CIn

Monday, March 6, 2017Dallas, TX

1:45–3:00 p.m.

RISK FACTORS AFFECTING CONTROL OF WELL AND SPECIAL INSURANCE ENDORSEMENTS TO MITIGATE THE RISKS

Presented by

Brian KrauseWell Control SpecialistJ.H. Blades & Co. Inc.

Bill MahlerExecutive Vice President & General Manager

Wild Well Control, Inc.

Maintainingcontrolofthewellintoday’soilandgasdrillingenvironmentcanpres-

entanumberofrisks.Thissessionwillidentifytheprimaryriskfactorsthataffectcontrolofthewell.Inaddition,theconsequencesandassociatedcostsofhavingawellcontroleventwillbediscussed.Thesessionwillreviewmitigationactionsthatcanbeimplementedthroughspecialendorsementstocontrolofwellpolicies.

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opyright © 2017 International Risk Management stitute, Inc.

www.IRMI.com

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Brian KrauseWell Control SpecialistJ.H. Blades & Co. Inc.BrianKrauseisaveteranintheoilandgaswellcontrolandfirefightingworld.HebeganhiswellcontrolcareerasanapprenticetofamedAmericanoilwellfirefighterRedAdair,whereheeventuallybecamevicepresidentinAdair’scompany.LaterheledthefirefightingteamthatcontrolledsixsabotagedwellsatthestartoftheGulfWar,andmostrecently,hespentsixyearsasvicepresidentofTravelersOilandGas.Mr.Krausespentnearlythreedecadesonactiveassignmentthroughouttheworldcontrollingblowouts.FollowingAdair’sretirementin1993,heandotherformerAdaircolleagueswentontoformtheirowncompany,IWC/Boots&Coots.Mr.KrausewaspresidentandseniorwellcontrolspecialistofIWC/Boots&Cootsfromits1995startuntil2003.

Bill MahlerExecutive Vice President & General Manager

Wild Well Control, Inc.

BillMahleristheexecutivevicepresidentandgeneralmanagerforWildWellControl,Inc.,aHouston,Texas-basedcompanyspecializinginworldwidefirefighting;wellcontrol;andrelat-edengineering,marineengineering,andtrainingservices.Mr.Mahlerhasover33yearsintheoilfieldserviceindustry.Hisexperienceencompassesoperations,businessdevelopment,salesandmarketing,strategicplanning,marketanalysis,andacquisitions.Mr.Mahler’sexperiencehasbeenintheoilfieldserviceindustry,specificallytherentaltoolanddownholeservicesector,withadirectfocusonprovidingsupportservicestothehy-draulicworkover(snubbing),coiledtubing,andwellcontroloperations.Mr.Mahlerreceivedhisbachelorofbusinessadministrationdegree in finance fromTexasA&MUniversity.HeisalsoamemberoftheSocietyofPetroleumEngineers,InternationalAs-sociationofDrillingContractors,andAmericanAssociationofDrillingEngineers.

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#IRMI2017

Risk Factors Affecting Control of Well and the Use of Special Insurance Endorsements to Mitigate Same

Bill Mahler Executive VP

Wild Well Control, Inc.

Brian Krause Well Control Specialist

J.H. Blades#IRMI2017

#IRMI2017

There are certain inherent risks associated with the drilling and workover operations regarding Control of Well. There are many risk factors involved and a majority of them can be assessed, then minimized, mitigated or eliminated.

This presentation will identify the primary risk factors and some of the things that can be done to mitigate these new risks.

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#IRMI2017

Purpose of PresentationThis presentation is to enhance your –• Awareness of Control of Well Risks• Awareness of the Consequences of a Well Control Event• Awareness of Possible Mitigation Actions Available through Insurance

Endorsements

This presentation will answer the following questions -• What are the primary risk factors affecting Control of Well?• What are the consequences and associated costs of having a well control event?• What can be done to minimize the number of claims and to minimize the size of a

claim when a well control event does occur?

#IRMI2017

#IRMI2017

Who is Wild Well Control?

