Delegates IOCs

15NOCs

21Expert Speakers750+

Conference Sessions177


Iran Drilling 2017April 2017 / Drilling MagazineC

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Congress ReportSecond chapter



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Diamond:

Well Services of Iran

Platinium: Gold: Silver:

Sponsors

International Iran Drilling Congress & Exhibition, was held for the first time in 2008, sought to explore the problems and challenges facing this key industry and search effective strategies in the light of the knowledge and experience of Iranian experts; the knowledge and experience that is the most precious asset of Irans oil industry.Despite many difficulties and unwanted hiatus, the second and the third Congress were held in 2014 and 2015. And now with the fourth congress held, we are planning to hold the next round of the event. From the beginning, the effort of organizers of this congress was to make this large gathering of drilling industry experts not an instantaneous and fleeting event, but a way to integrate knowledge, exchange of experience and synergy to achieve operational results. Therefore, the establishment of workgroups, permanent specialized committees and meetings for development and codification of scientific contents based on industry needs, has been on the agenda of authorities.

Now in the days that the oil industry leads the growth and development of the country during post-sanctions era, drilling industry stakeholders have adopted a paradigm shift in this strategic industry and put the development of the technical and executive system for upstream oil industry on their agenda by holding more than 400 meetings and 9,000 man-hours of work on contents which is accomplished with membership of 600 managers and experts in 30 specialized working groups in the last two years. And the results of the fourth Congress were presented in the form of 26 panels, out of which, 10 are presented in the following.The set of seven technical and executive system documents will cause vital and inevitable transition of this industry in a gradual and evolutionary process so that a bright future for drilling industry would arise through the hands and minds of the managers and experts of the industry. The codification of these documents is a strategy for integration of technical achievements of industry experts, utilization of the international achievements and

a guarantee for it to be considered in different activities and it becomes more important in post-sanction era because the possibility of cooperation with international partners and a stronger presence beyond the country borders will be prepared for drilling industry participants more than ever. Technical and executive system in Iran drilling industry which consists of 7 main documents and will be codified with the participation of all key stakeholders of this strategic industry regarding worlds successful examples is as follows.- The first document; business model and services description of key stakeholders in different parts of the drilling industryIncluding the definition of sectors, determination of the framework governing administrative processes, determination of key stakeholders of each sector and preparation of separative description of technical services of drilling industry.- The second document; Optimal system of Implementation of projects and plans of drilling industryIncluding various methods of implementation of projects and mechanisms for the determination of the optimal procedure for each sector.- The third document; Unified contract formats in drilling industryIncluding integrated contracts for drilling projects with qualitative and quantitative indicators separately for a variety of fields (onshore or offshore / exploration or development / oil or gas)- The fourth document; System of Evaluation and Ranking of the drilling contractors and service companiesIncluding models and qualitative and quantitative indicators to evaluate and rank the companies and key performance indicators (KPI) The fifth document; System of awarding projects to contractors

- The sixth document; Workflow structure, procedures and drilling industry standardsIncluding list of standards and procedures governing the implementation of projects and drilling operations- The seventh document; Performance evaluation System of drilling projectsIncluding qualitative and quantitative evaluation model and indicators separately in different parts of the drilling industryDue to the variety and complexity of the upstream sector in the areas of technical services, goods and drilling equipment, codification of the above documents requires a comprehensive and integrated look with the participation of all stakeholders of the owners and contractors. this have been done by defining 3 phases of act. In the first phase, which took place in 2015, we first surveyed and analyzed the available capability and situation of drilling industry and companies which are active in this field from two perspectives of quantitative (assets: equipment, human resources, experience, financial resources, etc.) and qualitative (performance: results based on key performance indicators). And in the second phase, which took place last year (2016) and was presented in the Fourth Congress, initial indicators and models for each section were modeled after international successful examples (as ideal situation). We plan to extract optimal models and systems and finish compiling these documents in current year (2017) by matching the obtained results to the facts and domestic circumstances of the drilling industry within the country.Such a difficult mission requires better utilizing of the knowledge and experience of all participants of drilling industry as well as support of senior managers of the industry; the support which is arisen from deep commitment of all of us to the development of the industry and serving the country from this way above all.

