wem - chapter 2 - well construction process - rev.0

Well Engineering Manual – Revision 0 OKIOC Doc.no.: 99-03-002

Chapter 2 – Well Construction Process of 18

OKIOC - CONTROLLING DOCUMENT

WELL ENGINEERING MANUAL (WEM)

CHAPTER 2 - WELL CONSTRUCTION PROCESS



TABLE OF CONTENTS

1. INTRODUCTION ................................................................................................................... 3

1.1. Purpose and Scope ............................................................................................................ 3

2. PLAN WELL CONSTRUCTION OPERATIONS .................................................................... 4

2.1. Purpose.............................................................................................................................. 42.2. Input and Deliverables........................................................................................................ 42.3. Process steps ..................................................................................................................... 5

3. SCHEDULE WELL CONSTRUCTION OPERATIONS........................................................... 7

3.1. Purpose.............................................................................................................................. 73.2. Input and Deliverables........................................................................................................ 73.3. Process steps ..................................................................................................................... 7

4. EXECUTE WELL CONSTRUCTION OPERATIONS ............................................................11

4.1. Purpose.............................................................................................................................114.2. Input and Deliverables.......................................................................................................114.3. Process steps ....................................................................................................................11

5. ANALYSE WELL CONSTRUCTION OPERATIONS ............................................................15


6. IMPROVE WELL CONSTRUCTION PROCESS...................................................................17




1. INTRODUCTION

1.1. Purpose and Scope

This chapter describes the activities required to be executed during the planning and construction ofoffshore wells. The activities span the entire spectrum from conceptual planning to preparing thesequences for drilling installations, contracting/ maintaining the drilling units and execution of wellconstruction, maintenance, i.e. workovers, and abandoning operations.

Reference is made to the Well Engineering Interfaces, Doc no.99-03-003, which provides an overviewof the various well sponsors and their responsibilities with regard to the process and products requiredto set the process in motion.

The planning and construction is described as a process description, broken down in five consecutiveprocess steps in line with the EP business model, each defining inputs and deliverables.

The process may be initiated, but never finished, i.e. both Plan and Schedule process steps may bestarted, but due to a variety of reasons, the well may not be constructed. The final decision to goahead and execute well construction operations is normally only taken late in the Scheduling phase.

Each of the 5 main process steps have different starting points within the customers’ businessprocesses, and as such they will never be initiated at the same time for the same project.

This document includes only the activities related to the Well Engineering Discipline's scopeof work. It is not intended to describe interfacing organisations (well sponsor, supportingfunctions (finance, materials, logistics etc.)) activities related to these processes.

Within each step, there may be a number of sub-steps, which can be executed in parallel.

Where applicable within this process description, reference is made to one or more of the chaptersfollowing it. These chapters provide procedures or guidelines on how some of the steps are to beexecuted. Where such procedures or guidelines contain requirements that shall be met, these will behighlighted.



2. PLAN WELL CONSTRUCTION OPERATIONS

2.1. Purpose

The purpose of this step is to provide a conceptual plan for the well, describing technical issues andthe operational set-up, and highlighting critical areas requiring further investigation or a special follow-up. This will be achieved through the setting up of:

• a framework that sets the strategies for how well sponsor objectives shall be met, how things shouldbe carried out in policies, procedures and controls;

• a technical framework that will ensure that the well sponsors' objectives for the specific explorationwell can be met;

• a plan that identifies critical activities, and ensures resource (experience/ competence) availability;

• the activity levels and identification of what needs to be achieved in the long term perspective.

2.2. Input and Deliverables

Inputs: • Well Request (Planning) Deliverables: • Updated policies, strategies andcontrols for the venture

• Prospect Data • Possible preliminary identificationof drilling unit / servicesrequirements where applicable

• Offset well data • Hazard Identification

• Preliminary well budgetestimates (as available)

• Specific (HSE) Risk AcceptanceCriteria

• Well EvaluationRequirements

• Specific Requirements toEmergency Preparedness

• Production LicenceAgreement

• Proposed risk reducing measuresfor the operation

• Joint OperatingAgreement

• Updated Operational Plans

• End of Well Reports • Alternative and preliminary welldesigns

• Review of theenvironmental sensitivityin and around the licence

• Well specific HSE plan

• Standards • Preliminary time and costestimates

• Plan of activities for the nextprocess (SCHEDULING)

• Conceptual plan report



2.3. Process steps

Accountable Step Activity Reference

OperationsManager

1 Clarifies Well Request with sponsor, andGeneral Management.

Well Engineering Interfaces

(WEI), Para. 4.2 and

Appendix 1

Head of Drilling 2 Accepts assignment by co-signing the WellRequest.Establishes strategies/ up-dates specificpolices and procedures for the venture.

