PACIFIC RIM DRILLING
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D R I L L I N G CONTRACTOR
PACIFIC RIM DRILLING
to take the world stage
To meet
soaring energy
demands at home,
China is working
harder than ever to
reach out to the global
drilling community for
new technologies, new
equipment, new reserves.
Here’s a glimpse into CNPC’s
projects, ambitions, challenges and more.
By Linda Hsieh, associate editor
D R I L L I N G CONTRACTOR
November/December
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PACIFIC RIM DRILLING
IN THE CENTER
of Daqing, a city
of more than two million people in
northeast China, the sprawling Iron
Man Memorial Hall stands in dedication to Wang Jinxi, a 1960s oil worker
who earned the nickname of “iron man”
with his devotion to the development
of Daqing Oilfield. He is said to have
jumped into a pool of drilling mud to
keep it from freezing — temperatures in
Daqing can drop below -30°C in wintertime.
CNPC production
statistics
In first half of 2007, CNPC’s
oil and gas output totaled
553 million bbl of oil equivalent, a 3.7% increase from
the same period in 2006. It
produced 420 million bbl of
crude oil, a 0.1% increase
from 2006. It also produced
798 billion cu ft of marketable natural gas, a 16.5%
increase from 2006.
It is this “iron man” spirit that still motivates China’s petroleum workers to this
day, according to the Daqing Drilling
& Exploration Group of the Daqing
Petroleum Administrative Bureau.
The group is owned by China National
Petroleum Corp (CNPC), the country’s
largest oil and gas company.
The Chinese petroleum industry, including industry leader CNPC, has been
strongly pushing technological advances
through both internal research and cooperation with foreign companies. Zheng
Yi, vice chief engineer and secretary
general for CNPC’s engineering technology & market department, emphasized
that the company is eager to learn about
new drilling techniques and equipment
from around the world. CNPC knows
they will be critical if they are to maximize remaining reserves on their 13 oilfields, many of which are mature.
The Daqing Drilling & Exploration Group
(DDEG), a massive entity within itself,
owns four drilling companies and 121
drilling rigs, plus additional workover
rigs, said Liu Fu, DDEG assistant president and general manager.
While production at Daqing has been
declining, DDEG said it is hopeful that
new technologies, such as horizontal/
directional drilling and underbalanced
operations, can make a difference. At
the beginning of 2006, CNPC called for
full deployment of horizontal drilling.
By the end of the year, 522 horizontal
wells had been completed. On the Daqing
field alone, more than 50 horizontal
wells were drilled in low-permeability,
low-productivity areas. As of September
2007, the ratio of vertical to directional
wells drilled had reached 1 to 0.83, Mr
Liu said.
More than 10,000 wells were drilled in
2006, and this year CNPC plans to drill
12,000. By September, more than 700
horizontal wells and 140 underbalanced
wells had been drilled for the year —
numbers that reflect CNPC mandates in
2006 to begin large-scale uses of these
advanced drilling techniques to limit formation damage and improve production
rates.
The most active fields nowadays, in
terms of rig numbers, are the Sichuan
DDEG has reported average daily output
from horizontal wells to be 2-5 times
higher than that of vertical wells. Other
improvements reported include faster
drilling time, lower costs and reduced
pollution risks.
Underbalanced techniques have been
significantly beneficial for parts of
Daqing’s low-permeability formations as
well, Mr Liu said.
Total Footage Drilled Outside China
Up 37% on average every year since 2001
1,700
1800
1600
Internal reorganization in 2007 means
there is no steady number of drilling
companies at CNPC at this time, Mr
Zheng said. But the number of its rig
fleet provides a taste for the company’s
size: As of September 2007, it owned
1,035 drilling rigs, mostly land rigs with
a few shallow offshore units, plus 2,000
workover rigs. Mr Zheng said 22 million
meters (72.18 million ft) were drilled in
2006. Although he expects that number
to stay about even for 2007, he noted
that 22 million meters “is double what
we drilled just five years ago, only about
11 million meters (36.1 million ft).”
1400
Footage (1000m)
CNPC DRILLING
November/December 2007
‘DOUBLE CELEBRATION’
For 2006, its crude oil output was 830.7 million bbl,
a 0.9% increase from 2005.
Marketable natural gas output was 1.37 billion cu ft, a
22.5% increase from 2005.
Total output of crude oil and
natural gas was 1.06 billion
bbl of oil equivalent.
The discovery of Daqing Oilfield in 1959
was celebrated as step toward energy
self-sufficiency at the time — Daqing signifies a “double celebration” in Chinese.
However, China’s demand for oil and
natural gas in recent years has soared
beyond 1960s imagination. The country
now stands as the world’s second-largest
consumer of oil, and it understands all
too well that energy is critically important to its expanding economy.
