Adrin Shafil

Petrofac Drilling and Completions Manager
Last Updated: August 16, 2017
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Drilling & Completions
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During my first month as a young drilling engineer, I was sent for a hitch on a drilling rig at offshore Terengganu. My head was giddy with the vision of the awe I would receive upon stepping on to the semi, and impress people with my genius. After all, I had in my backpack my university TI82 graphing calculator, a thick company issued laptop, Excel pre-installed and I had made a point to read at least 1/3 of the Drilling for Dummies book during the weekend before. I entered the chopper cabin with hopes and dreams, and was sure that this was the start of an illustrious career.


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Unfortunately, my earlier personal euphoria was gutted swiftly when I exited the chopper in a dazed stupor, trying to get my bearings on which was port and starboard, and wondering why nobody can just say left or right. Pointed to the briefing room direction by the HLO, I still managed to successfully go down the wrong set of stairs, while struggling to keep upright on non existent sea legs fighting against the rig sway. After finally being pushed impatiently by a fellow traveler to the right doorway, I sat gratefully in the front row through the safety induction, looking for the nearest waste paper basket in case my digested lunch decides to come up the wrong way. After the last presentation slide, I shook hands with the rig OIM and jolly old rotund medic, who then proceeded excitedly to show me locations of the galley, lifeboats and room. The images of the food being prepared in the galley, and the sight of tightly made top bunk in the four person occupied room, filled my mind with hopes for dinner and a deep slumber. Unfortunately those images were replaced with dread, when I was informed that actually my work shift had started. And like everyone else, especially as a newcomer, I would start my shift with the honour of meeting the drilling supervisor, aka the king of the rig, aka the company man.


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Gingerly swaying in my shiny boots, I walked through the corridors and found the company man's office, eerily situated at the dimly lit end with the door half open. I knocked, and only silence greeted me. I knocked again, and a sudden bravado overcame my senses and I stepped in, because it occurred to me that technically, I was a company man too. Shifting to the middle of the room, my presence continued to go unnoticed by the man in charge. He was just sitting there on a rickety chair, gazing out to the rig floor through the smudged safety glasses and half opaque window. He looked very uncomfortable, hunched in filthy coveralls withered by what I assume to be continuous rig laundry and exposure to mud and sun, but he maintain his slouched posture in deep thought. I tried to calm my nerves and grunted a half swallowed "Hello, I'm Adrin, boss", and waited for him to respond. For another full 5 mins he continued his silent meditation, his deadlocked eyes just continued to stare into space. Then, his cracked lips moved ever so slightly, lisping the words no driller ever wants to hear, "We just stuck pipe". Unfortunately for me, I didn't know how dire a situation that actually was, and with the cheeriest voice I could muster, I said, "Oh good, then I can learn about what stuck pipe is!". He looked up and peered at me through his safety glasses, and gave me the most disgusted grunt. "You are here to learn, right? Then by all means, learn. Get your PPE, I'll show you what a stuck pipe is. I want you to figure out how to get free, and until you let me know how you are able to do that, or we free the pipe, you will spend your shifts on the rig floor. You will only come down for meals and safety meetings. Is that clear, whoever you say you are?".

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Side note: Just for the benefit of non-drillers, during drilling operations, a pipe often with expensive bottom hole assembly (tools, or referred to as BHA) is considered stuck if it cannot be freed from the hole without damaging the pipe, and without exceeding the drilling rig’s maximum allowed hook load.


        So there I was, first week offshore, already incurring the wrath of the company man, and already bought a front row seat on a stuck pipe event. The experience itself, is as interesting as the namesake, a pipe stuck, stationery and unmoving. Most days were spent with me spewing obvious solutions like "pull harder...let's try twisting it...let's pull now because maybe whatever has the pipe in its jaws has tired of holding on to it.." As time passed to days, and into the second week, I saw the mighty top drive pull and jar up and down on the pipe in futility, and over time people started to talk to it, hug it, curse at it, but most of the time stare at it. Somebody actually suggested that we slaughter a black chicken and drip the chicken's blood on to the stick up, but when I took the idea seriously and suggested it to town, I could still recall the cruel laughter on the other line and comments about how the contracting to buy the animal alone would take too long. What i learned though was, once a pipe is stuck, it generally stays stuck. The only recovery was to continue to work on the pipe until we received approval to cut the pipe as deep as we can, and pump cement across the tools downhole and leave it buried. As we had nuclear sources in the tools, it was only until the government gave the approval on the 10th day, could the attempts to free the pipe cease, and I saw wireline tools run to cut the pipe, and the recalcitrant pipe finally was freed without the tools downhole, and cement plugs pumped above the abandoned BHA, tools worth millions of dollars left for the next generation to unearth.


