Energy Symposium Anthony Recanatini Presenta · Rotary Drilling Equipment & Operations 1. ... (by a...
Transcript of Energy Symposium Anthony Recanatini Presenta · Rotary Drilling Equipment & Operations 1. ... (by a...
8/10/2010
1
What an E&P Underwriter Needs & Why
BASIC OVERVIEW OF DRILLING ANDWELL COMPLETION PROCESS
Preparing to Drill
1. Determine the location likely tobe a commercial source ofhydrocarbons;
2. Obtain rights, permits, etc. todrill the well;
3. Plan the Drilling Program, i.e.casing, cement, bits, pressures,temperatures, type of rig;
4. Identify subcontractors;everything from bulldozers towater supplies;
5. Obtain & sign DrillingContracts;
6. Site Preparation; unload &assemble equipment and;
7. Spud In.
8/10/2010
2
Pre-Drilling…Seismic Survey
Downhole
Note: The first Rotary Rig was patented in 1833. By 1901, more than 100wells in Texas alone had been drilled with them. Early Rotary Rigs werecrude powered by nothing more than mule walking in a circle.
Rotary DrillingEquipment &Operations
1. Rotating System
2. Hoisting System
3. Circulating System
8/10/2010
3
Modern Rotary Drilling Equipment
Drilling Mud ispumped through“orifices”as thebit is beingrotated
Rock Bits
PolycrystallineDiamond
Compact Bits(“PDCs”)
Hoisting System
Drawworks (Hoist)
Hoisting Pipe
8/10/2010
4
Functions of Drilling Fluids (“Mud”)
1. Transports cuttings to the surface;
2. Cleans the bottom of the hole;
3. Cools & lubricates the bit;
4. Supports the walls of the well and ;
5. Prevents entry of formation fluids intothe well.
Composition of Drilling Mud
1. Water Based and;
2. Oil based
Note: According to oilfield legend, the firstoilfield “Mud”was made by flooding afield and driving a herd cattle back andforth through it.
Circulating System
Intentionaldeviation of awell bore fromthe vertical.
Directional Drilling
A method ofsimulating productionby opening new flowchannels in the rocksurrounding aproduction well.
Formation Fracturing
8/10/2010
5
A machine designedspecifically forsucker rodpumping.
Beam Pumping Unit
Casing is pipe used to linethe hole walls and istypically cemented in-place. Conductor, surface& intermediate casing isrun during the normalcourse of drillingoperations.
If the decision is made tocomplete the well, thenproduction casing is runand set in-place.
Well Completion
Conductor Casing
Surface Casing
Intermediate Casing
Production Casing
Well Completion…con’tThe purpose(s) of Casing:
1. Conductor Casing: short length of casing set at the surface(sometimes called conductor pipe) that is usually set before the rigmoves in. The hole for conductor casing is usually drilled with an augerand pipe sizes vary from 16”-20”onshore and 30”-42”offshore.
2. Surface Casing: a set inside the conductor pipe. Many regulationsrequire the setting of surface casing to protect freshwater sands. TheBOPs are attached to the surface casing.
3. Intermediate Casing: setting an intermediate string of casing dependsupon well depth and geological conditions encountered during drilling.The use of intermediate casing is more to support drilling operationsthan production operations.
4. Liner (Casing) Strings: serves the same function as the intermediatestring and is hung (by a liner hanger) from the bottom of the previousstring.
5. Production Casing: the “conduit from the producing formation to thesurface.
8/10/2010
6
BASIC OVERVIEW OFASSOCIATED SERVICE
CONTRACTORS
Well Servicing & WorkoverSooner or later, almost allproducing wells becomedeficient from mechanicalproblems and /or depleted /damaged reservoirs.
Contractors make these wellrepairs to either maintainand improve existingproduction.
Well Servicing & Workover…cont’d
Water drives oil to the surface. As the oil reservoir becomesdepleted, water takes its place. Workover solution: A plug at theend of the casing located at (A) and perforating the casing asshown allows the reservoir to continue production.