52
and Changqing fields in the Southwest
and the Xinjiang field in the Northwest,
Mr Zheng said. But the king of CNPC
fields and the biggest-producing field in
China is still Daqing, home to the “iron
man” spirit.
1,275
1200
929
1000
723
800
600
400
541
355
200
0
2001
2002
2003
2004
2005
2006
Year
Great Wall Drilling Company, CNPC’s international arm, has expanded rapidly outside
of China since 2001. The chart above shows that GWDC’s footage drilled overseas has
increased from 355,000 m in 2001 to 1.7 million m last year.
D R I L L I N G CONTRACTOR
PACIFIC RIM DRILLING
Zou Yeh, chief engineer for Daqing
Drilling, and Zhang Shurui, senior
engineer for DDEG’s No. 1 Drilling
Company, both cited deep gas wells as
a big concern — especially since these
wells are often drilled in the volcanic
formations common to the area. These
wells average more than 4,000 m (13,100
ft) deep, they said, with the deepest at
4,900 m (16,000 ft). About 60 of these
deep wells are drilled per year, Mr
Zhang said, and drilling speeds and wellbore collapses can be headaches.
Underbalanced drilling has helped to
a degree, but Mr Zhang and Mr Zou
agreed that geosteering equipment
would be extremely helpful. High costs,
however, still keep things like rotary
steerables out of their reach.
es in onshore drilling and operates more
than 180 rigs in 26 countries (including
four joint ventures), ranking it among
the biggest land drilling contractors in
the world.
Most of GWDC’s fleet were manufactured
by CNPC’s own factories, said Great Wall
vice president Du Jun. A big portion of
them are 1,500-hp to 2,000-hp rigs with
depth capabilities ranging from 2,000
m to 9,000 m (about 6,600 ft to 29,000
ft). Mr Du noted that some clients have
requested 3,000-hp rigs, but GWDC
determined there was not sufficient work
to justify the cost of acquiring such a rig
at this time.
Still, GWDC has kept busy. Since a major
reorganization in 2001, the company’s
total footage drilled outside of China has
increased by an average of 37% every
year, from 355,000 m (1.16 million ft) in
2001 to 1.7 million m (5.58 million ft) in
2006. A total of 35 Great Wall rigs are
working in Kazakhstan, its biggest market. Other major operating areas include
Sudan and Venezuela.
Case in point: In September, DRILLING
CONTRACTOR toured No. 1 Drilling
Company’s Rig 70163 on the Daqing
Oilfield. The drilling team, which had
drilled three other deep wells since 2005,
was three months and 3,600 m into a
4,400-m MD/3,800-m TVD gas exploration
well using downhole motors and MWD.
With no top drive or rotary steerable
equipment, drilling through the volcanic
rock has been tough going. Average penetration stood at about 1 m (3.28 ft) per
hour in September.
The project would be going much faster
if geosteering tools were available, Mr
Zhang said. As it is, the well was expected to be completed by November 2007.
GOING INTERNATIONAL
Mr Liu pointed out that DDEG doesn’t
serve just Daqing Oilfield; it is a comprehensive drilling engineering group that
provides services on more than a dozen
domestic oilfields other than Daqing.
Since 1998, DDEG has also contracted
for international work, providing drilling
technology services in countries such as
Algeria, Indonesia and Venezuela.
As a relatively late entrant to the international market, Mr Liu said, DDEG is
still going through the process of learning and opening new markets for itself.
He emphasized that the group is keen to
step up communication with other companies in the international community.
GREAT WALL DRILLING
Although many of CNPC’s subsidiaries,
such as DDEG, work extensively around
the world, the bulk of its international
work is still carried out by subsidiary
Great Wall Drilling Company (GWDC).
Founded in 1993, the company specializ-
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PACIFIC RIM DRILLING
Jidong Nanpu
discovery
In May 2007, CNPC
announced that a newly
found oilfield in the tidal and
shallow water area of Bohai
Bay has a reserve of 1 billion
tons, or about 7.35 billion
bbls, the largest discovery in
China in more than 40 years.
The oilfield lies in the Nanpu
block of CNPC’s Jidong
Oilfield in north China’s
Hebei province.
The Nanpu block, partly
offshore, covers an area of
1,300-1,500 sq km and is
expected to produce light
crude. It is an uncompartmentalized high-grade oilfield with average oil layer
thickness of 80-100 m and
major target zone depth of
1,800-2,800 m. Production
testing results show that the
daily output of each vertical
well is between 80-100 tons
and between 200-500 tons
for each horizontal well.
CNPC also has several
onshore oilfields in the
Jidong area with total
reserves of more than 100
million tons.