4th International Iran Drilling Congress & Exhibition; Symbol of synergy and convergence



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policy council of 4th International Iran drilling Congress to present his views.Mr. Javadi welcomed all participants and guests of the congress at the beginning of his speech. He continued his speech with conduction quality of the drilling industry congress in various times and said: Until 2014, only a congress at the local level was held in Khuzestan in 2008. In 2014, we realized the potential and capabilities in an important but neglected part of the countrys industry named drilling industry and a positive work was founded by a group of enthusiastic youth. We held the second and third congresses in cooperation with this youth in 2015 and 2016 and today we are starting the 4th congress. During this time, we have tried to set precise targets for each of the congresses and investigate the industrys most important issues. To this end, the most dynamic time was the period between the third and fourth congress and we obtained highly efficient results by the formation of multiple committees and working groups. Javadi stressed that defining the effective role and organization of drilling industry, must be done in both governmental and private section. He also emphasized that we should pursue two important goals in the current situation. The first aim is increasing the productivity and according to the post-sanctions condition and our emphasis on the 51 percent of local role in the development of oil fields, we should also be able to define equal tasks for the drilling industry and this will not happen unless we can do world-class jobs in this field. The second aim which is indispensable for the development of the oil industry, will be a glance beyond the borders of the country. President of the policy council of the 4th congress expressed the hope that the results of this congress will make the activists of this industry hopeful to the future. Finally he asked all of this industry activists to provide the development and growth of the oil industry followed by global economic growth in the global critical condition with more targeted work in this important industry in which more than one third of the development costs will be dedicated to this oil industry.After Mr. Javadi, it was Mr. Amir Abedpours turn who is the secretary of 4th drilling industry congress.Secretary of the congress allotted his time to play clips about the three previous and also the 4th drilling industry congress holding.

It is often said that we need to reduce our dependence on oil, but in fact, we have to say that it is necessary to reduce dependence on oil revenues for the government budget. It is normal for every country to rely on the

strengths of its own, meaning natural resources and human capacities. We have to use natural resources and mining with a tailored approach to develop and nurture intergenerational use. Therefore, the oil industry being the engine of the economy is a right mean. The reasons are that this industry can provide a portion of government revenue and supply the primary energy resources needed for the country.

We can describe the role of drilling industry in the oil industry by this phrase: drilling industry has a key role in the exploration and development of oil and gas, especially in the common oil fields and preservative production from oil and gas reservoirs of the country and finally, the development of Iran.

The goals and expectations of the ministry of Petroleum for the drilling industry can be summarized as:Improvement in capability of management of drilling companies in order to meet the needs of the oil industry to operate in the areas of exploration and development of oil and gas, optimization of time, Optimization of cost and quality of drilling operations on different executive and environmental aspects, increase in the number and performance of offshore and onshore rig fleet, bigger private sector participation in the drilling industry, the creation of competitive climate between different parts of the drilling industry, technology enhancement and use of new technologies in the drilling industry, and aim of participation in both regional and international markets.

The 4th international Iran drilling congress and exhibition was held on 18-19 February 2017 with the participation of 1,200 drilling managers and specialists in IRIB International Conference Center. In this two-day conference, drilling industry experts investigated the issues and challenges of this industry in 26 professional and scientific panels. In this volume, drilling industry magazine will get into the details of the various panel reports of this congress and its achievements. The report of opening ceremony will be described in the following. The opening ceremony of the 4th international Iran drilling congress and exhibition initiated on February 18th 2017 started at 9:30. Snowing in Tehran that made the presence of the attendees difficult, caused a half-hour delay in the beginning of ceremony. After the national anthem and recitation of verses from the Holy Quran, the ceremony officially began with the speech of the host which included welcome to the participants

and guests such as Mr. Javadi (deputy of oil minister in monitoring of hydrocarbon resources affairs), Mr. H. Bitaraf (engineering, research and technology deputy of oil minister), Ali Kardor (CEO of National Iranian Oil Company).After welcoming the guests, the ceremony host invited Mr. H. Bovard, the CEO of Iranian Offshore Oil Company and president of the congress, to give a welcoming speech and present his report.The president of the Iran Drilling 2017 welcomed attendees including government officials, CEOs of NOCs and all of the drilling industry activists at the beginning of his speech. Mr. Bovard began his speech with this sentence: Oil has always had a key role in budget and despite the government efforts to reduce the dependence, this situation has been continued. In the current situation, statistics indicate that the government has been able to reduce dependency of the state budget to the oil to about 50 percent. However, the oil is still accounted as the locomotive of economy. Meanwhile upstream oil industry is of great importance. He continued: This is a very good and important event in the last ten years with the powerful participation of private section in drilling field which are actively involved in the field of drilling industry. Mr. Bovard expressed about the distinction between the 4th and the preceding drilling industry congresses: The differences of the 4th congress include that it is panel oriented, it will address various issues and we have tried to avoid generalizations. Issues raised in this congress are the result of 40 technical committees, 10 management working groups and approximately 180 meetings which have been held in a one year period.President of the 4th congress appreciated the association of Mr. Javadi and Mr. Kardor in the policy council of the congress. After the speeches of congress president, the ceremony host invited Mr. Javadi, deputy of oil minister in supervision affairs on hydrocarbon resources and the chairman of the

Annual Gathering of Drilling Industry Experts

The Opening of the 4th Internationl Drilling Industry Congress & Exhibition

Hamid Bovard / CEO of IOOC

Rokneddin Jawadi / Deputy of Oil Minister



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All contracting and servicing capabilities of Iran should make one of its strategic goals having a presence in the regional and international markets. Capabilities of Iran in science, technical and experimental and also equipment that exist in Iran are backing this commitment.

