Drilling Engineering Overview

Project Management Well Planning Contractor Management Risk Assessment

Project Management
Operators are dependent upon various service

providers for services that are critical to well delivery.

Drilling engineers must actively manage

themselves and the resources at their disposal.

Effective drilling engineers are constantly and

actively shifting their focus between Engineering activities and Management activities.

Project Management
Engineering activities include:
Details of the well design Specification and assessment of work done by

other team members

Operational procedures and planning Short term scheduling of tasks Time and cost prediction Performance monitoring and reporting Lessons learned

Project Management
Management activities include:
Understanding the full scope of work involved in

the project
Leadership communication vision and goals for

the project, gain buy-in, progress reports

Long term scheduling of work phases based on

duration and lead time

Setting priorities / Allocation of resources Relationships among team members that enable

them to work effectively

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Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 5

Well Planning Process

Setting Priorities Information Flow Decision Support Optimization

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 6

Offset well data Electric Logs Mudlogs Samples Cores Test results Seismic data

Geology

Targets: N-S/E-W TVD Size / Shape / Orientation Directional Tendencies / Dip Angles / Faults Lithologies: Rock type / strength Porosity / permeability Troublesome Formations Fracture and Pore Pressure Gradients Temperature Expected Fluids Expected Flow Rates

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 7

Geology Lithologies: Rock type / strength Porosity / permeability Dip Angles / Faults Fracture and Pore Pressure Gradients Expected Fluids Expected Flow Rates

Completion

Production Casing/Tubing Size Completion Design Artificial Lift Requirements Stimulation Design Length / Orientation in Reservoir Future Intervention Requirements

Geology Completion Trajectory Wellbore Stability Drilling Fluids

Geology Targets: N-S/E-W TVD Size / Shape Orientation Troublesome Formations Directional Tendencies

Completion Length / Orientation in Reservoir Future Intervention Requirements

Trajectory Design
Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 8 MD/TVD Inclination Azimuth KOP Build Rates Walk Rates Dogleg Severity N-S / E-W Displacements Horizontal Departure Surveying Requirements

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing

Completion Geology Length / Orientation in Reservoir Target Orientation Prod. Casing/Hole Size Lithologies Pressure at Abandonment Rock type / strength Fracture & Pore Pressure Gradients Trajectory Troublesome Formations / Stress Regime Wellbore Position Directional Tendencies KOP Inclination Azimuth

Wellbore Stability
Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 9 Mechanical Stability: Chemical Stability: MW Window Drilling Practices Tripping Practices Inhibitive Fluid Reqts.

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing

Completion Non-damaging Geology Lithologies Rock type / strength Fracture & Pore Pressure Gradients Troublesome Formations

Trajectory Inclination

Wellbore Stability MW Schedule Inhibitive Fluid Reqts.

Drilling Fluids
Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 10 Mud Type Mud Properties Mud Weight Rheology Filtration Inhibition Solids Control Requirements Cuttings Handling / Disposal

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 11 Casing Sizes, Weights, Grades, Connections Casing Setting Depths Casing vs- Liner/Tieback Load Cases Tension, Burst, Collapse, Buckling Special Tools Running Procedures Trajectory Critical Angle Dogleg Severity Wellbore Stability MW Schedule Casing Seat Options Drilling Fluids Mud Type Mud Properties Mud Weight Viscosity Friction Coefficient

Completion Prod. Casing / Hole Size Completion Design Stimulation Design Zonal Isolation Geology Pressure Profile Unstable formations

Casing

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 12 Trajectory Inclination Dogleg Severity Wellbore Stability Completion MW Schedule Hole Size Requirements Problem formations Completion Design Stimulation Design Zonal Isolation Drilling Fluids Geology Mud Type Pressure Profile Mud Properties Temperature Mud Weight Aquifers Viscosity

Cementing
Cement Job Designs Slurry type / additives Slurry volumes Spacers / Washes Displacement Conventional vs- Inner string Tool Selection Float Equipment, Centralizers, Stage tools, ECPs FIT / LOT Plan

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 13 Wellheads / BOP Trajectory Close proximity Drilling Fluids requirements Completion Mud Type Hole Size Requirements Mud Additives Completion Design Stimulation Design Casing Geology Pressure Profile Temperature Casing Sizes No. of strings to surface

Wellhead Size / Design / Pressure Rating BOP Size / Configuration / Working Pressure Rating Testing Procedures / Frequency

