Skip to comments.Understand Oilfield Technology Lifecycles [OCTG Case Study]
Posted on 04/30/2014 8:42:50 AM PDT by thackney
The oilfield is a hotbed of innovation always has been, always will be. Even from the industrys first days, when oil was still easy, the industrys technology has always turned heads and drawn admiration.
Over the generations since those early days, the pursuit of oil has captured the imagination of some of the greatest innovators, inventors, and risk takers on the planet. From derricks on land, to drillships in deep waters, to refineries and distribution, the oil business utilizes the most impressive physical infrastructure of any big industry. And that's literally just the surface—for what occurs downhole is equally, if not more, impressive. Modernizing and optimizing this giant steel ecosystem requires a great deal of innovation and creativity.
At the core of most successful oilfield innovations, there are three consistent objectives. These also serve as catalysts for new technology adoption:
Unlock Difficult-To-Access Resources. Oil is becoming harder to find and extract, challenging the industry to continuously advance technologies. Dealing with remote areas, extended reach wells, and HP/HT are just a few of the challenges driving oilfield technology forward today.
Improve E&P Economics. Saving time and costs in the field while maximizing well productivity enhances E&P profitability. Innovators that deliver judicious ways of completing better wells have a profitable history in this business. In fact, developing such tools and processes is how all of the Big 3 service companies got their start. Halliburton was born when its founder discovered that cement sheaths made for better wells, and he did it faster by replacing hand mixing with a cement jet mixer. Schlumberger started with the first large scale petroleum survey, which sped up exploration and identified better reservoirs. Baker Hughes exists today because of the introduction of the rotary drill bit, which as you might guess saved operators a great deal of time and money.
Reduce Environmental Impact. Protecting the environment and minimizing footprint is not only the right thing to do, but the profitable thing to do. Regulation, litigation and public opinion have made environmental preservation a priority for operators. We'd also include crew safety in this category.
To survive, every oilfield technology must deliver at least one of these three objectives. The truly great products deliver on all three and are generally met with more rapid, pervasive, and long-lasting adoption in industry. Examples can be found across the entire oilfield value chain, but in this post, we are focusing on the first technology innovation in the casing and tubing connection process in over 100 years.
For over a century, casing and tubing strands have been connected together in the exact same way. A rig hand applies a layer of petroleum-based lubricant to the threads by hand with a brush before the connection is made to lengthen the string.
A conventional (doped) connection is made - hands on / manual process
Folks in the OCTG industry will readily admit that advances in connection methods have lagged progress in other drilling and completion product service lines. Part of this is that more attention is paid to more capital intensive equipment like drilling rigs or bottom-hole assemblies. Part of this is the industrys resistance to procedural change when something works and is understood.
But conventional doping has its fair share of drawbacks. These include discharge which impacts environment, rejected pipe strands from mistakes in running compound (dope) application, and supply chain and time inefficiencies.
Moreover, the importance of connections should not be overlooked or taken for granted. Every 40-44 feet of hole made requires a manual connection. With longer laterals in shale and the move into deepwater, modern well depths can reach into the 20-30,000 ft. range. This means 500-700 connections have to be made up to drill some modern wells.
Well integrity depends on sound connections. And the number of connections per well is surging higher. So why are we still making strands up the same way we did 100 years ago? As you'll learn in the case study below, there is a new innovation picking up steam in the market today. We believe this technology is poised to become the new standard and change the game in the casing/tubing market.
Dopeless is a dry coating that replaces the conventional on-site application of running compound. The dry lubricant and corrosion prevention compound is applied at Tenaris's mills to TenarisHydril premium pipe threads. This standardizes and "cleans up" the lubrication process by taking it off the rig and into the factory where quality can be monitored and assured.
Unconventional connections: dopeless pipe threads come pre-coated
The technology traces its roots to a customer request from an international customer in Norway received by Tenaris in 2001. The customer asked Tenaris to work with them to eliminate dope and increase drilling efficiency. Three years later, the first Dopeless connection was made in the North Sea. And yes, Tenaris trademarked the term "Dopeless".
Since those early successes about 10 years ago, Tenaris has built out their manufacturing capacity to supply the broader market, not just harsh environments. Dopeless been widely adopted in the Arctic. Now it's gaining traction offshore, and the more widespread adoption of this technology across the oilfield is the subject of our technology case study in this post.
The S-curve, a conceptual exercise describing industry lifecycles, is a useful thought tool for understanding progression in oilfield technology, performance, and productivity. From the drawing board to mass production, the curve's slope depicts a successful technology's rise in the industry. Shifts in the curve occur when new technologies are introduced that disrupt the market and change the game. The casing/tubing connection business is in the midst of such a step change—the first in over a century. Shown below, we examine the ongoing step change in running compound technology with an S-curve analysis.
As mentioned above, revolutionary technologies in O&G must deliver three primary objectives: address ever more difficult reservoirs, improve economics, and lower environmental impact. New Dopeless connection technology developed by Tenaris excels in all three areas.
"Dopeless is a dramatic step change—the existing technology is really far behind and the impact of Dopeless is significant," Tomas Castiñeiras, Dopeless technology development director at Tenaris, told us.