Daqing Well Control Training Center of China is equipped with a full-scale rig that can
simulate a well blowout. Every year, about 3,400 well control students go through the
school, which includes 13 well control instructors and five HSE training instructors.
“As a subsidiary of CNPC, we try to fully
utilize the advantages of CNPC’s integrated resources, such as equipment,
technical expertise, financial resources
and human resources,” Mr Du said. For
example, Great Wall has access to technological advances at the CNPC Drilling
Research Institute, established in 2006
to improve innovations and R&D in drilling technologies.
Additionally, GWDC has access to the
more than 1,000 rigs owned by CNPC.
However, Mr Du acknowledged that, at
this point, no additional CNPC rigs are
available for the international market.
“Just 2-3 years ago, we were actively trying to send more rigs outside of China,
but it’s a very different story now.”
Now, CNPC does not have enough rigs
to meet its own drilling needs in China,
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November/December 2007
both Mr Zheng and Mr Du said. So
unless it’s for CNPC’s own overseas
development, no more rigs will be sent
outside of China.
CNPC is working to amend that lack of
rigs though. The company owns several
drilling rig manufacturing companies,
the biggest of which is Baoji Oilfield
Machinery (BOMCO). The company is
capable of building 9,000-m (29,500-ft)
depth rigs and is targeting the building of 12,000-m (39,400-ft) rigs. Overall,
CNPC is building and/or refurbishing
40-50 rigs a year on average, Mr Zheng
said. “We don’t have enough rigs to meet
our needs. Rig and parts manufacturers
in China are very, very busy.”
Liu Guanghua, president and senior
engineer of CNPC’s Beijing Petroleum
Machinery (BPM) factory, can attest to
that. BPM produced its 100th top drive in
mid-2007, and it is the largest supplier of
surface-mounted BOP control systems in
the world, Mr Liu said. Last year the factory produced 530 BOP control systems
of up to 15,000 psi. Roughly half were
exported outside China. About a third of
its top drives are sold internationally as
well, he noted.
Mr Liu said it takes BPM three months
to make one top drive and estimated
that, currently, it would take them about
six months to deliver a new top drive
after getting the order. BPM also makes
downhole motors, progressive cavity
pumps and drilling jars.
CHALLENGES
According to CNPC’s 2006 Annual
Report, its “priority areas” are increas-
D R I L L I N G CONTRACTOR
PACIFIC RIM DRILLING
Zhang Shurui (left), senior engineer for Daqing’s No. 1 Drilling Company, monitors drilling on Rig 70163. Improving efficiency and safety on deep gas drilling is a major focus
for the Daqing Drilling & Exploration Group, which owns the No. 1 Drilling Company.
ing prospecting efficiency in complicated
reservoirs, EOR of mature oilfields,
reducing production and operation costs,
improving product quality and clean
operations. The report also noted that
most of its major oilfields are suffering
from high water cut, high percentage of
low-permeability reserves and increased
difficulty of heavy oil development and
EOR. These were all supported in comments from Mr Zheng at CNPC’s Beijing
headquarters and from Mr Liu, Mr Zou
and Mr Zhang in Daqing.
To address these challenges, CNPC in
2006 decided to integrate and optimize
its scientific and research resources by
establishing the CNPC Drilling Research
Institute, which includes eight research
centers and one factory (Beijing
Petroleum Machinery).
On the equipment side, the research
institute has been focusing on improving their top drives. According to Zou
Laifang, vice president of the research
institute, they are also on the verge of
producing geosteering tools in association with BPM. The institute has spent
more than eight years researching nearbit geosteering equipment, he said, and
finally research is finished and field trials are under way.
The institute traditionally operates on
two levels of research, Mr Zou said.
The first is advanced R&D on emerging technologies; the second is direct
problem-solving for CNPC oilfields. The
latter can be done through real-time
monitoring from the research facilities.
On 18 September, the Beijing branch of
the institute was monitoring three wells
simultaneously, including a 7,380-m well
on the Xinjiang field.
Mr Zou cited several specific challenges
facing the research institute and CNPC.
One is drilling vertical wells in highangle formations, as often seen in northwest China such as Xinjiang, Qinghai
and Gansu provinces. With formation
angles in the range of 72°, sometimes
drilling speeds are so slow that only 5-6
m are drilled a day. Improving drilling
speeds in high-density, low-permeability
and low-porosity formations is a challenge they’re facing on many oilfields.
Another challenge is controlling different
pressures with one formation, he said. In
addition to using advanced drilling fluids
to improve formation pressure capacity,
they have made limited progress using
corrugated pipe to expand formation
pressure parameters. So far, the corrugated pipe solution has been used in lowpressure formations on 3-4 open holes
and 90 cased-hole wells.
