Importance of understanding the worst case

To underline Peter Riva’s point: When my company and its partner were drilling one well in the Middle East, we were drilling down to 5,900 meters and had subcontracted a rig from one of the larger U.S. rig suppliers.

The well had been profiled by the geologists as definitely high temperature/high pressure (350 degrees Fahrenheit and 16,000 lbs. per sq. inch pressure to be expected at reservoir depth) and needed careful and experienced drillers and rig operations supervision.

Although the rig and all of its ancillary operations were fully outsourced, we had, as is normal, two “company men� on the rig 24/7 to supervise, give the company’s decision when choices had to be made and to provide us constant progress reports. These were experts subcontracted in for the duration of the drilling.

The oil price was soaring and demand for rigs was doing the same. This led to numerous changes to the rig crews and, in particular, to the drillers. One of our company men came to us with serious concerns that, for such a potentially dangerous well, the lack of continuity of the crew created a risk that had not been factored in previously.

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We took our concerns to the highest level of management of the rig operator and they agreed to supplement their own expertise by providing 24/7 cover on the rig from Boots and Coots, probably the world’s top well-control specialists. (Messrs. Boots and Coots were Red Adair’s next in command, and when he died, they took over and changed the name of the company).

In early 2008, we perforated the reservoir. The top was at least 100 meters higher than predicted, so it happened unexpectedly. But even more frightening, the pressure of liquid entering the well was 19,500 lbs. per sq. inch. The blow-out preventer (BOP) was rated to, I think, 16,500 lbs. per sq. inch, and although there would have been a tolerance higher than its rating, it was not going to contain the liquid (which turned out to be steam).

In a textbook well-control operation, in the seven minutes it would have taken for the liquid to reach the surface, the drilling mud (a thixotropic-like liquid circulating in the well which stabilizes the well as its being drilled, lubricates the drill bit and brings the rock chips back to the surface) was weighted up to its maximum (by adding a mineral, Baryte — found near iron ore deposits and extremely dense — I believe it is the densest material that can be mixed into a liquid). A small amount of the steam did get to the surface.

The BOP was configured to allow excess pressure to be bypassed through a series of baffles to take the kick out of it. Nevertheless, that small quantity (whose volume had grown massively between minus-5,100 meters and the water’s surface) was sufficiently powerful to knock down the walls of the containment tank.

The 5-kilometer column of heavy drilling mud in the 8-inch well hole was strong enough to keep the steam down. As it happened, at the bottom of the well, in the “open� hole section (the last 500 meters was not cased, i.e., no metal sleeve) something in the subsoil gave way and the steam blew out underground and disappeared along the line of least resistance. The column of drilling mud then had nothing holding it up any more and we assume slid down to the bottom of the hole; the BOP created a vacuum at the top of the well and we think the well collapsed inward.

Anyway, it had to be sealed up and abandoned and became the subject of a very large (but successful) insurance claim.

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The point is, we didn’t kill anyone or cause a major environmental disaster; but we could have done if we had not taken responsibility and action to minimize the risk, having analyzed the worst case. We didn’t palm off responsibility to the rig owner, we just made it our business to ensure the rig was fit for purpose. All of the company’s and its partners’ most senior people were directly involved in the detail of getting it right.

Martin Groak is a British Chartered Accountant with more than 30 years of international business experience. During the last 10 years, he has held two CFO positions with publicly quoted oil and gas exploration companies; one with operations in South America and the other in the Middle East. He is currently working on a new project in central Russia.