We tested this claim by taking an empirical look at how this new technology measures up against our three innovation objectives. Our findings are below:
1. Unlock More Difficult Reservoirs ✓
We see three primary benefits in this technology's capacity to address more difficult reservoirs:
First, as the industry progresses into harsher environments, Dopeless has unique efficiency advantages. Tenaris's sub-zero Dopeless simplifies drilling operations in arctic areas like Russia, the Caspian Sea, and Canada, where the dry compound-lubed pipes can be stored and run without the need for a constant heat source to warm the running compound. "At -40°, applying traditional dope becomes quite complicated. I've seen pipe actually lit on fire try and heat the dope," Tomas Castiñeiras says. Further, Dopeless technology's dry and non-sticky nature minimizes contamination caused by sand in desert climates, debris in dusty environments, and humidity/rain in jungle climates.
Second, as locations become more remote, Dopeless also trumps the conventional connection make-up approach. Take continental Russia and Alaska as examples. It's impossible to prep connections at the service base because of distance and on-site joining is complicated by winters as discussed above. Also, deepwater drilling is accelerating outside the traditional Golden Triangle. With drilling locations moving further from onshore support bases, minimizing trips to return rejects, load replacement pipes, and re-stock application material is another benefit of Dopeless.
Third is dealing with more complex wells and reservoirs. As the number of connections rises with extended reach and deeper vertical sections, Dopeless ensures better well reliability at each connection. Also, with HP/HT, there is no room for error. As Tomas Castiñeiras says, "the quality of each connection and its capacity to hold up against the pressure of the well requires perfection in the make-up process, which in turn depends on perfection in the doping application. Dopeless, on the other hand, ensures that the high quality connections crucial to well reliability are made at every joint."
2. Improve E&P Economics ✓
In our view, this is the area Dopeless really excels in. And this area will be the primary driver of future adoption on a global scale. Dopeless improves economics in two key ways:
3. Reduce Environmental Impact ✓
For over 100 years, lead has been included in dope, and API specs still call for lead, copper, and graphite. Discharge that occurs during conventional doping application puts the environment, rig deck, and crew at risk. Taking crew "hands" off the doping process also improves safety on the rig.
Green dopes can't be used in all environments, but Dopeless can, and it zeroes out the environmental impact of making up connections on location.
Mr. Castiñeiras says standardizing Dopeless application also de-risks connections from a corrosion perspective, which reduces the potential of future well failures (and ensuing environmental damage).
At OTC this year, Tenaris will be focusing on its premium connections for deepwater applications. Tenaris sells about 1mm tons of premium connections p.a., and only about 10% of those tons are Dopeless today. By 2018, Tenaris expects over 40% of premium tons sold will be Dopeless. That's an adoption trajectory worthy of an "S-curve" shift.
Offshore activity, particularly deepwater, is expected to be a primary source of this growth. About 70% of Tenaris's Dopeless technology sales today come offshore, giving the company a great platform for expansion. The GOM and West Africa represent a great deal of potential demand.
Offshore, Dopeless is a no-brainer. The lack of space demands efficiency. Supply chain minimization is crucial, and reducing boatloads is a key initiative. Dopeless also works with more stringent offshore regs.
"Over the past three years, Tenaris has been redesigning premium connections in accordance with protocols to comply with post-Macondo standards in the GOM," says Tomas Castiñeiras. "The lube in Dopeless complies with new GOM standards, and all customers in the GOM have run Dopeless to some extent."
After about ten years of experimenting in harsh conditions and building infrastructure, Tenaris has now laid the groundwork for more extensive distribution. Investments in the McCarty mill in Houston and other infrastructure means Tenaris will be able to keep up with global Dopeless demand growth—from manufacturing to distribution to servicing, facilities are now in place to provide the product on a global scale.
Further, Tenaris has begun doing demonstrations on training rigs. This aggressive marketing step should translate into accelerated adoption.
Tenaris teams deliver dopeless demonstrations on rigs—education leads to adoption
Some degree of education is required for the spread of any new technology, and once the benefits of Dopeless are observed in the field, there is no going back to the conventional methodology. These demos are expensive to conduct, but Tenaris has invested in a dozen so far on four different rigs. Three more are planned this year, and at least three more will be conducted next year.
The phrase "Rope, Soap, and Dope" has been in use for over a century in the oil patch. If Tenaris's new Dopeless solution spreads globally as we expect, this traditional vernacular may soon need to be amended to just "Rope and Soap"
Here in Raleigh we are being inundated with anti-fracking ads.
Supposedly interviewing folks in Penn. that are suffering all kinds of health issues caused by fracking.
Watery eyes, shortness of breath, asthma.
The ads end w/ the people warning NC voters to vote against fracking.
Realistically, anything to the claims?
Hydraulic Fracturing has been done in this country since 1940’s. Most wells, shale or not, are hydraulic fractured during their life production.
A good source of basic info, with links to more can be found at:
For those who want to see a video showing how horizontal drilling and fracking is done, Northern Gas and Oil has a great one. Its 6 minutes.
It includes a visual piece on how fresh water aquifers are protected from contamination.
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