Head of Drilling 3 Reviews Company standards, proceduresand controls, to further identify scope ofwork.

Well Engineering Manual

(WEM)

Head of Drilling 4 Plans and organises the execution of theassignment:

• establishes a plan and seeks Wellsponsors' blessing;

• assigns a Drilling Superintendent tocarry out the assignment, and providedeliverables as requested.

DrillingSuperintendent

5a Assigns a Senior Operations Engineer toperform the work & verifies this.Coordinates resources in order to producethe deliverables:

WEM, chapter 3

• review of offset wells and data;

• prepare preliminary well design:

- casing programme,

- mud proposal,

- cement proposal,

- formation evaluation programme;

WEM, chapter 4

• identify drilling unit / services requirements (input todrilling unit contractor tender document);

WEM, chapter 11

• identify critical material / equipment requirementsand prepare materials requisition plan;

• prepare preliminary time/ depth curve and budget forthe execution of the operation;

• request a HAZID (hazard identification), propose riskanalyses and risk reducing measures, as necessary;

WEM, chapter 5

• request up-date HSE risk acceptance criteria andspecific req.'s to emergency preparedness for theactivity;

WEM, chapter 5

• review Well Construction Manual, Well EngineeringManual, Well Testing Manual, lessons learnt fromprevious operations or any other Companyprocedure, to identify the need for up-dates in orderto cover the planned operation;

WEM, WCM, WTM

• prepare a plan of activities for the next process step(SCHEDULING of exploration drilling operations).




Contracting 5b Up-dates contract plans, reviews existingcontracts and possible options, proposes acontract strategy and develops a TenderPlan for the well with regard to equipmentand services required.

WEM, chapter 11

Senior OperationsEngineer

5c Up-dates the well / work-over sequence,integrates the activity with otheroperational plans, updates manning /manpower plans and department budget.Provides technical support on request.


5d Requests support from other functions,contractors and expertise holders, asrequired to investigate the following:.• materials inventory; Materials Department

• cost data for support / time writing of directlyassigned and allocated resources etc.

Finance Manager

Heads ofSafety/Environment

6 Advises on a well specific HSE plan,covering the following:

• HSE targets;

• activities/studies;

• authority communication;

• budget/resources for these activities.

WEM, chapters 5, 7 & 9

Senior OperationsEngineer

7 Issues a conceptual plan report, includingall main deliverables and conclusions.


8 Assesses the Conceptual plan report, toensure that due consideration has beenpaid to previous Company experience, andthat the deliverables meet the technicalstandards of the Company andrequirements of Statutory Authorities.

Head of Drilling 9 Approves the conceptual plan report andverifies that the assignment met the wellsponsor's objectives of the activity.

Head of Drilling 10 Prepares the hand over and proposal forsubsequent work, when requested.



3. SCHEDULE WELL CONSTRUCTION OPERATIONS

3.1. Purpose

To:

• prepare the organisation and service contractors for commencement of drilling an exploration well,translating the work already performed in the PLAN phase to a stage where it lays the foundationfor a safe and cost effective execution of the operations, and

• obtain the RoK Authorities' permission to execute the operations, by demonstrating compliance withgoverning rules and requirements.


Inputs: • Well Request-Scheduling I Deliverables: • Updated ops' procedures

• Part A for the wellprogramme

• Contracts

• Location data for theproposed well.

• HSE Case

• Preliminary cost estimates • Blow-out Contingency Plan

• Well data acquisition /evaluation requirements

• Drilling Permit Document andApplication

• Conceptual plan reportand other Planning phaseoutputs

• Well AFE

• Well Request-SchedulingII

• Well programme

3.3. Process steps


OperationsManager

1 Clarifies Well Request with well sponsor,and General ManagementAccepts assignment by co-signing theWell Request.

WEI, Para. 4.3 and Appendix

1

Head of Drilling 2 Up-dates specific project plan based onWell Request, and plan prepared asoutput from previous process step(PLAN).Seeks Well sponsors' blessing of theplan.

