How to make a Break thru Breakthrough Drilling

How to make a Break thru Breakthrough Drilling & Completion Performance – Case Studies J. Ford Brett OGCI BP-Amoco: filename: 1 1

Predicting Rig Utilization Statistics Scaled Utilization SD =. 22 Scaled Oil Price SD =. 23 Correlation =. 09 $ 55 / BBL. 98 (Oil price, Utilization) Utilization 2000 $10 /BBL. 3 Drilling. Techand 10 Oil. ppt Change in Real Oil Price

Predicting Utilization. 98 57ºF Utilization Statistics Scaled Utilization SD =. 22 Scaled World Avg Temp. SD =. 25 Correlation =. 32 (Temp. , Utilization) World Temp. 3 58ºF 2000 Drilling. Techand 10 Oil. ppt

Predicting Rig Count and Oil Price is Like Predicting the Weather We Know: . 98 55. 5/ 56. 8ºF BBL · It will change. · We can’t control it. · We can’t predict it (very well). · We need to live with it. . 3 10. 15/ 58ºF BBL Drilling. Techand 10 Oil. ppt 2000

Drought Drilling. Techand 10 Oil. ppt Season long changes in the environment.

Drought Change your environment to prosper no matter what. Drilling. Techand 10 Oil. ppt Season long changes in the environment.

New well average ultimate recovery, bcf/well (Texas gas wells) Drought Season long changes Projected Ultimate Recovery in the environment. Oilfields dry up _ Change the technology to prosper _ Change your environment to prosper no matter what. Drilling. Techand 10 Oil. ppt (e. g. multilateral)

Everyone is in this together. . . “That’s it, sir. We’ve eaten the last of the contractors!”

Everyone is in this together. . . “That’s it, sir. We’ve eaten the last of the contractors!” operators

DUAL ACTIVITY DEFINED SINGLE ACTIVITY WORK SEQUENCE Time Drilling. Techand 10 Oil. ppt

DUAL ACTIVITY DEFINED DUAL ACTIVITY WORK SEQUENCE Yellow - Rig #1 Red - Rig #2 Time Drilling. Techand 10 Oil. ppt

Drilling Learning: Deepwater Drilling Example BP Go. M 180 160 1995 Wells 140 1996 Wells 120 95 100 Learning behaviors / processes introduced 80 60 42 40 20 1 2 3 4 5 6 7 8 9 Well Number Drilling. Techand 10 Oil. ppt 10 11 12 13 14 15 16

Greater Green River Basin: South Moxa Arch 1990 -1995 Successful Drilling Practice Study ROP (Avg. Ft/Day) 1100 900 STEP CHANGE • Comparable 1994 Statistics Regression with Wells R Square =. 22 • Every Operator P-Value Intercept =. 000 Slope 700 Significance F =. 000 y = 34. 8 x + 346 500 Graph here 15%/year 300 1/90 1/91 1/92 1/93 1/94 1/95 Spud Date Copyright © 1996 by OGCI Management,

Gravel Pack Completions - Learning Completion Days Implemented Dedicated Learning Effort in Operations Well # Drilling. Techand 10 Oil. ppt

Greater Green River Basin: South Moxa Arch 1990 -1995 Process Driven Alliance can Yield Step Change in Improvement “Alliance” ROP (Avg. Ft/Day) 1100 900 • Comparable 1994 Statistics Regression with Wells R Square =. 22 • Every Operator P-Value Intercept =. 000 Slope 700 Significance F =. 000 y = 34. 8 x + 346 500 Graph here 15%/year 300 1/90 1/91 1/92 1/93 1/94 1/95 Spud Date Copyright © 1996 by OGCI Management,