We are the world’s leading provider of emergency firefighting, well control and related engineering, training and environmental management services. Our unique services are provided for domestic and international O&G Operators, both onshore and offshore.We are the only Company in our industrythat is ISO 9001, 14001 & 18001 certified.

We are a wholly owned subsidiary of Superior Energy Services (NYSE – SPN).

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#IRMI2017

What Is A Well Control Emergency?The most catastrophic occurrence during well site operations is a blowout.

A blowout is an uncontrolled flow of reservoir fluids from the wellbore to the earth’s surface.

The blowout may, or may not, result in a fire.

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WWhen Can A Blowout Occur?

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During Drilling Operations

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During Workover Operations

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During Production Operations

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During Completion Operations

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Due to Deteriorated Surface Equipment

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Blowouts Can Occur Offshore

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And, Blowouts Can Occur In Storage / Disposal Wells

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Blowouts Do Not “Just Happen”

• Documented facts show that over 80% of major catastrophes involve a chain of 7-11 separate contributing factors (or warning signs) before a catastrophe occurs.

Blowouts Are NO Different!

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The Risk Factors

There are two types of risk factors in the drilling of oil and gas wells.

• First, you have those risk factors associated with the mechanics of drilling an oil / gas well.

• Second, you have those risk factors associated with the human performance during the drilling of an oil / gas well.

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Risk Factors Associated with the Mechanics of Drilling a Well

• Reservoir Characteristics – HPHT? BHP? H2S? • Well Location

• Shallow Gas Formations

• Casing Design • Cementing Program • Rig Design • Rig Well Control System

• Blowout Preventers • Accumulator System • Choke & Manifold Design

• Drilling Operations• Stuck Pipe • Loss Circulation • Kicks

• Completion Operations • Frac Operation

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Risk Factors Associated with the Human Performance

The Rig Crew -• What is the Rig Crew’s experience level? • What is Rig Crew’s level of Well Control Training

• Does Tool Pusher and Driller have current well control certification? • Others on Rig Crew understand basics of Well Control?

• What is the Rig Crew’s Safety Culture and Attitude • Is the Rig Crew prepared for a well control emergency?

• Are they conducting scheduled Kick Drills effectively? • Are they complacent to the ongoing drilling operation?

• How will the Rig Crew react to a high stress event? • Must react quickly and decisively to a kick. • Will the Rig Crew know what to do?

The Rig Crew is the First Line of Defense in Preventing / Handling Well Control Incidents

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CONTINUED RISKS IN TODAYS DRILLING OPERATIONS

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• Multiple Well Pads• Complex Multiple Stage Frac Operations• Continuous Multiple Well Frac Operations• Suburban Settings for Drilling / Production Activities• Simultaneous Operations at the Wellsite• Aging Field/Well Integrity Issues • Environmental Issues• Uptick in Drilling Activities

Leading Control of Well Risk Factors –Drilling / Production Operations

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Multiple Well Pads

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Complex Multi Stage Frac Operations

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Continuous Multi Well Frac Operations

Additional Risk Exposure vs Cost Savings

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Suburban Settings for Drilling / Production Activities

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Simultaneous Operations at the Well Site

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Aging Field / Well Integrity Issues

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Environmental Issues

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Uptick in Drilling Activities

• Rig Conditions• Rig Personnel Availability

& Experience Level

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RISK MITIGATION & MANAGEMENT TOOLS FOR USE IN WELL PLANNING AND DURING DRILLING OPERATIONS

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#IRMI2017

Risk Mitigation / Management Tools – Well Planning

• Risk Assessment Assessment of the probability of the risk and the severity of the consequences.• Well Plan • Well Location • Drilling Rig • Environmental • Regulatory• Political

• Assessment of Consequences

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Risk Mitigation / Management Tools – Well Planning

Emergency Response Plan or Blowout Contingency Plan • Provides a Response Methodology• Identifies Response Organization• Eliminates unnecessary Delays• Identifies Resource Requirements• Identifies Potential Problems • Increases the Efficiency and

Cost Effectiveness of a Response

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Modeling of Kick Tolerance

By Hole Section

Risk Mitigation / Management Tools – Well Planning

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Pressure Simulation Graphics

Risk Mitigation / Management Tools – Well Planning

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Dispersion Modeling

Dispersion Modeling can identify potential problem areas for evacuation should an uncontrolled flow occur.