To codify the technical and executive plans and projects in upstream of oil industry, situation in the international oil industry, such as the political and economic interactions in international and regional aspects, financial conditions and oil prices, features of business environment outside and inside countries including the effect of the private sector in the oil industry, financial and economic conditions of the government, strategies used for financing upstream projects as well as the features and executive aspects of the projects, complexity, time required for completion, the level of technology and financial resources needed to execute this types of projects, should be considered.

Standard process of documentation of technical system and execution of projects gets accomplished by providing initial draft of the document according to the upstream documents, the best international experiences and localization of the draft based on internal metrics. This process gets started in the committee of experts and then the draft is sent out to key beneficiaries of associations and professional organizations, and industry and academic experts. By enquiring, reviewing and applying their comments, the content of the documents is finalized in the specialized committees and will be communicated as an issue of technical and executing system demo. After getting feedback and applying revisions and updates, ultimate version can be issued.

Codification of the technical and executive system for drilling projects will be done in order to establish an integrated, coordinated and efficient structure to manage and execute drilling projects. This action is done through codification of following documents with management and responsibility of the deputy of engineering, research and technology of Oil Ministry:

1- Instruction manual for business processes and description of the services of key stakeholders of drilling projects which contains definitions of sectors,

(onshore or offshore / exploration or development / oil or gas)7- The instructions for selection of optimal applicable model in drilling projects, including analysis of different methods of execution, such as standard contracts for drilling, wages on onshore and offshore, standard contracts for drilling based on drilling depth, and distinct patterns according to specific conditions and suggestion of special methods and optimization.8- The instructions for the necessities and patterns for technology transfer in drilling projects involving

determination of the framework of decisive executive processes, determination of the key stakeholders of each sector, identifying specialized needs in software and hardware and codification of the technical services to each sector of drilling industry.2- Guidelines for Evaluating the competence of key stakeholders in drilling industry projects including qualitative and quantitative evaluation models and KPIs to rank companies according to various aspects of capabilities including technical and managerial, financial, operational, and organizational structure, as well as equipment, trade, reputation, review of their future empowerment programs, and technology transfer.3- Identical documents of drilling projects deals including the integrated contract models and attachments for drilling projects.4- The framework to operate drilling projects and workflow procedures, including the list of standards, necessity of laws, regulations, technical documents and procedures decisive on execution of projects and drilling operations.5- The instructions for selection and assignment of work to key stakeholders of drilling projects, including terms & pathways.6- The instructions for evaluation of the performance of key stakeholders of drilling projects including the model and qualitative and quantitative indicators to evaluate the performance of companies in the projects separately in different parts of drilling industry and variety of fields

technology development processing model with the approach of university-industry interaction to achieve new technologies with speed and efficiency.A couple of models had previously been applied in order to shift the development paradigm and also to produce from oil and gas fields. One of them was BUY BACK and it played a big role as a development tool in the oil industry potentials. Afterwards, the EPC model was majorly used in the South Pars. There is no doubt that we achieved a reasonable growth and so this presented us more GC and MC companies which have been able to do a lot of great projects for us despite the time and costs. After all, our goal is to lead GC, MC and EPC towards IOC companies so that they would turn to independent developing upstream companies.

According to the sixth schedule which has started since April 2017, petroleum production must reach to 4.7

million barrels per day, gas production must reach to 1300 million cubic meters, oil rigs quantity must reach to 135 platforms and wells must reach to 500. Based on the sixth schedule outlook, the share of drilling costs is 40% out of the onshore total investment and 60% out of the offshore total investment.

The first step to change the intended paradigm is to change the theoretical strategies to practical ones. This has increased the abilities for private sectors in the drilling industry. Therefore, each company must get updated and equipped more and more so that we could reach to our goals. Regarding the common drilling contracts in the world, there is a need to say goodbye to old methods of contracting and say hello to the practical EPDF contracts. So we do not have a choice but putting the contractor companies at risk.

In general, the imperfections of the old methods for projects through EPD and EPC in the National Oil Company are as below: sectional approach for projects and fields, lack of reasonable relation between contractors goals and performance, payment to the contractors by the issued statements, low production and efficiency, accepting more risks by the client, and lack of reasonable relativity between risks and outputs for the contractor.

On the other hand, the advantages of the practical approach through mutual contracts and EPDF are as below: homogeneous approach in the field, constructing a reasonable connection between contractor and productions goals, paying the contractor based on how far objectives would come true, and more flexibility in designing the start of the job with a balance and a connection between risks and contractors efficiency. In discussing the EPDFs and EPCFs, National Iranian Oil Company plans to supply 80-85% of the financial resources of projects by contractors, as 100 % financing through foreign investors is not available. So, it is assumed that companies should move and then National Iranian Oil Company would be left with 15-20 % of the whole financing. Regarding the supplied financing resources, financing costs for production and its legal continuation belong to the contractor. Refunds would be paid off after finishing the whole project.

