Price of Oil what is ahead?

Price of oil estimation has always been a very complex science and always missed by experts. There is no long term business plan that could assure shield to price fluctuations.

Technically the production in the US increased substantially due more that 1600 rigs operating for several years. The US can not export by law oil so the oil storage capacity is being compromise by this increase.

Wall street WTI is based on storage data of Cushing OK, rig count, EIA reports, supply disruption news, etc. If the US producers are allowed to export excess production the price of oil will estabilize back to 70 USD-80 USD range. Worldwide demand is increasing at a constant rate.

The sharp decline of production in the US is being felt now and most likely with be sharp drop by the first quarter of next year.  This cannot be replaced by imports, there is a limit of what OPEC and other producing countries can deliver.

You will say no problem Iran will cover the gap, not really projects do not turn on as turning a light switch, it will take 10 to 15 years for Iran to catch up even more time.

See ya

Driller!

The Future -Drill to Limit Systems

Deepwater operations are the most expensive in the oil and gas industry, spread rates for rigs are in the order of 1 to 2 million dollars per day. Maintenance and operation of offshore rigs are expensive also labor costs are on the rise.  The oil & gas industry due to the oil price roller coaster caused that experienced personnel be scarce and difficult to recruit and retain.

Current tendency is the development of drill to limit systems that is a combination of Underbalance UB drilling, Manage Pressure Drilling MPD and conventional drilling. The idea is to use slightly underbalance fluid mud weights and compensate at surface with back pressure on special automatic choke when mud pumps are off.

For subsea mud pumps same concept is achieved with subsea chokes and dual gradient equipment and procedures. The main driver is to reduce casing strings achieving bigger completion equipment diameters assuring higher production rates.

The development of new technologies require to follow stringent processes of proper acceptance and integration tests prior to deployment. Is important to have the assurance that the equipment and personnel will perform as designed and planned at the rig site.

Is not recommended to accelerate deployment of new technology on the field since if troubleshoot is necessary rig time will be consumed pushing the deployment to the exit door in a short time.

The training and competency of the drill to limit systems by the drilling crew, service company personnel and Drilling Engineers involved is key for the success of the operation. It requires a basic understanding of fluid mechanics and well control rig mathematics.

See ya!

Driller

Kansas the re-newed oil & gas state

While visiting Jayhawk country with my son new freshman at Kansas University, I had the opportunity to take a look at Kansas as new promising area for a potential oil boom. The famous Missisipian limes may prove to be revived by horizontal drilling.  The limestone that lay at an approximate depth of 5500 to 6000 ft. are is the prefered target. There are lots of horizontal wells that make the planning of horizontal wells simpler with good geological control.  Kansas can be the new North Dakota!.

See ya!

Driller

Drilling Technologies the future is here?

Drillers around the world are constantly battling with nature forces. The drilling industry is an around the clock activity and the trend is to work with nature and not against it while drilling the oil and gas wells. Since the early days of the industry drillers learned to increase productivity and safety of the drilling operations. Rotary drilling was introduced in 1860 by french inventors and become popular in the US in 1880 after Captain Anthony Lucas drilled the Lucas I well at Beumont, TX. During those days a gusher of oil was the indication of a discovery. The Texas gusher began the US oil boom.
Since those days the rigs did not change radically, we still using the same rotary drilling methodology.  Safety was enhanced with new drilling engineering methods weighted drilling mud and Well control equipment which prevented reservoir fluids to reach surface.
New down hole tools were created to measure reservoir properties in real time. And new rig improvements and downhole equipment materials helps drill deep and deviated wells such as the top drives and iron roughnecks,etc.
But essentially the rotary rigs did not change much, other industries have more dramatic evolution of their processes and equipment.

See ya!

