Is a Zero AFE Possible with Underbalanced Drilling?
Authors: Chitty Greg H. 
Published: October 2008

Introduction

Underbalanced (UB) drilling is a rapidly developing technology for reservoir exploitation worldwide. In some cases, it is the most economical method of field development. Although not yet completely quantifiable, it is assumed that UB drilling and completion techniques, when properly applied, will increase IP and EUR. But, UB service usually comes with a hefty price tag. UB operations may add 40% to 100% to the AFE for a drilling project. Additionally, gas flared while in UB operations is an unrecoverable asset and an environmental burden (Kyoto protocol). Some operators flare as much as 80 MMscfd while in UB operations. In spite of these issues, the value that UBS provides has sparked growth and interest among operators worldwide. Now it is time to reign in the costs and move on from the 1950's technology that permeates today's underbalanced drilling. With recent advances in novel multiphase pumping technology, returns handling systems and well control equipment for underbalanced services, it is possible to capture & sell flared hydrocarbons while drilling, bring UB operations into the 21st century, and create a Zero AFE.

The Zero AFE Criteria

There are four criteria that have to be passed for a zero AFE to be possible. The first is UB candidate selection. If UB is not economically beneficial or is deemed unsafe, other methods are best employed. Secondly, a facility must exist that can accept oil & gas produced while in UB operations. Third, the amount of gas flared during operations must have a higher sales value than the UB AFE cost. Fourth, the UB system used operationally must have the capability to produce gas dominant multiphase fluids ("wet gas") while drilling. Additionally, due to the fact that producing while drilling from oil reservoirs (i.e. Austin chalk) has been accomplished, we will discuss gas reservoirs only. Having established these criteria, a general AFE equation can be written which defines the costs for underbalanced drilling operations.(1)AFE = Crig + CUB + Cfuel + CFG + CKEC

These tangible costs associated with offshore underbalanced drilling are the drilling rig (Crig), underbalanced services(CUB), fuel (Cfuel), flared gas (CFG), and Kyoto Emissions Credits (CKEC). In addition to this, there are other one time costs associated with normal drilling such as mobilization, overhead, cementing costs, and other costs that can be significant. In general these costs will be similar whether overbalanced or underbalanced techniques are employed and for the discussion in this paper the costs will offset.

History & Traditional UB Inefficiencies

The Southern North Sea, SE Asia, and Brazil are the only geographical areas where underbalanced drilling operationshave been performed offshore. The Southern North Sea is the only ongoing development project. There are several reasons why growth has been limited offshore. Some of the more prominent reasons are high-pressure reservoirs, offshore UB safety issues, the large footprint of UB equipment, difficult operational implementation, and poor understanding of UB candidates.