It should be noted that the ability to refund after the completion of one or plenty wells ought to be considered. In case of any delay in contractors refund, he has to pay the finances related to the delay.

Habibollah Bitaraf / Deputy of Oil Miniser

Ali Kardor / CEO of NIOC



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There are new contracts in MOP which are mainly field-oriented. These contracts consider the field development in a long period and think of the whole age of the reservoir or a 20-years period. Therefore, regarding the planned production curve of the field, the contractor should have production from the field for a 20 years period and it should finally reach the cumulative production as per its goal. This model is applicable for both brown- & green-fields.In fact, there is no alternative for improving the reservoirs recovery factor for now. Naturally, we cannot determine a definite number for the recovery factor and it is based on many factors like abilities, production cost, the amount of investments and the technologies we use. Believe it or not, the inexpensive production era has come to an end and the production will be more expensive. As an example, if we reach 35000 barrels in a day in the oil layer of the south pars, our OPEX and CAPEX altogether will be 7 to 8 dollars per barrel and it would not be economical beyond that. But if we have a greater perspective and higher amount of investment along with using a modern technology, we might reach to a number of 15$. This increase in costs, may result in a higher recovery factor and it would be also economical in the future.This issue, in addition to direct revenue, may lead to job creation and bringing technology to the country. In development of the green or brown fields, and also the

New Development & Production Models & Strategies; Requirements & Challenges with Special Focus on Private Sector

Progress and development will not be achieved in any field unless the decision-makers of that area determine and describe a productive strategy by investigating all important parameters. This is also correct about the drilling industry especially due to the importance of upstream sector in petroleum industry and also in Irans economy. According to the importance of this issue, there was a detailed discussion in this strategic panel as follows:

development of common fields, we should use this new model of contracts. In the past, in Buy Back contracts, there was a physical look to the project. The first phase was equipment construction. The contractor had to create this production due to the primary MPD, which it was equipment MPD more than reservoir MPD and after that, it would construct the onshore, offshore and down-hole installations and it could supply the expected production capacities in 21 days from 28 days. After that, during 5 to 7 years, the investment and the bank interest of the investor was paid off and there was no responsibility for the contractor about the production and it was almost paid through 9 years and there was nothing mentioned about the cumulative production and recovery factor. However, in the new contracts, in addition to the amount of investment, the amount of production and the recovery factor will also be investigated and the cost of production is also considered.In north Azadegan, we considered 5.5 as the recovery factor of the field, which we expect more than these amounts and it is achievable only with continues work and investment. The nature of IOR and EOR are long term activities and the result would not show itself in a short period of time. We try our best to have the maximum cooperation of Iranian companies, and even if the company is only a partner and it is not an operator, it has a portion of the job. Beside the EPC contracts and services and EPD

contracts, the goal is that the Iranian sector has the bigger part of the job. In the services also, we have considered parts of the job for the Iranian companies, and we have also considered technology transfer. The most important point that we should care about is increasing recovery. In any job related to reservoirs, an important part is drilling the well. We have a great promotion in our drilling industry so that we can have something to say in the foreign rivals. After many years, in Saudi Arabia, a drilling university has been established, which shows the importance of drilling in petroleum industry. Nowadays our drilling rate is much less than international companies which work with modern equipment and software and we have to work a lot to solve this matter. Furthermore, we should go toward the intelligent wells and branched and horizontal wells. Regarding the complexity that oil layers will show from themselves from now on, we should lead the work with modern software and technologies.Unfortunately, Irans production is really low regarding the available reserves in the world. It gets back to low amounts of investment and also the weakness of our drilling industry. So in our country, one of the fields that we should work on, is drilling industry, which its progress needs international interactions and in these contracts we have tried to prepare its requirements.

Gholamreza Manouchehri; Deputy Manager for development &

engineering-NIOC

We need to have international interactions in our drilling sector and we have the context for that in our new contracts.



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Exploration, development and production of oil & gas fields has been tougher, as a mistake

will result in tremendous costs.

Mehdi MirmoeziVice Chairman & President-Pasargad

Energy Development Co.

