Introduction to Oilfield Operations

Central Region OHME 2015
BY KIP WILLS, CENTRAL REGION DIRECTOR, U.S. DEPARTMENT OF TRANSPORTATION

Executive Overview:

Since the first oil well was drilled in 1859 at a depth of 69 ½ feet to the 40,502 foot Odoptu OP-11 well, the petroleum industry has gone from a handful of individuals promoting “rock oil” to a multinational industry employing millions of individuals. An understanding of the fundamental principles will allow PHMSA enforcement personnel to effectively regulate the industry. Typically, several dozen companies may be involved in the exploration, drilling and production of a single well. Any combination of activities are utilized during this process and hazardous materials have the potential for being present during any of these stages. This paper will be divided into two main sections, upstream operations and midstream operations. Upstream operations refers to that portion of the process involving exploration, drilling the well and related activity. Midstream operation refers to all of the activities once the crude oil reaches the surface until it is delivered at the refinery. This includes separation of gases from liquids, transportation and marketing.

UPSTREAM OPERATIONS

Operating Companies

These are the financiers of the industry and are the principal users of the services provided by the drilling contractors and other service companies. An operator may be a major oil company such as Exxon, Shell, Chevron or BP to name a few. There are also many independent companies who produce and sell oil and gas but are not involved in the refining or marketing of it.

Drilling Contractors

These are the companies under contract to an operating company who actually drill the well. Like operating companies, these companies may be large like Nabors Drilling, or they may be very small one rig drilling companies.

Service Companies

These companies, also under contract to the operating company, provide the goods and services required to drill, assess economic viability and complete a well. Service companies include such companies as Halliburton and Schlumberger.

Drilling A Well

The Drill Site

The drill site, the actual location on which the well is to be drilled is selected by the operating company. The company’s decision on exactly where to drill is based on several factors. The most important factor is geological. The company must strongly believe that hydrocarbons exist in the subsurface under the spot where the well will be started.

In addition to the geological factors, legal and economic factors must be considered. For example, the company must obtain the right to drill for and produce oil and gas on the land.

Oil and gas wells are being drilled in almost every country in the world, on land, in marshes and offshore. Major oil and gas reserves have been discovered on every continent, including the continental shelves, in gulfs, bays and marshlands as well as deserts, frozen wastelands and tropics. Each new discovery brings new drilling problems that have to be solved.

Directional drilling has seen a rapid increase in use in the United States since 2000. Wells are drilled directionally for several purposes:

• Increasing the exposed section length through the reservoir by drilling through the reservoir at an angle

• Drilling into the reservoir where vertical access is difficult or not possible. For instance an oilfield under a town, under a lake, or underneath a difficult-to-drill formation

• Allowing more wellheads to be grouped together on one surface location can allow fewer rig moves, less surface area disturbance, and make it easier and cheaper to complete and produce the wells. For instance, on an oil platform or jacket offshore, 40 or more wells can be grouped together. The wells will fan out from the platform into the reservoir(s) below. This concept is being applied to land wells, allowing multiple subsurface locations to be reached from one pad, reducing costs. In North Dakota a few well pads have now been drilled with 16 wells on each pad. This process is called “High Density Well site Surface Operations”.
• Drilling along the underside of a reservoir-constraining fault allows multiple productive sands to be completed at the highest stratigraphic points.
• Drilling a “relief well” to relieve the pressure of a well producing without restraint (a “blowout”). In this scenario, another well could be drilled starting at a safe distance away from the blowout, but intersecting the troubled wellbore. Then, heavy fluid (kill fluid) is pumped into the relief wellbore to suppress the high pressure in the original well bore causing the blowout.

Selecting the Drill Site

In order for the operating company to reach the point where it can tell the drilling contractor the exact spot on which to drill, several steps have to be taken. Seismic sections must be reviewed and analyzed for the potential for accumulated hydrocarbons. Lease terms and agreements are negotiated and thoroughly reviewed by legal experts for clear title and right of way for access. After evaluating the data and clearing any legal problems, the operating company selects a drilling site.

Preparing the Site

After a contractor or service company gets the job to drill the well on land, the location is prepared to accommodate the rig and its equipment. Materials used to prepare the surface area and roads around the land location vary according to the terrain. Gravel or oyster shells may be used, if mud, muck and mire are a problem, boards are laid to permit traffic during wet weather.

After the site is made ready, the next step is to prepare the spot where the hole will actually be drilled.

Rig Components

The main function of a rotary rig is to drill a hole. Making a hole with a rotary rig requires not only qualified personnel, but a lot of equipment as well. In order to learn about the components needed to make the hole, it is convenient to divide them into four main systems: power, hoisting, rotating and circulating.