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 14 BHA Configuration / Directional Response Drill String: Lengths, Sizes, Weights, Grades, Connections Performance Properties: Tension, Torque, Buckling Operating Procedures: Torque and Drag % Rotary Mode, Tortuosity Casing Wear Prediction / Mitigation Plan Inspection Procedures / Frequency Trajectory Measured Depth True Vertical Depth KOP / Dogleg Severity Inclination Azimuth Geology Lithology / strength Dip Angles / Faults Drilling Fluids Mud Type Mud Properties Mud Weight Friction Coefficient Casing Casing Sizes Setting Depths

BHA & Drill String

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment

Wellbore Stability Mobile Formations Trajectory Measured Depth Dogleg Severity Geology Lithology / strength Reactivity of clays Abrasiveness

Drilling Fluids Mud Type Mud Properties Inhibition Casing Casing Sizes Cementing Annular Clearance Reqts BHA & Drill String WOB and Torque Cap. Motor Torque Output % Rotary Mode

Bits

Bit Size, Roller Cone / Fixed Cutter, Style, Features Operating Parameters: WOB, RPM Expected ROP, Footage, Bit Life, Cost / Foot Eccentric or Bicenter Requirements

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Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment

Drilling Fluids Mud Type Wellbore Stability Mud Properties Unstable Formations Mud Weight Hole Enlargement Rheology Pore Pressure / Frac Filtration Gradient Window Trajectory Measured Depth Surveying Reqts Inclination

Casing & Cementing Casing Sizes Setting Depths BHA & Drill String Drill String: Lengths, Sizes, % Rotary Mode Bits Hole Sizes Bit Design Expected ROP

Hole Cleaning & Hydraulics

Flow Rates Standpipe Pressures Pump Horsepower Requirements Annular Velocities Equivalent Circulating Densities Surge / Swab Bit Hydraulic Horsepower Hole Cleaning Recommendations 16

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment

Cementing Slurry Volumes Casing Additive Types Casing Sizes Setting Depths Hookload Drilling Fluids Mud Type Mud Properties Solids Control Storage Volume Cuttings Handling

Wellheads / BOP Size / Configuration Pressure Rating BHA & Drill String Lengths, Sizes Tension / Torque Loads RPM Hole Cleaning & Hydraulics Flow Rates Standpipe Pressures Pump HP Reqts

Rig Equipment

Top Drive Torque / RPM Capability Pump HP / Flow Rate / Pressure Capability Hookload Capacity Derrick Setback Space / Capacity Drilling Fluid Storage / Mixing / Solids Control Bulk Dry / Liquid Storage Capacity Deck Space / Bed Space 17

Working Backwards from Rig Capabilities

Top Drive Torque Output Liquid Storage Dry Storage Solids Control Cuttings Handling Dry Storage Liquid Storage for returns Rig Pipe Inventory Racking Space Storage Space

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 18

Deck Space for Equipment Storage for Fluids Bed Space for People

Deck Space for Tubulars Deck Space for Equipment Hookload Capacity Size / Configuration Pressure Rating Pump HP Flow Rate / SPM Standpipe Pressure Limit

Example of Other Iterations

Geology Completion Trajectory Wellbore Stability Drilling Fluids Casing Cementing Wellheads / BOP BHA & Drill String Bits Hole Cleaning & Hydraulics Rig Equipment 19

Hazard Control Process

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Unocal Hazards Control Policy

Each operating unit shall ensure that hazards control procedures are developed and implemented to effectively identify, evaluate and control hazards associated with all work at each stage, from conception through design; Engineering, Drilling, Well servicing, Construction, Inspection, 0perations, Maintenance and Cessation of operations.

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Work

Emergency?

Yes

Mitigate Emergency

No

As Soon As Possible

HA Screening and Technique Selection

Change or New Project

Type of Work?

Maintenance/Replacement-in-Kind

HAR Required? Yes No Finalize Design

Yes

Select HAR Technique and HAR team

Perform Hazard Analysis Review

Follow-up and Close-out HAR Actions

Significant Work Scope Change?

No

Implementation Planning

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D esign/Enginee ring Phase

Hazards Control Process

Implementation Planning

Yes

Any Concerns?

Yes

Resolve Concerns (Note 1)

No

Start Work

Note 1: "Resolving concerns will be by any of a number of methods such as peer discussion, project meeting or a formal hazard analysis. The method selected will be at the discretion of the performing authority, suitably trained in application of the techniques.

Variance from Work Plan?