Business model of E&P companies play an important role in determining strategy and business way of these companies. Especially in drilling, if changes are necessary in technical fields, application of more updated technologies, and contract models, E & P companies and their clients will not implement projects by suitable contracts and good performance until they get correctly organized and equipped with

It is said that each country in the world that is involved in the full cycle of energy, has the superpower; and Iran as a country that has the highest hydrocarbon reserves must have a major role in this industry. When the energy cycle and its role in various fields are considered, the

first thing to take is that the strategic role of drilling and upstream industry is not complete without drilling. Also the underground potential is not converted to the income. However oil cannot be considered only as a source of income while this industry is effective in other areas such as security and politics. Meanwhile in addition to be a source of good income, this industry is a tool for the purposes of governance and a job creation activity. Drilling industry also relates knowledge and technology, as well as a way to cooperate with foreign companies. About 130 billion dollars are considered as the drilling share in the fifth plan and at least 40% to 50% of that amount is for drilling. Therefore drilling industry must be considered better and more than the past. We have to know where we are and where we must be and this should be considered in approach to strategy, application and feedback. Since the economic downturn and the average economic growth which is expected to be 3.5 in 2040, if drilling industry is not investigated regularly, a spare capacity in drilling rigs will appear in the world and therefore it will be challenging in the drilling industry of our country. Therefore apart from the IOR, EOR and new contracts, an appropriate application must be mentioned in the drilling industry to increase our production in 1.6 million barrels.

required instruments and technologies. According to the investment diagrams of E & P section in years 2010 to 2016, it can be seen that investing process in E & P has been in an increasing pattern regarding the increase of oil price in years 2010 to 2014. It is predicted that this trend will still be uprising with a lower slope from now to 2020. It should be noted that according to predictions, majority of this increase in investment may go to Shale oil and gas sectors, and in conventional fields, this increase will be in a smoother trend. It seems that these fields will be facing a stability in investment rate. Also, it is necessary to mention that investment rate in E & P section in Iran in year 2017 will be same as Norway and Nigeria and in comparison with countries like Russia and Saudi Arabia, will be less. Of course, those countries may require to invest more, since these costs include investment in different sections like exploration, development and production cost out of which, production has higher costs in these countries than in Iran. So, it doesnt seem that in this field our country has unsuitable condition in comparison with other countries.In oil contracts especially Buy Back type, there was no role defined for E & P companies in production; and in EPCF contracts, their role for exploration and production was neglected. Generally speaking, IOCs were contracted

for EPCF or Buy Back contracts, and some developer companies like Petro Pars and Petro Iran were working in development section than exploration and production. Anyway, in new models of petroleum contracts, the possibility have been created for local companies to work alongside international ones.There are some notes to mention about investment rate which will be in different fields of exploration and production. There are 57 development and 9 exploration fields to be awarded to E&P companies in IPC (Iran Petroleum Contract) or Buy Back form. Respectively, 14% are exploration fields, 63% are oil development fields, and 23% are gas development fields. As this statistics shows, unlike the recent 10 years, gas fields will not have the majority of shares. However, in terms of investment, they will almost have the same share. In terms of offshore/onshore fields, 67% are onshore, while the remaining 33% are offshore. This shows that unlike the past in which the offshore section (e.g. South Pars Field) had the major part, the investment will be headed toward onshore fields.Some subjects should be clarified for E&P companies. First, it is necessary for each Iranian E&P company to determine that in which of the above-mentioned sections, they are eager to work. This subject will be important even in selecting an international partner. Second, is that to

In the unpredictable, cumbersome and inflexible drilling environment, we must

first survive and then improve. Our surviving depends on energy and energy

depends on drilling industry.

Salbali KarimiCEO-Iranian Central Oil Fields Company

We need to have an integrated approach and focus on the most important upstream industry drilling industry- which downstream depends on it.We work in an environment that is very unpredictable, cumbersome, and inflexible, hence new strategies must be developed to prevent the whole risks that challenge and decline activates. In other word this industry must be survived and then improved. Next discussion is the strong dependence of companies to the government in a way that if they do not get paid for several months, they face many difficulties. The only activity that exist in the reservoir cycle from beginning to end is drilling. And it cannot be treated as a supplementary service.The next issue is about the share of investment in the energy industry, which is about 435 billion dollars a year in the world that our 5-year plan has about $ 12 billion annually for drilling but the principle is to move toward the strategy.We see that in the 1970s, strategic management was classical and had predictable, stable and low competitor conditions and oil was inexpensive. However, conditions are unstable, unpredictable, and cumbersome and the strategy of modernization must be achieved in order to

survive. Actually, a sustainable strategy must be chosen. The next item is competitive advantage. When oil price is 35-50$, companies can survive; but when the price is 50-70$, companies can be profitable. The proposed drilling plan have to be profitable, have stability and security in production and be able to be competitive. It also must improve productivity, be flexible and stable partnership rather than trading, have diversification of portfolio activities, and become an E & P company. Essentially drilling companies must have a trend to become an E & P company. The next important issue is drilling companies management that must be altered from classic strategic management to the transformational management, from practical to entrepreneurship and business and from income to the profit. Finally, when an industry has such a level in the economic, social, and security and plays a role in sovereignty, security, and the chain value, it must have a special place. As long as private companies law is not recognized legal and they do not care themselves, they cannot survive. Clients have to support them and the contracts must alter from EPC to DBF and from conventional rig contracts to the EPDF contracts. We must know that our survival depends on energy and energy conservation also depends on drilling industry.