The application of extended-reach drilling has been challenging on shallow offshore drilling as well, he said. In China,
offshore drilling falls under the control
of China National Offshore Oil Corp
(CNOOC), but CNPC is allowed to drill
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PACIFIC RIM DRILLING
He also mentioned that cementing in
sour gas formations has been problematic, especially in the Sichuan province.
Finally, Mr Zou said, there’s the everpresent challenge of protecting the
reservoir while drilling. He noted that
improvements in drilling fluids have
helped, as well as underbalanced drilling, which only recently began to see
widespread use in China.
One project that had significant influence on the spread of underbalanced
techniques in China was done by Great
Wall Drilling. According to Mr Du, air
drilling is not new in China, yet due to a
lack of equipment and misunderstandings about the technology, it was not
popular or commonly used.
This drilling project in Iran, undertaken by Great Wall Drilling Company, influenced the
spread of UB techniques in China, said GWDC vice president Du Jun. Its success caught
the attention of many in China’s drilling industry. Air/foam drilling has almost become
standard now in some areas, he said, to improve drilling speed.
An integrated drilling project in Iran in
2000 changed that. GWDC signed a contract with National Iranian Oil Company
to drill 19 wells using three rigs in
Tabnak, Iran’s largest onshore, sweet gas
field. From the start, drilling progressed
extremely slowly. The formation’s low
downhole pressure made it difficult to
drill with a mud system. Lost circulation,
cave-ins and sloughing were encountered.
Knowing that one previous contractor
took 440 days to drill one 3,000-m well in
this field, GWDC decided to give air drilling a shot. An air drilling program was
designed and implemented, and drilling time improved significantly. From
2001-2006, 22 wells averaging 3,000 m
(about 9,900 ft) were drilled with 100%
success, Mr Du said. Drilling time per
well was shortened from 220 days on the
first well to about 80 days.
Students (wearing blue hats) from China National Offshore Oil Corp (CNOOC) receive
training at the Bohai Petroleum Vocational College. The school is located near Tianjin,
China, by CNPC’s Huabei Oilfield. Its well control training center is WellCAP-accredited.
within 5 meters offshore (see “Jidong
Nanpu discovery,” page 54). In these
very shallow, gentle-slope areas, CNPC
must reach out from land to very shallow
formations at about 1,200 m (3,900 ft).
ERD applications in these situation have
reached upward of 5,400 m (17,700 ft),
Mr Zou said, and problems such as wellbore collapse have been common.
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November/December 2007
Drilling in coalbed methane reservoirs
using multilaterals is another area the
research institute is focusing on, Mr Zou
said. The production rate from these
wells have not been ideal, so the center
is trying to determine if multilateral
technology is really a good fit for these
formations.
Because of the success in this project, air drilling and related underbalanced techniques caught the attention
of Chinese companies, according to
GWDC, especially in southern areas like
Sichuan. “Air drilling or foam drilling
has almost become standard drilling procedure there to speed up drilling speed.
This project had great influence on the
development of drilling technology in
China,” Mr Du said.
OPEN COMMUNICATION
Other than technological challenges,
Mr Zheng Yi in Beijing noted that cost
increases — on everything from casing/
drill pipe to rigs and personnel — have
impacted some projects.
Another big obstacles for Chinese companies, especially as they try to expand
in the global market, remains language,
Mr Du pointed out. This problem is
D R I L L I N G CONTRACTOR
PACIFIC RIM DRILLING
In September, No. 1 Drilling Company’s Rig 70163 on the Daqing Oilfield was drilling a
4,400-m MD deep gas exploration well. Drilling through the volcanic rock formation has
been a big challenge. The team had drilled three other deep wells since 2005.
especially critical for GWDC since it is
CNPC’s international arm, and the company continues to work to make sure
that its Chinese employees can communicate efficiently and effectively with
local employees — about 75% of GWDC’s
10,000-plus employees around the world
are from host countries.
However, Mr Du emphasized that this
problem is lessening every year as China
opens up more and more. When he
graduated from university in 1983, very
few people in China could speak English,
even college students. When he visited
the Middle East in 2000, he was shocked
when he was asked if China had any
drilling operations or oil. “That really
surprised me. How could they think we
don’t have any oil?” he said. “But what
that really meant was that we lacked
communication.”
Throughout CNPC, from Daqing to
Beijing, from those in the field to those
in offices, employees realize that China
can benefit by learning from the international drilling community. At the same
time, they’re eager to share their own
knowledge, successes and “iron man”
spirit with the rest of the world.
China’s communication process has
begun. Let’s keep pushing it forward.
D R I L L I N G CONTRACTOR
November/December 2007
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