8/10/2010
7
Well Servicing & Workover…cont’d
Gas pressure drives oil to the surface. As the reservoir becomesdepleted, the gas forms a cap over the oil. An oil well becomes agas well; considerable oil reserves can remain in the reservoir.
Well Servicing & Workover…cont’d
Gas is in solution with the oil driving it to the surface. As thereservoir becomes depleted, the gas forms a cap over the oil.However, there is not enough gas pressure to drive the remainingoil and gas to the surface.
Well Servicing & Workover…cont’d
The most common tasks involved in well servicing and workoveroperations are:
1. Replacement of Sucker Rod Pumps;
2. Repair and /or replacement of Sucker Rods;
3. Repair and replacement of worn and/or damaged ProductionTubing and;
4. Replacement and repair of Downhole Packers.
8/10/2010
8
Well Servicing & Workover…cont’d
Other tasks involved in well servicing and workover operations are:
1. Well cleanout, i.e. sand removal and sand control;
2. Plug-back & squeeze cementing;
3. Casing repair and sidetracking;
4. Drilling deeper;
5. Cased-hole logging;
6. Perforating and;
7. Wireline completions
Mobile Offshore Drilling Units andOffshore Platforms
Mobile Offshore Drilling Units(“MODUs”):
1. Jack-Up Rigs
2. Semi-Submersible Rigs3. Drills Ships
4. Drilling Barges
Permanent Platforms:
1. Concrete Platforms
2. Steel Platforms3. Tension Leg Platforms
OUTLINE BASIC P&C COVERAGESNEEDED
8/10/2010
9
General Liability Coverage and Limits of Insurance
Limits
General Aggregate Limit (other than Products - CompletedOperations)
$2,000,000
Products-Completed Operations Aggregate Limit $2,000,000
Personal & Advertising Injury Limit $1,000,000
Each Occurrence Limit $1,000,000
Damages To Premises Rented To You Limit $100,000
Medical Expense Limit - Any One Person $5,000
General Liability Coverage and Limits ofInsurance…cont’d
FORMS AND ENDORSEMENTS
TIME ELEMENT POLLUTION INCIDENT LIABILITY ENDORSEMENT
($1,000,000 LIMIT / $10,000 DEDUCTIBLE with x days discovery & x days reporting)
UNDERGROUND RESOURCES AND EQUIPMENT COVERAGE ($1,000,000 AGGREGATE)
@VANTAGE FOR GENERAL LIABILITY
EXCLUSIONS
RECORDING & DISTRIBUTION OF MATERIAL OR INFORMATION IN VIOLATION OF LAW
EXCLUSION FUNGI OR BACTERIA EXCLUSION
EXCL - OTHER ACTS OF TERRORISM; CAP ON CERTIFIED LOSSES
AIRCRAFT PRODUCTS EXCLUSION
DESIGNATED PROFESSIONAL SERVICES EXCLUSION –ALL PROFESSIONAL SERVICES
TX CHANGES - EMPLOYMENT - RELATED PRACTICES EXCLUSION
NUCLEAR ENERGY LIABILITY EXCLUSION
EXCLUSION - INFRINGEMENT OF COPYRIGHT PATENT, TRADEMARK, TRADE SECRET
ABSOLUTE EXCLUSION-ASBESTOS LIABILITY
Automobile Liability Coverage and Limits of Insurance
Coverage Symbol Limit
Liability 1 $1,000,000 CSL eachaccident
Personal Injury Protection 5 $5,000 each person
Uninsured Motorists 7 $1,000,000 CSL eachaccident
Underinsured Motorists 7 $1,000,000 CSL eachaccident
Physical Damage 7 Actual Cash Value - $1,000/$1,000 Deductible Comp andCollision
