Land Drilling (Onshore)
Most land rigs are owned by contractors who sell their services to exploration and production companies on a day rate (charge by the day) or footage (charge by foot drilled) basis. Rigs vary based on how deep they can drill, their degree of automation (e.g. automatic pipe handling, automated control systems, moving systems, top drives, etc.), and what they are equipped to drill (e.g. Arctic operations, horizontal drilling).
Land-based rigs (Exhibit 33) are designed to be quickly assembled and taken apart for fast movement between locations. Some drilling rigs have their own moving systems, while others employ third party trucking companies.
Engineering, Procurement and Construction (EPC) companies help operators design and build the infrastructure required to produce and process hydrocarbons. The nature of this work depends on whether the facilities are onshore, offshore, or subsea:
• Onshore: Building onshore production facilities (preparation of drilling site, field gathering and processing facilities, oil sands extraction facilities, LNG facilities).
• Offshore: Building offshore production facilities (fixed platforms, semi-submersibles, floating production storage and offloading, floating LNG)
• Subsea: Manufacturing of equipment (trees, manifolds) and installation of umbilicals, risers and flowlines that allow the transmission of flow (oil/gas and information) between the subsea production hub and the offshore production facility.
Under a typical EPC contract, service companies are responsible for the engineering & design, the procurement of necessary equipment, the construction (onshore/offshore) or installation (subsea) of the infrastructure, and the commissioning. The construction is often sub-contracted to third parties.
The drilling mechanism for offshore is analogous to land drilling (onshore). The major difference is that an offshore rig needs a platform (fixed or mobile) to support it and there may be hundreds of metres of water between this platform and the sea floor. Different types of offshore rigs are used depending on the water depth, from rigs on submersibles and jack-ups used in more shallow locations, to drillships and semi-submersibles used in deeper locations.
Horizontal and Directional Drilling
In contrast to traditional vertical wells, directional wells use a curved wellbore. Multiple directional wells can be drilled from a single drilling pad. Directional wells are used to extend the wellbore into a larger portion of the resource-bearing formation, which can result in higher resource recovery compared to a traditional vertical well.
Specialized equipment and techniques are used to drill horizontal and directional wells. Downhole mud motors are used to rotate the bit, which are powered by the pressure of mud (drilling fluid) being pumped down the pipe. Measure-while-drilling (MWD) equipment, with sensors typically located several metres behind the drill bit, is used to measure deviation and help determine if the drilling is on track.
Coiled tubing is a continuous, joint-less, high-pressure rated hollow steel tube that can be used in place of conventional production tubing, which is made of joined sections of pipe and is similar to a drill string. Special equipment is used to insert the coiled tubing (Exhibit 34) through the wellhead into the wellbore. This method is considerably quicker and more efficient than joining sections of pipe.
Drilling fluids are used to stabilize the borehole to prevent cave-in and collapse, to cool the bit, to flow the cuttings up to the surface, and to increase the rate of penetration. Drilling fluids are pumped down the wellbore through the middle of the pipe during drilling, and the “mud” circulates back up between the drill pipe and hole to the surface. Different types of drilling fluids provide different benefits to the drilling operations, depending on the reservoir type.
Service companies manufacture drilling fluid, transport it to site, analyze the mud when it returns to the surface, and dispose of the fluids once the drilling operation is complete.
Service companies rent ancillary equipment to operators and other service companies, with examples including tanks, rig mats, power and light generation, waste handling equipment, and flare stacks, to name just a few.