Driller

The Energy challenge

One day waiting in line at the entrance of the St Louis Arch monument a person next to me asked me about my profession. I responded I am a petroleum engineer, and he asked me an interesting question Are we able to meet the growing global demand of energy?. Really make me think like 30 seconds before I can elaborate a simple and straight forward answer. Certainly this is a challenge for us as engineers I responded in order to bring enough resources to match energy supply and demand we evaluate constantly our present energy supply in order to assess sustainability. Since the first well was drilled in Pennsylvania by Coronel Drake in 1859 and hit oil, our lives changed. Several products that are part of our daily life are derivatives of fosil fuels, live expectancy grew as well and population exponentially increased.

It is expected that the population will increase one and a half times from 2011 to 2050 and the energy demand required will be 3 times the actual. Are we planning for this supply increase? . Certainly we hear everyday governments pushing for development of renewable resources such as Wind and Solar Energy we cannot depend alone on this resources because they cannot cope with the capacity required since wind and sun are intermittent  power sources. Biofuels is another option but in order to produce enough to fill up an SUV is equal to the corn consumed by one person for a month thus we have to balance food vs fuel.
So is there a solution to solve the energy supply challenges?.

See ya soon!

Driller

Oil & Gas Industry Citizen Educaction

Drilling oil & gas wells for energy resources is a major challenge economically and technically. The new discoveries are more difficult to reach, have to justify the investments and provide an acceptable source of revenue to make economical the projects. The new findings are also deeper and more complex to reach and new technologies are being developed to reach them safely. The development of drilling technology and equipment require years to engineer, design and deploy.
The average citizen do not know of the financial risks the operators are liable in the event the findings are not commercial. Is important to educate youth on how the oil & gas upstream and downstream business works so they could appreciate the complexity of the projects, the efforts thousands of professionals and the time that it takes to get the first barrel of oil out of the ground.
If you happen to be in Houston you can visit The Houston museum of natural science http://www.hmns.org, it has a wonderful exhibition Wiess Energy Hall about the oil & gas industry and the technologies actually used in the industry exploring the entire process of energy development.

Riding the roller coasters at Six Flags San Antonio

I drove to San Antonio, TX for spring break weekend, last week and it was not a surprise to find all Hotels booked with no rooms available and long lines at most of the great restaurants at the Riverwalk. Certainly the violence in Mexico helped to pull in all those visitors. I suggested my wife my favorite restaurant and she was nice to please me this time we walk to Schilo's deli my favorite german food, is a very traditional restaurant and is like going back in time to the 30's. We enjoy the best root beer in the US in my opinion and bagels and potato pancakes.
Next day I was waked up by my son early, we had breakfast and head to the Six Flags Fiesta Texas, I was surprised of the traffic to get in the park after paying our day passes, we got in and we realize that was impossible to get in the rides the wait run for 4hrs per ride.
We decided to purchase a fast track pass and by pass the lines, actually paid off we ride all the roller coasters in 6 Hrs, certainly my body was so shaked up after the experience that I felt dizzy in between rides. I was impressed with the technology on the coasters equipment.
The best one was the Poltergeist, you just sit and go from 0-60 mph in under 3 seconds at the start of the ride followed by a craziness of loops and drops.

The list of the rest of the rides and my rating are:

Big Spin- this was the most benign was like time out from the coaster tour :)
Boomerang-It lift you backwards and drop you on 3 loops then up again and go on the opposite way :(:(
This one was very rough for me. (Make feel bad-dizzy!)
Goliath- This ride has a 10 story drop and 5 inversions and you are suspended on the air. :):):) I liked it very exciting.
The Rattler- This wood coaster is not so rough but shakes a lot is long never ends :) kind of boring
Superman-Krypton coaster- This is extreme, I know now why Superman gets sick with Krypton  has 6 inversions and a 170 ft drop that barely misses the quarry park walls. :):):) I liked it!

After all of this scary therapy and all shacked up we enjoy a nice meal at a nice restaurant at La Cantera Shops. Visit San Antonio you will have fun : )!


See ya soon!