Power System

Practically every rig uses internal combustion engines as its prime power source or its prime mover. A rig’s engines are similar to the one in a car except that rig engines are bigger, more powerful and use diesel or natural gas as fuel. Also, rigs require more than one engine to furnish the needed power. A rig, depending on its size and how deep a hole it must drill may have from two to four engines.

Circulation System

Drilling fluid, or mud, is a mixture of water, clay, weighting material and a few chemicals. Sometimes oil may be used instead of water or a little oil is added to the water to give the mud certain desirable properties. Drilling mud serves several very important functions. Mud is used to raise the cuttings made by the bit and lift them to the surface for disposal. Equally important, mud also provides a means for keeping underground pressures in check.

Hoisting System

Regardless of whether the rig is mechanical or diesel-electric, its job is to make the hole. To do its job it must have a hoisting system. Basically the hoisting system is made up of draw works, a mast or derrick, the crown block, the traveling block and wire rope.

Rotating Equipment

Rotating equipment from top to bottom consists of a device known as the swivel, a short piece of pipe called the Kelly, the rotary table, the drill string and the bit. Officially the assembly of members between the swivel and the bit, including the Kelly, drill pipe and drill collars, is termed the drill stem.

The Drill String

The drill string consists of the drill pipe and special, heavy walled pipe called drill collars. A length of drill pipe is about 30 feet long and each length is called a joint of pipe. Each end of each joint is threaded. One end has threads cut inside female end and the other end is threaded on the outside male end.

Drilling the Surface Hole

For discussion purposes, let’s assume that the crew is ready to begin drilling the first part of the hole.

At some predetermined depth, perhaps as shallow as a few hundred feet to as deep as two to three thousand feet, drilling is halted. The drilling stops because this first part of the hole, the surface hole, is drilled only deep enough to get past soft, sticky formations, gravel beds, freshwater-bearing formations that lie relatively near the surface. At this point the drill string and bit are tripped out of the hole.

Once the pipe is out, the casing crew moves in to install the first casing. Since this is the surface hole, the first string of casing they run is called surface casing. Surface casing is large in diameter and like all casing, is nothing more than steel pipe. The function of the surface casing is to “seal off” the well from the weaker soils that are typically found near the earth’s surface. In many situations (especially offshore), steel pipes can be driven into the earth as a substitute for the upper portion of the surface casing. This piece of pipe is called the “drive pipe or conductor” pipe.

Cementing

After the casing string is run, the next task is cementing the casing in to the hole. An oil well cementing service company is usually called for this job.

Special pumps pick up the cement slurry and send it up to a valve called a cementing head. Just before the cement slurry arrives, a rubber plug is released from the cementing head and precedes the slurry down the inside of the casing. The plug stops or “seats” in the float collar, but continued pressure from the cement pumps open a valve through the bottom plug. This allows the cement slurry to pass through the bottom plug and continue on down the casing.

The slurry then flows out through the bottom of the casing and starts up the annular space between the outside of the casing and the wall of the drilled hole. Pumping continues and the cement slurry fills the annular space. Using the same techniques and tools described earlier, the drill string and bit are tripped out and a new bit, suitable for the type of formations being drilled, is made up and the whole assembly of bit, drill collars and drill pipe is tripped back in. Several round trips may be required before drilling is once again brought to a halt.

At this point, particularly in deep wells, another smaller diameter string of casing may be set and cemented in the hole. This casing string is an intermediate string, there can be several intermediate strings.

Whether intermediate casing is set or not, the final part of the hole is what the operating company hopes will be the production hole. To drill it, the crew makes up a still smaller bit. The bit is tripped in, drills out the intermediate casing shoe and heads towards what everyone hopes is a formation capable of producing enough oil and gas to make it economically feasible for the operating company to complete the well. This part of the hole is eventually “cased” then perforated to allow reserve air fluids to enter the well.

Completion

To help the operator make his decision to complete or not complete the well, several techniques have been developed. One thing that helps indicate whether hydrocarbons have been tapped is a thorough examination of the cuttings brought up by the drilling mud.

Another valuable technique is well logging. A logging company is called to the well while the crew trips out all the drill string. Using a portable laboratory, which is truck-mounted for land rigs and permanently mounted on offshore rigs, the well loggers lower devices called logging tools into the well on a wireline. The tools are lowered all the way to the bottom and then reeled slowly back up. Logging tools developed over the years measure the natural gamma ray, electrical, acoustic, stimulated radioactive responses, electromagnetic, nuclear magnetic resonance, pressure and other properties of the rocks and their contained fluids. Some of these properties are indicative of the presence of hydro-carbon.

After the operating company considers all the data obtained from the various tests it has ordered to be run on the formation or formations of interest, a decision is made on whether to set production casing and complete the well or to plug and abandon.

If the operating company decides to set casing, casing will be brought to the well and for one final time, the casing and cementing crew run and cement a string of casing.