what scale they are willing to work. For example, they want to start by small contracts and then gradually extend the borders, or by partnership with international companies, they want to start with bigger sections. Third is the risk tolerance factor in terms of investment and financing. Fourth is portfolio management structure. Each company should determine that in how much they dedicate to offshore/onshore, and oil/gas sections, as well as their focus on different chains of exploration and production.It is common for these companies to work on their potential capacities according to their strategic planning. For instance, if a company wants to work in exploration, it should be stronger in geology, geophysics and reservoir description; in case of development, they should work more on project management skills; and in case of production, it is necessary to pay attention to subjects of well management, production optimization and so on.Finally, it should be noted that exploration, development and production of oil & gas fields has been tougher, as a mistake will result in tremendous costs. Actually, the time for easy exploration and production is long gone and if a company makes a mistake, it may be irreversible and lead to a major loss of revenue. So, it is necessary to investigate and concentrate on potentials.



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Development requirements of the exploration and production

companies in Iran

Drilling companies have to work on engineering and procurement in

addition to rig operation.

Mohammad IravaniCEO-Dana Energy Co.

Mohammad Reza TakiediDeputy Manager-National Iranian Drilling Company

Topics discussed in this article include foundations and requirements of the cooperation with international companies in exploration and production section. In the introduction, it should be said that the position of exploration and production companies in the value chain of the oil industry is evident. For example, among the Middle East countries, Oman alone has 17 exploration and production companies. It should be noted that the contracts are different among various companies. In the case of the new oil contracts in Iran, exploration and production companies have been identified and classified. Also these startup companies require capital and also the risk and high period of the exploration and production phase affect

Since 2007 by implementation of new contracts, companies have shifted toward the EPD projects. The only company that did so at that time was National Iranian Drilling Company, but nowadays private and

them. Currently, 12 domestic companies and 29 foreign companies have deemed qualified. Market conditions are such that the oil price is projected between $ 60- $ 70 leading to a sharp decline in investment in the upstream oil industry from 765 billion to 435 billion USD and naturally reduction in the revenues and margins of the companies. However, due to low production cost and security of the Iran, these companies are interested in participating in the Iranian market. According to the considerable changes occurred in the global oil and gas market, the main protagonists of this industry are sometimes not able to plan due to the emergence of numerous variables. In Iran, the governmental financial dilemma and the problems of the banking system are considered as the main issue. In the oil industry client (The national Iranian Oil Company) pays much attention to the issue of technology, its transfer and the EOR topic. Also the completion of major projects such as South Pars leads to a reduction in the utilization rate of the equipment and manpower in the oil industry. Also a review of the management structure of the NIOC has been carried out and its completion requires to reform decision-making and processes as well. Among the infrastructure for experience and technical knowledge transfer and review in the business model through looking at the successful global experiences which lead to attract the successful global companies in Iran and using their services in specialized areas. Among the other important requirements in the technical section: strengthening the management and expert body

in the field of reservoir science, making R&D units with foreign partners, communication with active universities in this field, attention to the new methods and technologies such as drilling technologies and maintenance, completion and the EOR can be noted. Taking the advantage of the opportunities created due to the decline in world oil prices will be another tip which have caused incorporation of the exploration and production companies together. This model can also be used in the case of Iranian companies and make them strong and they can take advantage by foreign companies as partners. In the financial and contractual section, the most important issue is the finance topic which domestic market is not able to supply the whole and according to the new contracts, foreign investment for completion and exploitation and utilization of the new methods of financing should be considered. Clarification and modification of the financial statements using the new standards named IFRS should be considered and used in Iran. Of course, this standard is not considered by the banks yet and it must be implemented by the companies to increase their standards. Generally, it should be focused on making structure to use the financial supply and various methods. The internal knowledge is insufficient in this section and should be amplified which will be possible through the consultation with foreign partners or through external consulting. In the strategy section, development and revision of the business strategy should be considered proportional to the oil market development and risks of each of the companies or their partners should be achieved. Also, due to the low cost of

production in this region, investigation of the processes which are related to the Middle East countries can be very helpful and bring us external look to create and manage the economic participation. Focusing on the strategies to reduce the costs and increase the productivity, requires reduction in the costs of the organizations and making them agile so the companies will be ready to implement the projects due to the considered risks. Also it is recommended to organize the approved governmental and private E&P companies to increase their productivity and they should use their experiences. It is also necessary to create more clarity regarding new models of the contracts which is being followed by the NIOC. On the other hand, according to the aspects of financial supplement of the new contracts in which private companies can use the development fund, this helps them considerably. Of course the disadvantage of this possibility is that each company can use it only once until the loan is paid. Another important issue is clarification and dissemination of information about the future plans of investment opportunities in Iran that have been declared about the contracts and fields and it is a good opportunity for the companies to be able to choose their partners and start cooperation with them. The final issue is reforming the business environment in order to attract foreign investment. Of course, we require a multi-sectorial effort in this field that should be fulfilled by cooperation between the parliament and activists of other areas of the economy.

semi-private companies are doing so and the drilling industry is improving.There are about 140 drilling rigs in our country that some of them are working as rentals and some others are working as EPD. Besides owning rigs, drilling companies must have the ability to work on rigs and perform drilling work and services. In other works, they have to perform and support engineering services simultaneously. In future, drilling companies will face many challenges and contractor companies must match themselves with the client policies in order to survive.

