While we are bobbing about on the high seas, somewhat trapped by the PR doldrums and awaiting a moderate to strong trade wind to carry us to riches, I would like to share a little general knowledge about wells, drilling, well maintenance and some of the less sexy day-to-day work necessary in the oil patch to make a profit.
As a preamble to this, the information shared here is general in nature and any resemblance to a specific well or lease is purely coincidental. This reflects my own personal knowledge and opinions, and that each individual is responsible for there own research, confirmations, due diligence and portfolio strategies.
In the process of drilling a new well, the process itself damages the naturally occurring rock formations, as the drill bit rotates and crushes the rock as it advances large amounts of granular and dust-like material is produced (called “cuttings”). To keep the drill bit from getting stuck in the hole the cuttings must be removed by use of some medium to carry it out of the hole (called “circulation”). The medium used to create circulation is in some instances is a thick, viscous liquid (called “mud”) used in deeper wells or in the case of the shallower wells drilled compressed air.
Mud or compressed air is circulated under pressure during the drilling process to control the removal of the cuttings, to cool the drill bit, and to control the naturally occurring back pressures encountered in the rock formations being drilled. The mud or compressed air is pumped down the drill string, out of the drill bit through nozzles that are designed to clear the drilling teeth or surfaces of accumulated cuttings, carrying them up to the surface under pressure in the space between the drill pipe outside diameter and the well bore wall created as we drilled through the rock formation.
The drill string, consisting of lengths of drill pipe (called “joints”) with a drilling bit fitted on the bottom is advance forward during the drilling process through the well head assembly that generally incorporates a mechanical device that encompasses the drill pipe and seals the outside diameter so that pressures can be maintained in the circulation procedure. This mechanical device is called a “blowout” preventer.
The blowout preventer will actuate upon any circumstance that could occur if or when a sudden change in pressure is encountered in the circulation system. This actuation causes the drill pipe to grasped by mechanical jaws and held in place so that the drill pipe is not pushed up out of the ground like a long slender bullet out of a rifle bore or for oil, gas, water, etc that is in the wellbore to shoot out of the ground and damage the well, the environment, the drill rig and drilling crew. The pressures encountered can be thousands of pounds per square inch, with huge volumes of material energized by this high pressure.
All of this mechanical rotation (drilling process), circulation, mother nature adds up to a possibly dangerous environment requiring close attention to safety procedures. So when you are near the drilling rig, the driller will command the scene just like a captain will command all that goes on while aboard a ship. Any no drilling personnel should remain at a safe distance for the circumstances and approach the rig only when beckoned, a good ‘rule of thumb’ is to keep the driller or other drilling crewmember between you and the action you are there to witness.
As a point for illustration purposes, consider a situation wherein mud is being circulated at and a ‘pin hole’ develops in the flexible hoses used to connect to the drilling head assembly, this ‘pin hole’ leak at 2,000 psi can cut through your arm instantaneously, whistle clean just as if a Samurai took it off with a Katana (Samurai Sword).
Observer beware….follow the rules!
Back to drilling, the presence of this high-pressure circulation medium against the wellbore causes the dust-like material generated by the drilling process to be forced into the cracks, fissures and pockets (called “vugs”) that naturally occur in the rock formation. These cracks, fissures and vugs are necessary to allow the accumulation and transport of the hydrocarbons, water and gas we encounter. This is where the produced products of the well come from, not to break your bubble but there is no chamber filled with stuff like sticking a straw into a soda cup with a lid on it.
You can now see how we damage the well bore just by drilling it, but don’t despair, we have ways to mitigate the damage, perhaps not 100% effective but none the less, effective in bringing back the well bore production efficiencies.
Damage caused by drilling is addressed by using acid treatments wherein the dust-like stuff is simply dissolved by the acid and then washed out of the wellbore, or possibly by using explosive fracture techniques using high pressure air shocks, or used of a fracture inducing liquid, or mechanical devices to ‘shoot’ into the rock. All of these procedures are done to simply mitigate drilling damage and to increase the productive capacity of a well.
In the case of a well that has been on line for some period of time (each well and its environment will display specific characteristics indicating that damage has occurred by simply producing the well) treatments are routinely done to stimulate production and to enhance the economics of a particular well. These costs and economics for each well are monitored and schedules for routine treatment are put into place as normal business procedures.
In addition, a well may have an equipment failure, the down hole pump, pumping unit, prime mover, surface lines, etc that require the ‘shutting in’ of a well to perform work to correct the problem. That is why one sees ‘work-over’ rigs on leases frequently.
The job of the production superintendent is to monitor production and to schedule work-over and repairs necessary to a well-run lease, and all of this is to increase profitability.
Hope this helps in understanding why not every well is pumping at any one time, and to create a better understanding of the work that is in front of our guys and gals at PBLS.
Why not let them do their work, in an efficient manner, and let them grow OUR company, without the distractions of unsympathetic and overly nervous shareholders. Let’s do our jobs as efficiently as they do theirs, and realize that our job is to decide whether or not to put our capital into their budgets to create OUR wealth.
Do it or don’t do it! Make your personal decision and then take personal responsibility for that decision, don’t chew on your management and fellow shareholders. If your temperament is not conducive to this type of investment, sell, and put your capital into muni-bonds or high pps dividend paying stocks.
This really is quite simple, assume higher risk and make higher profits.
JMHCowboyO
USC Cowboy
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