8/10/2010
10
Automobile Liability Coverage and Limits ofInsurance…cont’dFORMS AND ENDORSEMENTS COMMON POLICY DECLARATIONS BUSINESS AUTO DEC (PART I) BUSINESS AUTO DEC (PART II) BUSINESS AUTO DEC (PART III) PREMIUM STATEMENT BUSINESS AUTO COVERAGE FORM TX CHANGES TX CHANGES - CANCELLATION & NONRENEWAL TX UNINSURED / UNDERINSURED MOTORISTS COVERAGE TX PERSONAL INJURY PROTECTION ENDORSEMENT EXCLUSION OF TERRORISM TX SUPPLEMENTARY DEATH BENEFIT TX EXPERIENCE MODIFICATION @VANTAGE FOR AUTOMOBILE (N/A SC) COMMON POLICY CONDITIONS- (N/A TO VA AUTO) CANCELLATION BY US TX CHANGES - CONCEALMENT, MISREPRESENTATION OR FRAUD POLLUTION LIABILITY- BROADENED COVERAGE Schedule 1 - STATE CHARGES Schedule 2 - LIST OF COMMON DEC FORMS Schedule 3 - AUTO FORMS LIST Schedule 4 - UNINSURED MOTORISTEXCLUSION NUCLEAR ENERGY LIABILITY EXCLUSION
Umbrella Liability Coverage and Limits of Insurance
Limits
Each Occurrence Limit $5,000,000
Products - Completed Operations Aggregate Limit $5,000,000
Bodily Injury by Disease Aggregate Limit $5,000,000
General Aggregate Limit $5,000,000
Self Insured Retention - Each Occurrence $10,000
Umbrella Liability Coverage and Limits ofInsurance…cont’d
FORMS AND ENDORSEMENTS COMMON POLICY DECLARATIONS PREMIUM STATEMENT UMBRELLA DECLARATIONS COMMERCIAL UMBRELLA LIABILITY COVERAGE FORM INTERNET SEARCH,ACCESS,CONTENT OR SERV PROVIDER COV EXTENSION TX CHANGES ASBESTOS EXCLUSION DISCLOSURE NOTICE TX COMMON POLICY CONDITIONS- (N/A TO VA AUTO) CANCELLATION BY US EMPLOYEE BENEFITS LIMITATION OF COVERAGE NAMED PERIL AND TIME ELEMENT POLLUTION COVERAGE WITH X DAYS DISCOVERY & X REPORTING TX CHANGES - CONCEALMENT, MISREPRESENTATION OR FRAUD Schedule 1 - LIST OF COMMON DEC FORMS Schedule 2 - UMBRELLA POLICY FORMS LIST
EXCLUSIONS PROFESSIONAL LIABILITY EXCLUSION EXCLUSION - INTELLECTUAL PROPERTY - CHANGES EXCLUSION - CARE, CUSTODY OR CONTROL (PROPERTY OF OTHERS) EXCLUSION - FUNGI OR BACTERIA RECORDING & DISTRIBUTION OF MATERIAL OR INFORMATION IN VIOLATION OF LAW EXCLUSION EXCLUSION OTHER ACTS OF TERRORISM COMMITTED OUTSIDE THE US COVERAGE TERRITORY –LIMITATION OF COVERAGE AIRCRAFT PRODUCTS EXCLUSION ABSOLUTE EXCLUSION –ASBESTOS LIABILITY
8/10/2010
11
Property/Inland Marine Coverage and Limits ofInsurance
Schedule of Equipment Limit
As per schedule on file with company $2,500,000
Miscellaneous Tools (2,500 max per item) $50,000
Leased rented from others ($300,000 max per item) $300,000
Rental Reimbursement $25,000
Employee Clothing and Tools ($1,000 max per employee) $10,000
Valuation Actual Cash Value
Rig Deductible $5,000
All Other Equipment Deductible $1,000
Coinsurance 80%
Property/Inland Marine Coverage and Limits ofInsurance…cont’d
FORMS AND ENDORSEMENTS COMMON POLICY CONDITIONS COMMERCIAL INLAND MARINE POLICY CONDITIONS COMMERCIAL INLAND MARINE BUCKET LIMIT COVERAGE
FORM OIL AND GAS EQUIPMENT FORM BROAD LOSS PAYABLE CONDITIONAL ENDORSEMENT
