Why Drilling Projects Are Mostly Unsuccessful in the Niger Delta

While It is very rare to find a well that did not meet, at least, a part of its objective, only 10% of wells drilled in Nigeria between 2003 and 2015, achieved their stated objective. By well objective I am referring to such metrics as:

1)   Actual cost less than the well cost estimate.

2)   Non-Productive Time less than 5%.

3)   $/ft within global benchmark.

4)   Drilling cost per unit barrel of actual production within estimate.

The Current Reality

The figure shows a plot of the drilling performance between 1998 and 2015.

The average $/ft follows a similar pattern, and remains high. In 2016, the average was $3800/ft. Meaning that a 10,000 ft well cost $38 million to construct. In 2003, the same well cost only $5 - 6 million, with same oil price of $45/bbl then.

Drilling Speed is Poor

Drilling costs are 70% time-dependent. Therefore, a technical measure of drilling efficiency is the total wellsite duration divided by the well depth. The curve shows that this Mean Footage per Day performance improved year-on-year between 1998 and 2003, when it started declining. It is noted that this performance is inversely proportional to the oil price! That means, the period of high oil price corresponded to the deterioration of drilling performance. Furthermore, even the average of 500 ft/day reached in 2003 does not compare favourable with 1000 – 1500 ft/day global.

Well Cost/ft is too High

The average $/ft follows a similar pattern, and remains high. In 2016, the average was $3800/ft. Meaning that a 10,000 ft well cost $38 million to construct. In 2003, the same well cost only $5 - 6 million, with same oil price of $45/bbl back then.

The deterioration of drilling performance has not been reversed, since the oil price collapsed in mid 2014. Consequently, well cost is still on the upward rise!

Why the Performance is poor

Since my return to Nigeria three years ago after 10 years abroad, out of personal passion, I have become very familiar with drilling operations in the area. By comparison with standards that I am familiar with abroad (Europr, North America & even the Middle East), I have observed the following top contributors to the poor drilling performance.

Issues of Expertise & Competence

There is a pervasive shortage of drilling project experience in the Nigerian oil industry. And this ranges from mid-experience drilling engineers/supervisors to sophisticated level technology management. Consequently, there is a very sub-optimal use and mismatch of the few available expertise with their roles.

Drilling experience may be classed into three sub-groups, namely, rig contractor expertise, service company expertise and operating company expertise. Each of these areas is an expertise group and mismatching a personnel from one group into another is sub optimal. It will be sub-optimal, for example, to convert a Schlumberger or Baker well planner to a well operations/drilling superintendent. Likewise, an experienced Transocean rig superintendent cannot optimally look after an OPCO well operations as a drilling superintendent.

Is there an Established Well Delivery Process?

Stemming from the competence issues, is the absence of a recognised well delivery process, WDP. When there is a fit-for-purpose WDP, wells are not only drilled RIGHT with minimal NPT, but the RIGHT wells are delivered also. By this I mean a well that best meets its production (less skin, maximum flow, etc) or other objectives, as well as delivered at minimum total cost, including zero unplanned workover, re-entry or intervention.

Every single drilling team I surveyed, either did not have a well delivery process, or, even if they have, it is either not implemented at all, or, implemented very inadequately, in a tick-the-box manner. The result is very high NPTs. For example, when I first carried out this study in 2005, Wellbore Instability caused 30% NPT. My review in 2016 showed that wellbore instability still causes 30 – 35% NPT. Furthermore, a review of well designs in the past 10 years showed very little variety or improvement over the wells drilled in the past one or two decades.

In the earlier years while working for a major OPCO, in the late 90’s and the start the millennium, we drilled the first level 6 multi-laterals in the world in Nigeria, we developed cased-hole expandable wells technology to reduce lower completion skin, we drilled long laterals with the the first 1000 ft ESS in the world, we combined different technologies to achieve a reduced cost and delivered projects to extremely tight budgets with slim wells. We developed the stuck pipe risk factor tool to reduce wellbore instability to near zero. And wrote several SPE papers to show-case our technology management expertise.

Where are our colleagues of those good old days!

Are There Enough Creativity in Well Design Today?

As addressed in the forgoing, there is very little creativity in well design. Every well seems to be like the other and well objectives are often assumed, rather than matched with the specific economic, geological and reservoir conditions. DWOP exercises often end up with very little cost savings due to recycled knowledge. This must be related to inadequate experience input into the well design process.

Is there a Recognition of the Remoteness & Complexities of the Environment?

The Niger Delta operations environment is complex, and failure to recognise this, is a source of most failures. The logistics and supply chain management is complex with security issues, and delicate conflicts of interests. Remoteness calls for early assemblage of the project team and detailed workplans as there is very little room to recover from failure. If a required fishing tool is not available when required, a long and complex process must be followed to source and air-lift the tool into the country, resulting in excessive NPT. Current local content laws impose unconventional challenges on drilling teams, as even the inclusion of a non-required party into the team changes a team chemistry.

How Might We Bridge The Gap

I believe strongly that if we get it right, drilling projects should thrive even at $25/bbl crude oil market environment, as it did in the 1998 – 2000 years.

Even when wells are delivered in-house, the use of external consultants will yield immeasurable results and should be considered. External Consultants with the right experience can inject fresh ideas into DWOP/CWOP and well challenge exercises, and bring new perspectives and huge cost savings. 

External Consultants can be used to facilitate the well delivery process in an independent fashion to ensure the RIGHT wells are drilled RIGHT. External consultants can facilitate technology implementation. External Consultants can help with well examination to make sure Concept Selection Reports (CSRs), Well Basis of Designs (BODs), Drilling programs, and end of well reports (EOWRs) are done well. The cost expended on these will result in huge savings and transfer of experience.

The least management can do is to challenge the team with the righ KPIs, and ensure the team has a good mix of expertise across the well engineering disciplines and expertise.

I believe strongly that if we get it right, drilling projects should thrive even at $25/bbl crude oil market environment, as it did in the 1998 – 2000 years.