June 6, 2009
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Home / Issue Archive / 2009 / March #3 / SPD Drilling Success: The Best of Russia Teams Up With the Best of the West

№ 3 (March 2009)

SPD Drilling Success: The Best of Russia Teams Up With the Best of the West

Salym Petroleum Development N.V. (SPD) is a joint venture established on a 50:50 basis by Shell and Russian oil company Evikhon controlled by Sibir Energy plc. Since 2003, SPD has been developing the Salym group of oilfields, which are located in the Western Siberia, with the licence area totalling 2,141.4 sq. kilometers.

By Alexei Chesnokov

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   The Salym fields’ recoverable С1+С2 category oil reserves approved by the Russian Federation State Committee on Reserves (GKZ) amount to 152.6 million tons.

   The Salym oilfields development is the largest onshore investment project with foreign capital in the Russian oil industry. The total investment in Salym project amounts $1.5 billion. SPD is one of the youngest companies in the oil industry of Western Siberia. As early as in the summer of 2006, three years after starting the project, SPD joined the ranks of the Russian oil companies with the annual production exceeding one million tons.

   The success of the Salym project is tightly combined with the integration between Western and Russian technologies, which is really a key issue for SPD. And in this case we are talking not only about a combination of technologies but Western and Russian experience and culture as well. In essence, the company’s success is based on a few key elements. First of all, it was assumed that with more than 40 years of experience of oil and gas field operations in the West-Siberian basin, there were many best local practices available already and SPD had to readily and quickly adopt these. Then was identified the specific areas where the addition of selected international technologies and techniques – offered by companies such as Shell – would significantly improve performance. Thirdly, company created an environment where creativity, innovation and learning would flourish. And finally, company surrounded this with a culture where continuous joint improvement, between company staff contractors, was the norm. This approach has really paid dividends, and there are some specific examples.

   SPD currently have four rigs active, and all of them were built by a Russian Uralmash company. Before starting the drilling operations rigs were modified, amongst others by installing a Western “top drive”, which is safer, more efficient, and expands the rig’s functionality. It resulted in a significant increase of drilling rate and mitigation of risks of well problems and complications (even exclusion on some stages). Moreover, these rigs are operated by the Russian Siberian Service Company (SSK) and the western company KCA Deutag. It’s a very good and successful integration and a ground for sharing experience. Also healthy competition between the contractors is for the benefit of the business.
“When we began our operations, we noticed that the concept of performance improvement was not very well understood. For instance, we found some very competent local contractors who we thought could perform even better, and, rather than working on a lump sum or turn-key basis, we decided to offer them performance-based incentives. Now their performance is excellent, in some cases much better than that of international contractors who do the same kind of work,” explains SPD CEO Harry Brekelmans.

   In SPD, many so-called sub-horizontal wells penetrate the producing formation at 80 to 85 degree angles. This provides the opportunity to increase oil recovery and optimise the number of wells. Currently, SPD keeps four rigs and seven hoists employed continuously, with an eighth hoist soon coming into operation. In 2007, SPD drilled 295 kilometers and in 2008 increased this figure up to 305 kilometers with 106 delivered wells.

   The first SPD’s well was drilled within 33 days, whereas the average drilling time to date is less than 11 days. In September 2008, SPD set a new drilling record – a well of 2,530 meters was delivered in 5.6 days. It’s a success for SPD and Russian oil and gas industry on the whole, as according to industry experts the average drilling time for similar wells under similar geotechnical conditions in Western Siberia is 18 to 20 days.

   The company’s drilling performance has been recognised externally. SPD Well Engineering department has been a winner of the Shell EP Global Performance Awards for Well Delivery and Completions and Well Interventions on three separate occasions.

    “Our facilities are operating around the clock, with very high reliability, and they are run by high-quality people. In the end, it comes down to building effective partnerships. If you work in true partnership with your contractors and suppliers, you can get a lot of inefficiency out of the system,” says Harry Brekelmans.

   SPD employs the same approach in coring, logging and well completion using new technologies. When coring started four years ago, SPD cut the reservoir per 6 meters or 12 meters at a time. SPD brought a bit of its own experience, and together with the contractor, SibBurMash, was able to progress up to 18-27 meters and now routinely to 36 meters. What previously required 5 to 6 days work is now taking SPD about two days. In 2008, a 48.5m length of core was recovered from a well in the West Salym field. The well was cored in one run with 100 percent recovery. These 48.5 meters in one run is the longest core recovered from the Salym fields to date.

   SPD used a combination of Western and Russian technologies in their downhole production equipment. Well completions are run with Russian-manufactured ESP, produced by Borets, Novomet, Alnas plants, and Y-tools provided by Zenith Oilfield Technology ltd. The advantage of this technology is the ability to run production-logging tools below a working ESP at any point in time during production without pulling the completion string. Flow rates in different perforation intervals and other valuable information will now be collected for production optimization and enhanced recovery plans.
SPD are continuing to explore the Salym oil fields as part of it’s plans and exploration commitments and have already discovered seven oil accumulations, including four in 2008 only. But there is still much work to be done and further exploration wells will be realized over the coming years. There is a phased exploration plan for the next few years and at this stage it is too early to say how many wells will be drilled. Based on the current seismic data a number of structures have already been identified as potential for future drilling.

Fred Van Nieuwenhuizen, SPD Well Manager, talks on the specifics of the company’s work

Oil&Gas Eurasia: What is your company special approach to the drilling problems?
Fred Van Nieuwenhuizen: Contributing factors of the success especially at the start of the project was the support of the Shell “global’’ technical expertise holders. Integrated project Management Skills combined with introducing the DTL (Drilling the Limit) concepts resulted in performance gains which then started generating momentum and ignited the performance culture (rDTL) which is now fully embedded into the organisation as second nature. Currently further enhancing it into “Drilling the Economic Limit”.
OGE: What technologies were employed at the project and why?
Van Nieuwenhuizen: Before drilling operations started in April 2004, the Russian well construction practices, materials and drilling equipment were studied. The study lasted for about one year and involved frequent site visits to Siberia. Based on the findings a well construction strategy was developed, that is based largely on Russian well construction materials, top end Russian drilling equipment, such as the Uralmash BU 3900 and 4500 drilling rigs, and Russian oil field services, and combines them with those Western services and equipment that offer a clear advantage on overall drilling performance. Examples are utilization of Western top drives, solids control equipment and performance downhole motors and MWD systems, PDC – polycristaline diamond bits.
OGE: Does your company employing automation processes in drilling?
Van Nieuwenhuizen:  This depends on what detail of automation is considered. SPD is using individual units which have a high level of automation like cementing trucks are computerized and Top drive system, but not using fully automated drilling systems with automatic pipe pick-up lay-down systems. This is due to the availability on the local market, as well as repair and maintenance capabilities and cost.
OGE:  Why drilling becoming now more and more expensive?
Van Nieuwenhuizen: There are several ways of looking at it. If you look at it only on a cost basis it’s mainly due to RF inflation, equipment and services cost) and exchange rates effects. On the other hand technology improvements made over the last few years are more expensive but cost efficient to use.
OGE:  Why do you use drilling rigs from the local market?
Van Nieuwenhuizen:  SPD uses Uralmash Drilling Rigs for the reason that that was “standard” used by our contractors and spare parts and maintenance items are readily available.

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