One of the challenges that contractors face, is quality improvement and increasing safety factor in accordance with international standards. The second challenge is to reduce the costs that needs more attempt. The next challenge is to lower the expectations and increase productivity and performance of drilling companies try to get into partnerships with international companies to promote their uptake. The next is following the instructions

for repair and maintenance of machinery. The next one is reducing the technology gap that must be used in drilling machine in order to increase productivity and efficiency in the application of appropriate technologies.Growing experienced human resources has been less investigated in recent years which must be taken as an important point, because obviously any increase in productivity and efficiency are achieved by having experienced human resources. The next item is the development of future contract policies of NIOC that can improve and support domestic companies. Development of knowledge management system in the field of technology, management and implementation of drilling projects can satisfy clients if knowledge management is considered.The next issue is to identify capacity of drilling companies. It is required to identify potentials based on the policies of the NIOC and assign projects based on the potential of the company. In my opinion, one of the strategies that leads to growth and development, is the growth and sustainable

development of companies. The creation of cooperation consortia between the E&P companies and drilling companies to synergize and enhance the capabilities and even MOUs between small drilling companies and large companies for the project are very useful.Eventually growth and development are in knowledge management which needs the right policy, planning, performance and controlling to achieve sustainable development



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The E&P companies can be useful in stable job creation for the smaller companies. Investment is the only missing loop in this industry. The requirement of creation of the E&P companies is obvious for everybody. The first duty of the E&P companies is exploration and then preparing MPDs, field development and reservoirs maintenance. If there is no thinking of increasing recovery factor, the field will get into attenuation and the production decreases. The E&Ps have responsibilities in improving oil recovery and also in field abandonment. This is a very good plan that the E&P companies participate in all of the field development and production chain. Now, due to the presence of MOP authorities, I want to talk about some of the requirements and challenges which

Two important issues to consider are upstream industry situation in three periods of pre- sanction, the sanction years and the post-sanction period and evaluation of a SWOT matrix with a focus on the requirements and challenges. Before the sanctions, we had the presence of great and trusted international companies, lack of capacity of local contractors in the upstream, records of foreign companies in Iran, financial affordability of clients, high demand for fossil fuels in the world and final reluctance to technology transfer of developing countries.The matters of years of sanctions: private sector investment and the establishment of domestic contractor companies Trust and implementation of local contractors capacities in oil and gas fields Development of common fields such as South Pars and West Karoun

Proliferation and development of contractor companies in services Success in some key tools localization Lack of attention to the project management science promotion particularly in the risk related issues Increase in the total costs of projects due to resource unavailability and inattention to cost control Inaccessibility to modern technologiesFrom my point of view, the followings happen in post-sanction years: Oil and gas original and interesting market for investing The presence of prestigious international contractors with assessment to financial resources Changes in contract model structure Lack of sufficient financial resources in the country Reduction of demand for fossil energy in the world and the tendency of developed countries to take advantage of new and renewable energies Oil and gas market downturn and low oil prices compared to those of sanction yearsIf we analyze the SWOT matrix, opportunities of post-sanction include the followings:The government plans to increase production in: Development of new fields with the priority of common fields priority Production ratio enhancement by IOR/EOR technologies Demand enhancement in the drilling sector and technical services Shortage of financial resources and orientation of Ministry of Petroleum to finance the projects by contractors with appropriate financial affordability. Highlighted role of national contractors on new oil contracts Improving the management and technology levels through working with international companies Presence in global markets through jointing with foreign companiesThreads of post-sanction period: Significant decline in oil and gas market and amplification of competition in this area, especially in international markets Reduction in the rate of global growth Lack of adequate financial resources at the petroleum Ministry and subsidiaries as clients Failing to provide the financial resources of local available capacities The presence of strong foreign competitors and the technology Unfamiliarity of national contractors with the science of project management and the lack of related experience

the contractors are faced with so that we can solve these problems together and we make our industry progress. According to the role of E&Ps, these companies can balance the situation for all the participants in this industry such as service companies, suppliers and equipment manufacturers. As an example, when a field project like the south pars starts, many companies in different levels are born and grown up. These companies have some projects for a while but after finishing that special project, they will be workless. Therefore they need to utilize in projects so that they can survive. However it seems that E&P companies can be effective in stable job creation for the smaller companies; they can form different consortiums in different levels and in different phase of the projects. These small companies can be the supplement of the production chain.Another point is that, creation of these companies is a new process in Iran and it requires setting new rules and the legal requirements of creation; such companies are not available. The private sector cannot cope with costs of this perfect plan and it may remain incomplete. So the legal obstacles should be resolved. In Iran we have only one E&P and it is NIOC. The other challenge which the companies are confronting with, is risk management. If new companies are not supported, they might be destroyed. The last word is about EOR; if the recovery factor increases by one percent, the revenue will increase by 400 billion dollars and our future developments need only 200 billion dollars investment and our only requirement in this part is investment.