Perforating

Since the pay zone is sealed off by the production string and cement, perforations must be made in order for the oil or gas to flow into the wellbore. Perforations are simply holes that are made through the casing and cement and extend some distance into the formation. The most common method of perforating incorporates shaped charge explosives.

Shaped charges accomplish penetration by creating a jet of high pressure, high velocity gas. The charges are arranged in a tool called a gun that is lowered into the well opposite the producing zone. When the gun is in position, the charges are fired by electric means from the surface. After the perforations are made, the tool is retrieved. Perforating is usually performed by a service company that specializes in this technique.

Acidizing & Fracturing

Sometimes petroleum exists in a formation but is unable to flow readily into the well bore because the formation has very low permeability. If the formation is composed of rocks that dissolve upon being contacted by acid, such as limestone or dolomite, then a technique known as acidizing may be required. The acidizing operation basically consists of pumping anywhere from fifty to hundreds of thousands of gallons of acid down the well. The acid travels down the tubing, enters the perforations and contacts the formation creating pathways through which hydrocarbons can more readily enter the well bore.

Fracturing

Another method to promote more efficient recovery of hydrocarbons, when fracking the permeability is too low to permit good recovery is a process called fracturing, or Fracking. Fracking may be used to increase permeability to a practical level. To fracture a formation, a fracturing service company pumps a specially blended fluid (typically 90 percent water, 8 percent sand 2 percent chemical mixture) down the well and into the formation under great pressure. This hydraulic pumping continues until the formation literally cracks open, again forming pathways through which hydrocarbons can more readily enter the well bore.

MIDSTREAM OPERATIONS

Gas/Liquid Separation

When crude oil is brought to the surface it consists of water, natural gases such as methane, butane, propane, neopentane, etc. This combination of gas, oil and water and various contaminants must be separated and processed. The production separators come in many forms and designs, with the classical variant being the gravity separator.

In gravity separation the well flow is fed into a horizontal vessel. The retention period is typically 5 minutes, allowing the gas to bubble out, water to settle at the bottom and oil to be taken out in the middle. The pressure is often reduced in several stages (high pressure separator, low pressure separator etc.) to allow controlled separation of volatile components. A sudden pressure reduction might allow flash vaporization leading to instabilities and safety hazards

Heater/Treater

The sepearation process used extensively with shale oil crude oil wells is the “heater/treater” process. This process uses heat rather than simple gravity to break up the emulsions from the well. Gas is liberated prior to the filtering and settling sections, allowing liquid and sediment separation without the agitation of gas breaking out of the liquid. The most commonly used single well treater is the Vertical heater Treater. Flow enters the top of the treater into a gas separation section. Oil and water travels down through the downcommet to the heated section where the heat breaks the emulsion. This separates the oil and the water with the water settling to the bottom.

Portable “heater/treaters” are also utilized when a tank fails to properly separate and there is too much BS&W (Basic Sediment and Water) when the truck driver arrives at the tank battery to transport the crude oil to the next step of the midstream operation. These portable heater/treaters are also a regulated vehicle, see picture below.

Pad/Battery Process

Once the separation process has occurred, the three phases are sent via pipe to their respective holding tanks. For the natural gases, this is most typically a small in field gathering line which will transport the gases via pipe to a natural gas plant. Typically in the remote shale oil plays the water is stored in an above ground tank as is the crude oil. In some instances the crude oil is also gathered via small in field gathering pipe lines. Any gas that can not be piped or stored on site is burned or “flared”. In 2013, nearly 40 percent of the produced gases were flared. In the Bakken play. The State of North Dakota has passed regulations requiring that by 2020 this number can not exceed 10% of produced gases.

Truck Transportation

In remote locations where in field gathering lines do not exist, the crude oil is collected from the above ground tank batteries by cargo tanks. For UN1267 petroleum crude oil, packing group I, only DOT 407 and 412 and MC304, 307, 330, 331 and 312 tanks are authorized. DOT406 and MC306 series cargo tanks are NOT authorized to carry Packing Group I flammable liquids. (See 49CFR173.243(b)). During transportation by truck, the Federal Motor Carrier Safety Administration maintains primary jurisdiction with concurrent jurisdiction over the material and package shared with PHMSA.

These trucks carry from 160-215 barrels of crude oil per load. There are 42 liquid gallons per barrel of crude oil. The drivers use a small “grind out” centrifuge to add a small sample of the crude oil from the tank they are collecting to a mixture of distilled spirits. This is heated and put in the centrifuge. This provides the BS&W referenced above. If there is a high volume of sediment or water the driver will call the company and have the crude oil treated again prior to loading.