No Complete Work

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Hazard Analysis
Design Phase
Hazard Analysis Screening Use Guidebooks - Tools and Techniques / When to use

Engineering Phase
Hazard Analysis Review Finalize Work

Implementation Phase
Significant Work Scope Change Implementation Planning Screening Go / No Go Deviation from work plan

Work Completion reporting / audit / learning

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Im plementation/C onstruction P hase

Implementation Phase Screening

Contract as Primary Risk Management Tool

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Risk Management & Contracts

Unocal

work is performed almost 100% by contractor personnel, working for a large number of Contractors. operations is co-managed by Contractors and Unocal. Management Tool.

Therefore Risk Management on the frontline of

The executed Contract is therefore a major Risk

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Risk Management Objectives

Control losses and manage risks Promote critical thinking and management of change Provide a standard risk assessment methodology Provide additional risk management tools Provide risk management training Comply with Unocals Risk Management Standard Comply with Unocals OMS requirements for risk, Complement Unocals Hazards Control Policy

engineering standards and management of change

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Key Contract Risk Management Elements

Indemnification Insurance Accident Reporting Force Majeure Warranties, including patents and copyright Confidentiality Audit

Applicable Law Billing Term Termination Foreign Corrupt Practices Act Technical Exhibits

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Contractor Management Program

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Key Aspects of the CMP

Company-wide application of best practices to select

and manage contractors

A well defined cradle to grave contracting process Each contract is owned by a Contract Manager Contract teams are formally established Technical specifications and Contractor selection are

based on business objectives

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Key Aspects of the CMP

Focus is on total long term value; not (only) on price Planned and structured management of Contractor

performance continuous improvement

Risk Management / OMS The program is a guideline that must reflect BU

requirements

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Managers Responsibilities
Integrate the CMP into every major project / program Make appropriate resources (personnel) available Delegate responsibility to contract teams:
Ensure the right people are selected as team members Clarify the priority of the contracting effort and provide guidance Participate in appropriate reviews and sanction key decisions Track progress and address problem areas - ensure accountability

Be visibly committed to the CMP

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The Procurement Team

Contract Manager Procurement Specialist HES Representative Engineers & Techs Superintendents Worksite Supervisors Clerks & Secretaries Management Attorney HR Rep Accounting Rep Tax Department Rep Auditors Cross Functional Personnel

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CMP Objectives
Apply Unocals values to all business dealings Maximize the value for every procurement dollar Manage risks (HES, operational, & commercial) Timely delivery of quality goods and services Meet requirements of policies and regulations Integrate multiple Contractors in a single project

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Contracting Priorities
(Key Value Drivers)

Personnel Service Goods Pricing

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Drivers - Personnel
This is the single greatest factor in being

the Clear Leader! We need Contractor personnel who are: technically excellent highly motivated driven by continuous improvement team players available to Unocal

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Drivers - Goods
Have we developed detailed technical

specifications?

Composition of materials API specifications Pressure and Temperature ratings Do we understand Contractors QA / QC?

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Drivers - Service
Quality of service is always determined by Service is impacted directly by the way in

quality of personnel and overall management which we manage the relationship from both sides

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Drivers - Pricing
Every Contractor working for Unocal

needs to make a fair and reasonable profit. A key driver for all Contractors is to be paid on time!

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Expectations
Establish high expectations and define them

early - What do we consider success?

Ensure management (Unocal & Contractor)

are committed to meeting the expectations

Expect continuous improvement

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Contracting Activities
Form a Contract Team Research the Business Environment
Internal and External

Develop Contract Strategy Method of Selection & Commercial Structure

Bid / Bundle / Negotiation / Alliance / Turnkey / Performance Global or local / Extensions / Exclusive personnel or equipment

Develop Specifications Pre-Qualify Vendors Revalidate the Strategy

Does original strategy still appear workable?

Contract Implementation
Reporting / Invoicing

Performance Management During the Contract Life

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Research the Business Environment

Internal understanding:
Analysis of this type of service: Who spends how much

with whom to accomplish what?

Forecasted activity level Historical problems (quality, timeliness, incidents) Opportunities to bundle services or consolidate with other

departments / business units

External understanding:
What levels of competition and what range of quality &

capabilities exist in the market? What commercial structures are most efficient for the Contractors?

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Performance Management During the Contract Life

Contract Manager is the focus point and is

responsible for Contractor performance

Business Performance Reviews (BPR) are held to

identify any issues and track action items created to address those issues of contract term)

Contract Strategy Review (6 12 months from end Final Contract Review

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