The E&P companies can be useful in stable job creation for the smaller

companies.

Retrospection, reviewing current situation and predicting future conditions are necessities in the upstream industry.

Hossein Sharif AbadiManaging Director-Sepanir Co.

Mohammadreza ParsaPourCEO-Mapna drilling company

Low rates of Service renderingWeaknesses at post-sanction period: Technology gap between domestic companies and foreign accredited contractor companies Lack of new technologies in operations, manufacturing and project management Weaknesses in the recruitment and use of appropriate partners, especially international companiesStrengths at post-sanction period: Development of strategic assets of the sanction period Provision and deployment of new technologies in the oil and gas industry and project management establishment with regard to the availability of development infrastructure As a conclusion, in local companies there should be a great attention to project management processes and mainly, a particular focus on risk management in Private companies. Implementation of modern management system and particularly quality management on risk management basis and the integrated management of human resources are all for creating a common language with foreign companies.Noticing the local contractor companies in E&P and service operations in new contracts, domestic support of manufacturers in oil and gas industry, market provision insurance, and establishment and development of research institutes are of considerable factors.Human resource training and progressing the technical abilities are conceptual view elements. Growth in applied science, investment knowledge and EOR operation strategies are also important to inform the private companies of petroleum ministry orientation in investment and make them take action more efficiently.Technology utilization without exaggeration and welcoming the arrival of new technologies on the international stage are considered principal.



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If the field-oriented development is not approached by integrated

management, national interests are endangered.

Drilling engineering includes both reservoir engineering and geology

According to the fact that there are 145 oil fields in the country, out of which, 28 are common fields, field-oriented development is a necessity for increasing productivity and achieving maximum efficiency. As a result, integrated management, production system monitoring, and EOR operations are considered vital. Certainly, engineering capabilities and potentials are significant to make a progress. The following is the full text of the discussed issues in this panel.

Mohammad Ali EmadiPasargad Energy Developement

Alireza Behbahani niaCEO of Kish Petroleum Engineering Co.

According to the current condition of hydrocarbon fields and performance of E & P companies, low recovery factor is a problem in the country. Average recovery factor is 25 to 28 percent worldwide. While, the recovery factor for Bangestan group (50 percent of reservoirs), is roughly 7 to 10 percent, it represents the drawback in IOR and production enhancement operations. Issues like field description, approving the field development model, reservoir performance, well performance and proliferation in drilling operation are usually discussed. Considering the technical principles at exploration and production cycle, E & P companies must respect the principles such as applying new technologies for field development plan. Another point is accessibility to widely used smart

Drilling operation is divided into three general categories: drilling services, procurement and drilling engineering. Rig related services are also considered as a part of drilling services or a separate part. From my viewpoint, it is the most important subset of drilling engineering. Rig related services are series of activities to keep the rig work as a mechanical and electrical administration. Drilling engineers tasks are to plan the drilling operation, order required goods and supervise the operation. Technical supervisor is interconnected with drilling engineering is an individual to completely supervise the rig-site operation.Rig service companies, which mostly undertake the EPD projects, in order to prevent unexpected events from happening, should be aware that drilling engineering

wells and smart fields due to complexities in wells.The development of capabilities in fluid extraction from carbonate reservoirs is essential and we lack such technologies. Meanwhile, almost all discussed new methods and technologies are for shale and sandstone reservoirs that should be absorbed.Field development consists of aspects appertained to technical, economic and legal issues of new contracts and contracts of previous generations, including buyback contracts and the changes in new contracts. In my opinion, more than 90 percent of people do not have enough information about the intricacies of new contracts and the lack of knowledge may cause lots of failures in future. There should be comprehensive plans for EOR operation defined by oil ministry to be a limelight to the companies that are equipping themselves to these abilities. Regarding the resources, IOR and EOR operations ought to be ranked from cost and productivity points of view. Regulation, applied laws and empowerment of national companies should be formed based on rules and frameworks to a successful increased productivity. Framework formulation is one of the most important issues and it is essential to avoid non-scientific thinking and considering the field development and production as separated matters.For example, abandonment of 20 wells in Azadegan field defects the integrated management and field-oriented development plan and causes national interests to be endangered. Certainly, national interests in short and long term are of great priorities that must be considered. For development planning in carbonate reservoirs and other specific reservoirs, it is essential to develop companys capabilities and to be committed in order to advance.

requires geology and reservoir engineering evaluations to plan the drilling operation.Regarding the effects of EPD based projects on contractor and employer companies, there are worthy of note explanations. Firs

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