LEASE OR RENTAL PAYMENT FEES COTNRACTORS EQUIPMENT WORKOVER EQUIPMENT & WELL SERVICING WELL SERVICING STACKING ENDORSEMENT
EXCLUSION WELL SERVICING GUY LINE EXCLUSION
REQUIRED UNDERWRITING DATANEEDED
8/10/2010
12
Required Underwriting Data Needed to Underwrite theRisk
◦ Name and Contact Information for Client
◦ Name and Contact Information for Producer
◦ Coverage Request
◦ Company Overview / Description of Operations
◦ Corporate Financials / Annual Report / 10K (if available)
◦ Projected Exposure Basis
◦ Property COPE
◦ GL: Class code and exposure basis
◦ Auto: Vehicle types, registered states, vehicle identification numbers
◦ Workers’Compensation: Class code and payroll
◦ Detailed Ground-Up Loss History
Five Year Minimum Acceptable*
Details requested on large losses over $50,000
Five Year Historical Exposure Basis, if available
LOSS CONTROL REPORTS, IFAVAILABLE
PROPOSED MANUSCRIPT WORDING,IF NEEDED
8/10/2010
13
ANY OTHER INFORMATIONRELEVANT TO THE RISK BEING
PROPOSED
Valuation of Drilling Rigs
• Rigs Types
• Who are the Drillers
• Where are they Drilling
• Rig Count
• Equipment Vendors
• Secondary Market
Buyers
Seeling Prices
• Life Expectancy
Life Expectancy
• What is a rig’s utilization? Working rig with propermaintenance will last longer than stacked rig laying inweeds. Market conditions dictate utilization.
• Rig components wear out at differing rates.
• Market expects rigs to last 20 –25 years dependentupon utilization, proper maintenance and drillinglocation.
8/10/2010
14
RESOURCES TO DRAW UPON
Resources to Draw Upon
• Claims
• Risk Engineering
• Legal
• Financial
Sources of Information◦ American Gas Association –www.aga.org
◦ American Petroleum Institute –www.api.org
◦ E&Pnet.com –www.eandpnet.com
◦ Energy Information Administration (EIA) –www.eia.doe.gov
◦ Engineering News Record –www.enr.com
◦ FedStats –www.fedstats.gov
◦ Foster Associates, Inc. –www.foster-fa.com
◦ Gas Compressor Association –www.gascompressor.org
◦ Gas Processors Association –www.gasprocessors.com
◦ Hydrocarbon Processing –www.hydrocarbonprocessing.com
◦ Independent Petroleum Association of American (IPAA) –www.ipaa.org
◦ Interstate Natural Gas Association of American –www.ingaa.org
8/10/2010
15
Sources of Information (cont’d)◦ Natural Gas.Org –www.naturalgas.org
◦ Natural Gas Intelligence –www.intelligencepress.com
◦ Ohio Oil & Gas Association –www.ooga.org
◦ Oil & Gas Discovery –www.bydesign.com/fossilfuels/links/html/oil/oil_find.html
◦ Oil & Gas Investor –www.oilandgasinvestor.com
◦ Oil & Gas Journal –www.ogj.pennnet.com
◦ Oil & Gas Well Site Security –www.csb.gov/videoroom/detail.aspx?vid=41
◦ Pennwell –www.pennwell.com
◦ Safety Guidelines –www.osha.gov/sltc/oilgaswelldrilling/index.html
◦ Society of Petroleum Engineers –www.spe.org
◦ Universal Compression Holdings, Inc. –www.universalcompression.com
◦ US Department of Energy (DOE) –www.doe.gov
◦ UT Petroleum Extension Service (PETEX) –www.utexas.edu/cee/petex
QUESTIONS AND ANSWERS