Oil Drilling – an Expensive Business

Among all the undertakings ter the world, this could rank spil one of the riskiest ventures-oil drilling. Here’s a sampler for what wij are talking about from Mukluk Island: Te 1983, twelve companies spent almost $Two billion drilling for oil ter the Beaufort Sea, North of Alaska. The exploration wasgoed based on oil stains found. But the well turned out to be a dry fuckhole with no oil. Little wonder then that oil drilling is risky and expensive.

According to Arizona Geological Survey, Oil drilling ter Arizona costs inbetween $400,000 to $1,000,000, depending on the depth of the slot and its location. A equipment capable of drilling most exploratory fuckholes typically costs $8,000-15,000 vanaf day. Well then, why is drilling for oil so expensive?

It is because of some of the costs involved:

  • Payments for the contractors, welders, engineers, supervisors, mud loggers, geologists, scientists
  • Personnel for drilling, logging, cementing, casing and other logistics
  • Clearing all the dues with the landowner (territorial payments if offshore), payment of taxes, toverfee for attorney, permit to drill the well
  • Costs for maintenance: There will be three shifts with personnel employed 24 hours a day, so amenities for the team like motels, restaurants, wegtransport, water and food.

Onto the process of drilling, how is the well drilled?

Well, the drilling equipment bores a slot into the earth through which stengel pipes are inserted. Pipes or casings like cementlaag would then be waterput te inbetween for strength spil well spil for separating different pressure zones- if they exist. The well is then drilled further, and more casings are added. At times, 2-3 layers of casings would be built depending on the geological composition of the zone. The rotator table then passes the drill string onto the fuckhole. The drill string rotating by ‘top drive’ or ‘power swivel’ mechanism extends the drill bit. This extension is done with the help of the derrick (the structure holding the drill string). The drill bit then cuts the rock into lumps.

Drilling fluid, also called mud-mixture of fluids, chemicals, abrasives and solids – is then pumped down the drill string. This fluid clears the cut rock vinnig onto the surface. Compressed air is substituted for the fluid, at times. Ter turbo-drilling, a turbine is placed ter the drill string. Mud flows through this turbine causing the drill bit to rotate.

Wij witnessed earlier that oil drilling is expensive, so are the drilling contractors because:

  • Discovery of fresh oil wells is very infrequent
  • Low yields from old/mature wells
  • High risks involved te the exploration process
  • Fluctuating price of oil and gas
  • Enlargened request for oil spil well spil for drilling contractors

The drilling works are done by specialized drilling companies like Transocean, Diamond Offshore Drilling, Inc and Noble. Ter general, thesis drilling companies rent or lease their drilling equipments to oil and gas companies like ExxonMobil, Royal Dutch, BP and Shell. Ter come back, they earn revenue through day rates.

Average well cost te the UK continental shelf te 1998-Northern North Sea £, 8-12 million, Westelijk of Shetland £, Five – 15 million, Southern North Sea £, 7 – 12 million, Irish Sea £, Two – Three million. To get a more clear idea of the costs involved let’s take a look at some of the drilling companies:

Transocean: This is the world’s 2nd largest offshore drilling contractor. Recently the company penned a contract for a well ter Westelijk Africa for $630,000 a day and its Deepwater Pathfinder is the most expensive drill ship te the world. It also signed a three year contract from a consortium of contractors at $460,000 a day te the Q3 of 2009. Most of Transocean’s drilling is occurring te the Far East, the U.K., Middle East, the U.S., spil well spil parts of Africa and Asia. Average day rate of Transocean has moved from $211,900 ter 2007 to $283,800 te the third quarter of 2009.

Diamond offshore drilling, Inc: Operating spil offshore contract drilling, the company concentrates more on the Gulf of Mexico. It has about 45 equipments, 30 semi-submersibles (11 high- specification capable of working ter water innards of more than 4000 ft, Nineteen intermediate rigs-work at insides less than Four,000 ft., 15 jack-ups- operates at water innards of up to 400 feet). The day rate wasgoed $386,000 ter the fourth quarter of 2008 which enhanced to $360,000 vanaf day te the very first quarter of 2009. Ter the Q2 of 2009, the day rate wasgoed $381,000 for high specification floaters, $286,000 for intermediate semis and $146,000 for jack-ups.

Noble: It is the third largest offshore oil exploration and production company with presence te India, Mexico, Brazil, Middle East and Westelijk Africa. It has 63 drilling units (13 semi submersibles, 44 jack-ups and three submersibles). The day rate wasgoed $83,417 te 2006 and $164,000 te 2009 (by comparison average day-rates for Noble’s international fleet wasgoed $60,922 ter 2005 and $83,417 ter 2006).

Ensco International: It has 45 jack-ups, one semi-submersible, one barge equipment and three ultra deep water semi submersible equipments. Exclusief from the US, the company has presence te Europe, Asia Pacific and Africa and the Middle East. The day rate of the company rose to $155,000 ter 2008, a dramatic increase from the rates of $114,762 ter 2006 and $139,882 ter 2007.

Seadrill: This Norway based company received contracts worth $Four.1 billion for three deepwater equipments from Brazilian Petrobras – day rates wasgoed more than $600,000.

Tho’ the oil prices have fallen te latest times, the companies still earn profit, te fact, their profit has surged- spil seen from the above discussion– spil most of their contract run through 2010.

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