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Pictured: A picture I found online on how other crews help start the well process with prayers or Pooja. I hope that the flowers and belief did help this particular rig stay trouble free. 


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If there is anything that the oil fields ingrain into a man, it's humility. We can try to predict what will occur, be ready with an assortment of fallback plans and equipment, and try to avoid certain conditions that might lead to catastrophe. Unfortunately in drilling, we deal with the unknown. The mystery of the unknown is more prominent in exploration or appraisal drilling, but even in development mode, the formation drilled can throw us a curve ball. Every single meter drilled have different characteristics, but challenges for every single meter cannot be addressed with real time changes, at least not with the technology available now. Apart from managed pressure drilling technology, all wells are drilled with normalised planned parameters, tools, fluids and practices, and the mode is always progressing while avoiding catastrophe. But when stuck pipe occurs, while we can likely deduce that its most likely caused by a deviation, a practice that went wrong, we cannot expel the notion that there is the element of the unknown that the sentences the pipe to its final grave.


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For non-drillers, I often explain a stuck pipe as an earthquake catching our tools. Indeed the simplified metaphor covers the likely causes of stuck pipe. Formation movement, debris, collapse, ruptures, key seats, pressure differentials are what the common man associates earthquakes with, albeit on a much larger scale. Unfortunately, more often than not, a stuck pipe is notched to a mistake made by the drilling crew. But drilling crews are also human. Training, drills, procedures, data analytics and supervision are all available for the driller and crew to make decisions, but just like our normalised parameters, they are often unable to predict and react easily for every single meter drilled. Thus a stuck pipe event will still remain a real catastrophic event, that until our technology catches up with real time response of equipment with real time inflow of data, we will have to put our faith on the team with the right attitude and knowledge to keep us out of trouble.


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However, a stuck pipe event still remains a commercial event. While it does introduce its safety risks with possible flow inside the pipe due to trapped pressure, there are many other drilling incidents that are far worse, often involving immediate injuries, explosive events and death. While any stuck pipe event often brings me back to the memories of my youth, standing across an unmoving stub, full of despair, I would take a hundred stuck pipe events before I would go through the ordeal of having casualties under my watch. Our focus on performance and continued diligence in trouble shooting should never falter, and make we have less stuck pipes in our careers, but more importantly we all stay safe and return to our homes unhurt.

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January, 24 2020
EIA expects U.S. net natural gas exports to almost double by 2021

In its Short-Term Energy Outlook (STEO), released on January 14, the U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas exports will exceed natural gas imports by an average 7.3 billion cubic feet per day (Bcf/d) in 2020 (2.0 Bcf/d higher than in 2019) and 8.9 Bcf/d in 2021. Growth in U.S. net exports is led primarily by increases in liquefied natural gas (LNG) exports and pipeline exports to Mexico. Net natural gas exports more than doubled in 2019, compared with 2018, and EIA expects that they will almost double again by 2021 from 2019 levels.

The United States trades natural gas by pipeline with Canada and Mexico and as LNG with dozens of countries. Historically, the United States has imported more natural gas than it exports by pipeline from Canada. In contrast, the United States has been a net exporter of natural gas by pipeline to Mexico. The United States has been a net exporter of LNG since 2016 and delivers LNG to more than 30 countries.

In 2019, growth in demand for U.S. natural gas exports exceeded growth in natural gas consumption in the U.S. electric power sector. Natural gas deliveries to U.S. LNG export facilities and by pipeline to Mexico accounted for 12% of dry natural gas production in 2019. EIA forecasts these deliveries to account for an increasingly larger share through 2021 as new LNG facilities are placed in service and new pipelines in Mexico that connect to U.S. export pipelines begin operations.

Net U.S. natural gas imports from Canada have steadily declined in the past four years as new supplies from Appalachia into the Midwestern states have displaced some pipeline imports from Canada. U.S. pipeline exports to Canada have increased since 2018 when the NEXUS pipeline and Phase 2 of the Rover pipeline entered service. Overall, EIA projects the United States will remain a net natural gas importer from Canada through 2050.