In Field Gathering Lines

Sometimes smaller diameter gathering lines are used to gather the crude oil, gases or even water. The materials are sent down separate lines to the next processing station. At times this means directly to a disposal well for water, a natural gas plant for the produced gases and either a rail loading facility or central truck gathering location for the crude oil. The lines carrying natural gas or crude oil are considered either gathering lines or transmission lines regulated by PHMSA. While all transmission lines are regulated, some gathering lines may be non-regulated. 49 CFR Parts 192 and 195 identifies what gathering lines are regulated based on factors such as location, line size, and pressures. Please contact the local Office of Pipeline Safety in PHMSA for specific questions regarding whether a line is regulated federally or not.

Rail Loading Facilities

Many of the shale oil plays are located in remote regions where there is not enough pipeline capacity to carry the crude oil to market. In this case the crude oil is typically loaded into rail tank cars and moved via railroad either directly to a refinery or to a further facility to load the crude oil into barges for barging it to refineries with limited railroad access. At these facilities the trucks are off loaded either directly into the rail tanks cars or into above ground storage tanks for loading later.

The rail loading facilities are typically one of two main types.

The first type is a direct transload from the semi tractor trailer through a small cart into the railroad tank car. This type of operation does not provide for any intermittent storage of the commodity and is highly susceptible to market forces of supply, demand and price. This type of facility will typically not have an access to sample the crude oil using any method other than an open catch glass jar.

The second main type of rail loading facility gathers crude oil by a combination of in field pipelines and trucks and utilizes above ground storage tanks ranging from 80,000 barrel capacity to 225,000 barrel capacity. The crude oil is then later loaded onto rail tank cars. These facilities are more likely to have locations where closed piston sampling cylinders can be utilized by field staff to collect samples of the crude oil.

Sampling and Safety Considerations

PHMSA and other regulatory entities are often tasked with gathering samples of the crude oil at the rail loading facilities for verification of assignment to the correct packing group and enforcement if the package it is contained in is not authorized for the material being placed in it. Several factors must be considered. The first is safety.

Safety

When hydrocarbons are brought to the surface in any operation, one possible gas that is brought up with it is H2S, Hydrogen Sulfide. It is a colorless gas with the characteristic foul odor of rotten eggs; it is heavier than air, very poisonous, corrosive, flammable, and explosive. For this reason, H2S specific meters, or in the case of PHMSA personnel, the assigned 4 gas meter MUST be worn in any environment that crude oil and natural gas is found.
In addition, specific clothing must be worn in these environments. This is either Nomex or Flame Resistant (FR) clothing on the outer garment. PHMSA staff are issued FR or Nomex coveralls and FR safety vests. In addition, FR or leather gloves must be worn as well as issued safety hard hats and safety goggles or glasses. There is no exception for these requirements. They are required of private industry by OSHA regulations. Most of the facilities require either attendance of their specific safety training or escort by their staff.
In addition to the equipment, safety training in the form of H2S awareness, 4 gas meter operations, OSHA 30 basic workplace safety training OR assigned PHMSA safety training such as Hazmat Technician (HazWopper) or other related specific training is needed. The facilities will also require that all vehicles on site are backed into their parking spaces and that high visibility vests be worn while outside the offices.

Sampling

There are two primary methods of sampling utilized by PHMSA. The first is “open catch” utilizing either a glass, pyrex, or tin jar. This is introduced at the needed location in the stream to gather a one liter sample. This sample must be tightly sealed and placed in a cooler and covered with ice for transportation to the laboratory.

The second method utilizes a closed piston cylinder system to collect a sample of crude oil. Once gathered the cylinders are transported to the laboratory. This method requires more planning and an assortment of gauges and tools and the assistance of the facility staff in finding a safe location where fittings are available.
Shipping to Market

Rail Shipments

Due to a lack of pipeline infrastructure, the most common method of moving shale oil crude oil to market is using railroad tank cars. The currently authorized package for UN1267 crude oil is the DOT 111 rail tank car. These are typically loaded in 105 tank car “unit” trains and moved from the oil field to refineries. During the rail movement, the Federal Railroad Administration has primary jurisdiction over the crude oil cars and tracks with PHMSA providing concurrent jurisdiction over the material and package it is contained in. These trains are carrying a highly flammable combustible liquid so safety when operating around these unit trains and train cars loaded with crude oil is paramount. Once at market, either a refinery or pipe facility, the crude oil is offloaded for refining operations and marketing. This is the end of the midstream process and the beginning of the downstream process.

Pipelines

The preferred and safest method of moving crude oil and natural gas from the well site is via pipeline. These are typically steel pipes ranging from 3 inch diameter up to 48 inch diameter pipe. The Office of Pipeline Safety within PHMSA enforces regulation on certain gathering lines and all transmission lines carrying natural gas or hazardous liquids. The Office of Pipeline Safety employs inspectors to conduct construction inspections of new pipelines, reviews operation, maintenance, and integrity practices of existing pipelines companies, and conducts investigations of jurisdictional pipeline.