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Mississippi Lime Developmen t 2/11/2015 Cody Martin Drilling Engineer

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Mississippi Lime Development

2/11/2015

Cody Martin

Drilling Engineer

2

Mississippi Lime Drilling Team

Mitch Elkins

Terry Leeper

Mike Jagneaux

Daniel Habenicht

Ian West

Cody Martin

Charles Patrick

Jill Fuller

Chelce Rouse

Jacque Croudy

Larry Rader

3

Mississippi Lime Overview

Miss. Lime Core

Area

Anadarko

Gulf Coast Onshore

4

Mississippi Lime Overview

Acquired Eagle Energy acreage in 2012

First Midstates drilled well in 2013

Design and operational changes in 2014

Capital efficiency in 2015

5

Mississippi Lime Overview

Cherokee

Shale

Mississippian Lime

Potential Target

Intervals

6

Design Initiative – Addressing The Problem

Design Directives:

Maintain full-section laterals (± 4,900’)

Place ESP as low as possible in wellbore to reduce hydrostatic head at intake

Pad drill wells to utilize existing infrastructure (location, tanks, SWD)

Issues:

High incident rate of stuck pipe from packoff events

• How can we change design to mitigate wellbore instability?

High incident rate of catastrophic downhole tool failure

• How can we adjust operational procedures to mitigate catastrophic failures?

7

Typical Pad Design

8

The Problem - Stuck Pipe

0

2

4

6

8

10

12

14

1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000

Fre

quency

Depth

Stuck pipe frequency by depth

Packoff

events in the

curve

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The Problem – Stuck Pipe

Cherokee Shale is predominately Illite Clay

Extremely dispersive shale

10

The Problem – Stuck Pipe – Caliper Log

20”+ Hole

Gauge Hole5’ TVD

11

The Solution – Stuck Pipe

Cherokee Shale is predominately Illite Clay

Extremely dispersive shale

Tangent was drilled for 200’ in the Cherokee Shale

• Approx. 50° - 60° Tangent Angle

Changed ESP tangent angle to 75°

Reduced exposure to dispersive shale

Maintained lower hydrostatic head for Production at intake

Pushed tangent downhole changed lithology

• Tangent now drilled in top of the Mississippi Lime

Sodium Silicate WBM

Chemical inhibition to shale – similar inhibition to OBM

Drill gauge hole through curve for better cleaning

Ultimately, changing tangent angle was more beneficial than Silicate WBM

12

The Curve and Hole Cleaning – Casing Time

Bin Frequency

-5.851487765 0

0.40109149 0

6.653670745 3

12.90625 26

19.15882926 14

25.41140851 3

31.66398777 1

More 1

Average 12.90625

Standard Deviation 6.252579255

Histogram for 7" Casing Run Time

Casing run times prior to tangent adjustment and Hole Cleaning initiative

13

The Curve and Hole Cleaning – Casing Time

Histogram for H2 7" Casing Run Time

Bin Frequency

3.738355272 0

5.857767151 0

7.97717903 4

10.09659091 19

12.21600279 13

14.33541467 7

16.45482655 1

More 0

Average 10.09659091

Standard Deviation 2.119411879

14

The Curve and Hole Cleaning – Casing Time

Changed ESP tangent angle to 75°

Reduced exposure to dispersive shale

Maintained lower hydrostatic head for Production at intake

Pushed tangent downhole changed lithology

• Tangent now drilled in top of the Mississippi Lime

Reduced 7” Casing Time Average and Train Wrecks!

Average running reduced 2.8 hours

• Previous average was 12.9 Hours

• New average is 10.1 Hours

Longest casing run was 13.5 hours

• No pulled casing strings!

• Previous longest casing time was 41 Hours

o Pulled casing and multiple conditioning runs

15

The Problem – Catastrophic DHT Failures

DHT failures were persistent issues

Catastrophic failures – resulting in sidetracks

Near-catastrophic – success retrieving tools

Undiagnosed failure – TOOH for new assembly

Why were so many tools breaking?

16

The Problem – DHT Failure Cost

Cata

str

ophic

Failu

res

17

The Solution – Catastrophic DHT Failures

DHT failures were persistent issues

Catastrophic failures – resulting in sidetracks

Near-catastrophic – success retrieving tools

Undiagnosed failure – TOOH for new assembly

Why were so many tools breaking?

Implement DHT guidelines and procedure rollout

Clearly define the issue at hand

Clearly state the operational parameters

Training, training, training!

• Engineer, Company Man, driller, and DD MUST work together!

Document failures

Learn from the mistakes

Keep it in the open so it’s not forgotten!

“It’s not the hole you make, it’s the hole you keep!”

18

The Solution – DHT Failures

$-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

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5

Cost vs. Directional Tool Failure Date of Incident

Directional tool failure analysis and action plan instituted

19

2015+

Address capital efficiency

Mitigate slow ROP and “yo-yoing” in high chert areas

Work diligently to “stay in pay”

Proactive measures during a runaway cost scenario

20

Questions

Thank you for listening

Questions?