U.S. pipeline exports to Mexico increased following expansions of cross-border pipeline capacity, averaging 5.1 Bcf/d from January through October 2019, 0.5 Bcf/d more than the 2018 annual average, according to EIA’s Natural Gas Monthly. The increase in exports was primarily the result of increased flows on the newly commissioned Sur de Texas–Tuxpan pipeline in Mexico, which transports natural gas from Texas to the southern Mexican state of Veracruz. Several new pipelines in Mexico that were scheduled to come online in 2019 were delayed are expected to enter service in 2020:

  • Pipelines in Central and Southwest Mexico (1.2 Bcf/d La Laguna–Aguascalientes and 0.9 Bcf/d Villa de Reyes–Aguascalientes–Guadalajara)
  • Pipelines in Western Mexico (0.5 Bcf/d Samalayuca–Sásabe)

U.S. LNG exports averaged 5 Bcf/d in 2019, 2 Bcf/d more than in 2018, as a result of several new facilities that placed their first trains in service. This year, several new liquefaction units (referred to as trains) are scheduled to be placed in service:

  • Trains 2 and 3 at Cameron LNG in Louisiana
  • Train 3 at Freeport LNG in Texas
  • Trains 5–10, six Moveable Modular Liquefaction System (MMLS) units, at Elba Island in Georgia

In 2021, the third train at the Corpus Christi facility in Texas is scheduled to come online, bringing the total U.S. liquefaction capacity to 10.2 Bcf/d (baseload) and 10.8 Bcf/d (peak). EIA expects LNG exports to continue to grow and average 6.5 Bcf/d in 2020 and 7.7 Bcf/d in 2021, as facilities gradually ramp up to full production.

monthly natural gas trade

Source: U.S. Energy Information Administration, Natural Gas Monthly

January, 24 2020
EIA forecasts U.S. crude oil production growth to slow in 2021

In the January 2020 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that U.S. crude oil production will average 13.3 million barrels per day (b/d) in 2020, a 9% increase from 2019 production levels, and 13.7 million b/d in 2021, a 3% increase from 2020. Slowing crude oil production growth results from a decline in drilling rigs during the past year that EIA expects will continue through most of 2020. Despite the decline in rigs, EIA forecasts production will continue to grow as rig efficiency and well-level productivity rise, offsetting the decline in the number of rigs until drilling activity accelerates in 2021.

Figure 1. U.S. crude oil production

EIA’s U.S. crude oil production forecast is based on the West Texas Intermediate (WTI) price forecast in the January 2020 STEO, which rises from an average of $57 per barrel (b) in 2019 to an average of $59/b in 2020 and $62/b in 2021. The price forecast is highly uncertain, and any significant divergence of actual prices from the projected price path could change the pace of drilling and new well completion, which would in turn affect production.

Crude oil production in the Lower 48 states has a relatively short investment and production cycle. Changes in Lower 48 crude oil production typically follow changes in crude oil prices and rig counts with about a four- to six-month lag. Because EIA forecasts WTI prices will decline during the first half of 2020 but begin increasing in the second half of the year and into 2021, forecast U.S. crude oil production grows slowly month over month until the end of 2020. In contrast, crude oil production in Alaska and the Federal Offshore Gulf of Mexico (GOM) is driven by long-term investment that is typically less sensitive to short-term price movements.

In 2019, Lower 48 production reached its largest annual average volume of 9.9 million b/d, and EIA expects it to increase further by an average of 1.0 million b/d in 2020 and 0.4 million b/d in 2021. EIA forecasts the GOM region will grow by 0.1 million b/d in 2020 to 2.0 million b/d and to remain relatively flat in 2021 because several projects expected to come online in 2021 will not start producing until late in the year and will be offset by declines from other producing fields. Alaska’s crude oil production will remain relatively unchanged at about 0.5 million b/d in 2020 and in 2021.

The Permian region remains the most prolific growth region in the United States. Favorable geology combined with technological improvements have contributed to the Permian region’s high returns on investment and years of remaining oil production growth potential. EIA forecasts that Permian production will average 5.2 million b/d in 2020, an increase of 0.8 million b/d from 2019 production levels. For 2021, the Permian will produce an average of 5.6 million b/d. EIA forecasts that the Bakken region in North Dakota will be the second-largest growth area in 2020 and 2021, growing by about 0.1 million b/d in each year (Figure 2).