Risk Mitigation / Management Tools – Well Planning

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Relief Well Planning and Modeling - Pre-Drill

Determines if one relief well or more may be required should the subsea well blowout during drilling operations.

Cross-By: drill and range on the TW,without By-Pass/plugback for ultimateTW intersect

Cross-By

Relief Well Target Well

Intersection Point

Final AlignmentInterval

ParallelInterval

Initial Ranging &Triangulation

Interval

Normal DrillingInterval

Drill to InitialRanging Interval

Locate Target Well

Monitor TargetWell Path

Prepare forIntersection

By-Pass: drill past the TW uncertaintyellipsoid, range to locate TW & plugbackfor re-direction and ultimate TW intersect

By-Pass

uncertainty ellipsoidreduction after ranging

Combined (TW + RW) Positional Uncertainty Ellipsoid

close approach point

for definition purposes only

Risk Mitigation / Management Tools – Well Planning

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Plume Analysis

Risk Mitigation / Management Tools – Well Planning

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Erosion Modeling Of Production Equipment

Risk Mitigation / Management Tools – Well Planning

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Rig Site Kick Drills • Evaluates the readiness of the rig

crew & their response skills.• Measures the crew’s response to

a well control kick.• Rig crews gain an understanding

of importance of their duties to daily operations and emergency response situations.

Risk Mitigation / Management Tools – Drilling Ops

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Well Control Equipment Audits• Assists in the effort to eliminate or

reduce those risks associated with well control.

• Includes a comprehensive visual inspection of the well control equipment once it has been rigged up and tested after casing is set.

• Based on established and accepted industry practices

• Areas of concern identified & communicated to the client

Risk Mitigation / Management Tools – Drilling Ops

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#IRMI2017

Well Integrity Audits• Audits condition of surface

equipment – trees, manifolds, pipelines, etc – to identify unforeseen risks.

• Can be used on existing properties or on properties being considered for acquisition or merger.

• Visual inspection of Surface Equipment as to working condition.

• Report prepared and concerns are ranked as to the highest risk concerns.

Risk Mitigation / Management Tools – Other

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Well Control Training • Introductory Well Control Training • Well Control Training • Advanced Well Control Training

Risk Mitigation / Management Tools – Other

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Environmental Assessments• Audit of Well Pads• Visual Inspection of Production

Equipment• Development of Environmental

Impact Statements identifying areas of concern – wetlands, streams, water sources, etc.

Risk Mitigation / Management Tools – Other

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Insurance Endorsements & Programs Designed to –

• Reduce the probability / number of well control events (and the number of Control of Well claims)

• Reduce the severity of a well control event should one occur (and the dollar size of the Control of Well claims)

Risk Mitigation / Management Tools – Other

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#IRMI2017

Special Control of Well Insurance Endorsements• Kick Assistance Program • Pollution Mitigation and Elimination Program

• Provides Oversight of environmental response during a well control event / response

• Well Control Training • Emergency Response Plan • Technical Support during Drilling Ops

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Consequences of a Well Control Event • Injuries to Rig / Company Personnel • Loss of Assets – Rig, Well, Reservoir • Environmental Damages • Civil Claims • Shareholders’ Equity • Regulatory Fines and Penalties

Porter Ranch, CA2016

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Increased Risk Profiles for Oil & Gas Operations in Today’s Market DRILLING OPERATIONS• Returning of Rigs to the Field - Condition?• Hiring of Rig Personnel - Experience? • Restricted Budgets for Well Control Training - Trained? • Complacency in Drilling Shale plays - Alert? Prepared?

OTHER OIL & GAS OPERATIONS• Storage Well Systems • Disposal Wells

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The Rig Crew is the First Line of Defense in Preventing / Handling Well Control Incidents

They must be –• Experienced and competent in well control • Prepared for a well control event • Alert throughout the drilling of the well • Able to make decisions without hesitation

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#IRMI2017

Thank You!

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