Driller

Oil base economies and future changes ahead on our living conditions

I always wake up each morning thinking if our oil base economy is sutainable in time. While studying Petroleum Engineering we learned of the natural declination of the oil & gas fields an type of natural energy that allow us to recover this non renewable resource. Today the biggest economies consume large amounts of oil & gas and this are the base of their economic growth.
Today most of the Middle East fields are in declination and the production is held by drilling more infield wells, horizontal wells and improving secondary recovery methods.
Technology is key to reach reservoirs as they get deeper and more complex to produce, there is a limit to all this efforts, and we will be facing a sudden drop on production in the near future as resources turn more scarce.
Most of the cities in North America are designed for automobile transportation and the distances are big between homes and shopping areas, an average conmuter makes 60 miles a day. That explains the huge amounts of gas consumed. If we face a sudden change and fuel is not available, some of our big cities will literally collapse. 
The quest to secure energy resources has been understood by the big economies and companies are in the quest to secure prospects worldwide. The recent Exxon Mobil farm in deal in Argentina shows the interest in developing complex reservoirs of shale gas in the Neuquen basin. Sinopec of china are also moving in the Canada Oil Sands and BP on the Artic exploration in Russia.  We can see by this deals that the complexity in reaching this reservoirs is increasing and new technologies are being develop as we speak to produce them effectively and economically.

See ya Soon!

Driller

Lafayette Cajun City- Oilfield Town fading?

I enjoy everytime I visit Lafayette, LA., because the kindest and friendliness of their people. I always have a warm arrival of the beautiful sun and green areas of the cajun oil city. Lafayette is a 24 hrs city with workers around the clock working to supply oilfield tools and services to the Gulf of Mexico and worldwide. The expertise and quality of drilling services make this town unique, and is home of great oil & gas drilling industry legends like Mr. Charlie Prentice.

In my last visit I had the chance to enjoy tasting fried gator at Gator Cove; was fantastic, cajun food is the best! the spices are unique, I miss shrimp poboys lunches as well.

I admire the hard work of their people and is sad the situation many people face with the drilling moratorium.

Hope to get back to work soon Lafayette!

See ya soon!

Communication is Key for Drilling Operations

I just had a workshop on E-colors from Equilibria and was the most en lighting session I ever attended.

I believe that the human brain is unique in each one of us, and I confirmed that the Equilibria color system is perfect to identify our personality and approach to daily work and personal issues.

By taking the test I came out red/green- that is Thinking Director, I confirm my strengths, weaknesses, how can I be hurt and how can I disrupt team work.

All my team members took the test and are color coded and is amazing how the communication, behavior and relations between us have improved know that we know each other.

I recommend this to everybody, go ahead take the test at  www.equilibria.vg.


See ya soon!

Driller

Are we ready for 100 USD barrel oil again?

The recent increase of Oil prices may indicate we are reaching the peak oil of most of the big reservoirs worldwide. The giant Saudi Gwar field is drilled horizontally to extend the plateau prior the natural declination.
What scares me is that the declination of those fields may be dramatically quick.  I do not think we are prepared at the moment to change so quickly our economic model based on  oil to an alternative reliable source or energy.
The world consumes 25 billion barrels a year and the consumption rate will increase mainly derived by China economy, as an example every month a million cars are sold and that only requires and additional million barrels of oil every day. If we see the new discovered oil reserves are insignificant with the increase in consumption that we are facing.
I believe is time to invest in exploration technology that will allow us to go beyond the limits; like drill in ultra deepwater offshore and Artic exploration.
I think the strategy of selling assets at this moment is not reasonable; will look good in paper in the short term, but will be in trouble when investors evaluate the reserve replacement portfolio. As a logic consequence the share value is compromised.
On the contrary is important to discover more reserves, by the drill bit or acquiring key assets worldwide securing the best fields with proven reserves, this is the trend Chinese oil companies are following today are they on the right track?.

Look forward for your comments!, have a nice and productive work week.

See ya soon!

Driller