Drilling. Techand 10 Oil. ppt

Moxa Arch Single Operator’s Process-Driven Improvement Now running logs on Frontier Zone Use 4 -1/2" production casing vs. 5 -1/2" casing No well clean-up on single Frontier well Cement Design 8 -5/8" surface casing vs 9 -5/8" casing Drill less rathole on Frontier Change in wellhead design Production equipment located closer to wellhead Reduced drilling days by Drlg. Co. Re-use of drilling mud on Frontier wells Rig Mobilization - Pre-Planning/Scheduling Less supervision/time on jobs/#of people Cooperation within Alliance Dowell avg. CEMENTING location time reduced Purchase pit liners in lots of 10 Negotiated with Denny's Water Co reduced price Hauling of surface casing Use 400 bbl frac master for cement water vs 400 bbl up. Switched vendors for casing dope right tanks Single contractor to handle all trash dumping Estimated avg. hole size from previous data - savings on Flat rate for casing screws number of sacks of cement Flat rate with contractor for cleaning casing Set 2 -3 conductors at a time Utilized railhead in Rock Springs, WO for casing delivery Pump 10 bbls vs 40 of chemical pre-flush Re-use 1" cement pipe Zero or bare bone automation Competitiveness between dirt contractors Purchase fencing material in bulk Drilling Cost Reduction Totals: Percentage of Total: Alliance and Other Drilling Planning Technology $/Frontier Well Anti. Whirl Bit $/ Frontier Well $5, 000 $30, 000 $25, 000 $7, 000 $2, 715 $15, 000 $460 $43, 200 $5, 000 $3, 000 $4, 196 $2, 500 $420 $1, 400 $6, 000 $300 $250 $100 $425 $1, 750 $1, 800 $1, 150 $200 $2, 400 $350 $110 $4, 000 $6, 000 $400 $68, 211 39% Total Drilling Cost Reduction $173, 226 $62, 715 36% $43, 200 24% Copyright © 1996 by OGCI Management,

Successful Alliances Critical Success Factors Alliance E K L P I D N O B C F A M G J Q H Mutual Goals X X X X Goals Linked to Profitabiity l X X X X Well. Defined Process X X X X X Buy-in at Appropriate Levels X X X Quantitative Performance Msmt. Tools Performance Process # of Success Based Improvement Factors Incentives Analysis Incorporated X X X X X X X 0 0 1 2 3 3 4 4 4 5 5 5 6 6 7 Copyright © 1996 by OGCI Management,

Successful Alliances are Process-Driven M, G Quantified Success All Report Success E Some Report Success P Some Report Failure P All Report Failure O F, C H B N I Q, J A Success N L, K F, C 3 4 5 Failure A D Quantified Failure 0 1 2 6 Number of Factors Incorporated 7 Page 20 Copyright © 1996 by OGCI Management,

Drilling. Techand 10 Oil. ppt

What is the bottom line? A Drilling Story 1100 ROP (Ft/Day) 900 Year 1990 1991 1992 1993 Average Cost $1, 400, 000 $1, 240, 000 $1, 080, 000 $ 920, 000 700 500 NOT ECONOMIC TODAY 300 1/90 1/91 1/92 1/93 2/94 2/95 Spud Date Copyright © 1996 by OGCI Management,

What is the bottom line? Impact 1100 ROP (Ft/Day) 900 700 Year 1990 1991 1992 1993 1994 Average Cost $1, 400, 000 $1, 240, 000 $1, 080, 000 $ 920, 000 $ 760, 000 500 NOT ECONOMIC TODAY 300 1/1/90 1/1/91 1/1/92 12/31/93 12/31/94 Spud Date Copyright © 1996 by OGCI Management,

Critical Success Factors % of Alliances w/ Quantified Success using these factor OCompelling Reason to Change OGoals Linked to Profitability OWell-Defined Detailed Process OQuantitative Performance 100 % Measurement Tools OPerformance-Based Incentives OProcess Improvement Analysis Drilling. Techand 10 Oil. ppt 60 % 80 %

The Bottomline for “My Company” Make your company more competitive = more valuable. • Have a Technology Direction – Have a technology strategy for each asset - what are the bottle necks and how might we remove them? • Routinely Measure Performance of Technology – Treat every use of technology as an experiment monitor & diagnose both successes and failures. • Link Economic Results with Technology use – Develop formal business cases for using technology estimate & document cost and value. • Have a way to Re-new your Technology – Create culture and structure that supports learning, in addition to mechanisms. Drilling. Techand 10 Oil. ppt

The Bottomline for “Me” Learn = make yourself more valuable • Have a Technology Direction. . . – Make a personal technology plan - ID gaps and create plan to close the gaps. Make yourself distinctive. • Routinely Measure Performance of Technology – Be able to PROVE how the impact of your know-how. • Link Economic Results with Technology use – Treat use of technology like it was your money - if you own stock it IS your money. • Have a way to Re-new your Technology – Listen, seek out, learn something new EVERY day, EVERY week, EVERY month - eliminate “Not invented by me” mentality. Drilling. Techand 10 Oil. ppt

• Compelling reason to change - crisis or leadership. Recognize change is needed • Commit to a goal you don’t know how to achieve • Involvement • Reason by in choose to do it – need buy on the hook. • Don’t come from continuous Drilling. Techand 10 Oil. ppt