Figure 2. Monthly U.S. crude oil production by region

EIA expects crude oil prices higher than $60/b in 2021 will contribute to rising crude oil production because producers will be able to fund drilling programs through cash flow and other funding sources, despite a somewhat more restrictive capital market. Financial statements of 46 publically-traded U.S. oil producers reveal that these companies generated sufficient cash from operating activities to fund investment and grow production with WTI prices in the $55/b–$60/b range. The 46 selected companies produced more than 30% of total U.S. liquids production in the third quarter of 2019. The four-quarter moving average free cash flow for these companies ranged between $1.7 billion and $3.5 billion from the fourth quarter of 2017 through the second quarter of 2019. The third quarter of 2019—the latest quarter for which data are available—had less cash from operations than investing activities, but this figure was skewed by the large, one-time acquisition cost of Anadarko Petroleum by Occidental, valued at $55 billion (Figure 3).

Figure 3. Cash flow statement items for 46 U.S. oil producers

Results for these 46 publicly traded companies do not represent all U.S. oil producers because private companies that do not publish financial statements are not included in EIA’s analysis. The Federal Reserve Bank of Dallas Energy Survey sheds some light on the financial position of a broader set of companies. Released quarterly, the bank’s survey asks oil companies about business activity and employment and asks a few special questions that change each quarter. The number of companies that participate varies each quarter, but generally the survey includes about 100 exploration and production companies. In the most recent survey (from the fourth quarter of 2019), 75% of survey respondents said they can cover their capital expenditures through cash flow from operations at a WTI price of less than $60/b. In addition, 40% of survey respondents plan to increase capital expenditures in 2020 compared with 2019, while 24% of respondents expect to spend about the same (Figure 4).

Figure 4. Selected questions from the Federal Reserve Bank of Dallas' Energy Survey

Since about 2017, large, globally integrated oil companies have acquired more acreage in Lower 48 regions, particularly in the Permian. These companies have announced investment plans to make Lower 48 production an increasing portion of their portfolios. These companies can typically fund their investment programs through cash flow from operations and are generally less susceptible to tighter capital markets than smaller oil companies. The financial results of the public companies shown in Figure 3 and the Federal Reserve survey support EIA’s production forecast and suggest that U.S. crude oil production can continue to grow under EIA’s price forecast for 2020 and 2021 because many companies are less dependent on debt or equity to fund investment.

U.S. average regular gasoline and diesel prices decline

The U.S. average regular gasoline retail price fell more than 3 cents from the previous week to $2.54 per gallon on January 20, 29 cents higher than the same time last year. The Midwest price fell over 5 cents to $2.39 per gallon, the Gulf Coast price fell nearly 5 cents to $2.23 per gallon, the Rocky Mountain price fell more than 3 cents to $2.57 per gallon, the East Coast price fell more than 2 cents to $2.50 per gallon, and the West Coast price fell nearly 2 cents to $3.18 per gallon.

The U.S. average diesel fuel price fell nearly 3 cents from the previous week to $3.04 per gallon on January 20, 7 cents higher than a year ago. The Rocky Mountain price fell nearly 6 cents to $3.01 per gallon, the East Coast price fell nearly 4 cents to $3.08 per gallon, the Midwest price declined almost 3 cents to $2.94 per gallon, the West Coast price fell nearly 2 cents to $3.57 per gallon, and the Gulf Coast price dropped more than 1 cent to $2.80 per gallon.

Propane/propylene inventories decline

U.S. propane/propylene stocks decreased by 1.4 million barrels last week to 86.5 million barrels as of January 17, 2020, 17.1 million barrels (24.6%) greater than the five-year (2015-19) average inventory levels for this same time of year. Midwest, East Coast, Gulf Coast, and Rocky Mountain/West Coast inventories decreased by 0.7 million barrels, 0.4 million barrels, 0.2 million barrels, and 0.1 million barrels, respectively. Propylene non-fuel-use inventories represented 6.9% of total propane/propylene inventories.

Residential heating fuel prices decrease

As of January 20, 2020, residential heating oil prices averaged nearly $3.07 per gallon, 3 cents per gallon below last week’s price and 10 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged almost $1.96 per gallon, more than 7 cents per gallon below last week’s price and more than 7 cents per gallon lower than a year ago.

Residential propane prices averaged almost $2.01 per gallon, less than 1 cent per gallon below last week’s price and more than 42 cents per gallon less than a year ago. Wholesale propane prices averaged more than $0.60 per gallon, nearly 4 cents per gallon lower than last week’s price and 20 cents per gallon below last year’s price.

January, 24 2020