WEM, chapter 3

Head of Drilling 3 Initiates the Scheduling activity, byallocating a Drilling Superintendent tohead a rig team.





4 Establishes a team and assigns staff tospecific activities according to the time-based schedule developed for theconceptual plan report.

Head of Drilling 5 Through HSE Manager informs theappropriate Kazak Authorities of plannedoperational activities.


6a Leads the rig team which is responsiblefor the following activities:

• initiating a well testing meeting to determine therequirements wrt casing size through thereservoir(s);

Appendix 3 of WEI

• finalising the well design, where required advise tobe sought from Partners, and other Operators;

WEM, chapter 4

• requesting formal proposals from contractors, anduse their experience in preparing the wellprogramme;

WEM, chapter 4

• compiling a list of non-conformances covering theplanned well construction operations;

WEM, chapters 6 & 8

• preparing the well programme; WEM, chapter 8

• updating the OKIOC Blow-out Contingency Plan toreflect specific well related requirements (ref.Firefighting and Capping Strategy, Appendix F);

• specifying drilling unit / well services requirements(input to contract tender documents);

WEM, chapter 11

Appendix 6 of WEI

• up-dating materials requisition plan, and writingMaterial Requests;

• preparing time / depth prognosis and preliminaryAFE;

• requesting the preparation of an HSE-Case, asrequired;

WEM, chapter 5

• updating operational procedures and manuals asrequired in order to cover the planned operation.

WCM & WTM

Contracting 6b Ensures all required contracts andcommercial agreements are updated, andwhere not present are put in place.

Appendix 6 of WEI

Head of Drilling 6c Carries out an assessment of Contractorand OKIOC staff training required for thewell construction operations, and ifrequired prepares an outline trainingprogramme covering the additionalneeds.

WEM, chapter 1

OperationsManager

6d Requests support from other stafffunctions, as required to carry out thefollowing:




• assisting the Heads of Safety/Environment inexecuting the activities identified in the well specificHSE plan;

Heads of Safety/Environment

• input and assistance to AFE preparation;

• facilitating and making plans for OKIOC andContractor staff training.

Finance Manager

Contracting

Procurements and Logistics

Exploration Manager

HSE Manager 6e Execute HSE activities as defined in thewell specific HSE plan.

WEM, chapter 9

Head of Drilling 7 When Well sponsors confirmation of wellto be drilled (Well Request - SchedulingII) is received:

• Ensures that all contracts are in place;

• issues Material Requests to Procurements andLogistics;

• if not already done so, review the well programmevis-a-vis the selected drilling unit;

• together with Standards & Compliance plans andperforms HSE audits of contractors;

WEM, chapters 7 & 11

• assesses the need for, plans and performs drillingunit equipment / system modifications;

• reviews contractors' manuals and procedures,issues bridging documents when required andupdates the non-conformance list;

• where required, carries out risk assessments andupdates Thesis;

WEM, chapter 5

• conducts formal review of well programme with allcontractors involved as well as the customer, andissues the well programme for review;

WEM, chapter 8

• presents the well AFE to the well sponsor andclarifies cost breakdown for well sponsor to presentto partners;

• verifies that findings of the risk assessment arebeing addressed and implements risk reducingmeasures.

WEM, chapter 5


8 Records, handles and closes, to theextend possible, all non-conformities frominternal/ external audits, inspections,programme preparation, etc.

WEM, chapter 6

Heads ofSafety/Environment

9 Input to Permit application document. WEM, chapters 9 &10

Head of Drilling 10 Verifies and approves processdeliverables on a continuous basis.




OperationsManager

11 Verifies well AFE and well programme,and seeks Well sponsor approval.

WEM, chapter 8

Permitting 12 Prepares the Permit application forsubmission to the appropriate RoKAuthorities.

WEM, chapters 8 & 10



4. EXECUTE WELL CONSTRUCTION OPERATIONS

4.1. Purpose

To construct an exploration well and acquire subsurface well data.


Inputs: • Well Request- Execution Deliverables: • well construction records fromthe operations (How built data)

• Approved Well AFE • Well status (As built data)

• Approved well programme • Operations performance andWell cost data (CTR data)

• Drilling Permit • Quality Records

• Materials and Services • HSE statistics and reports

• Output from previousProcess step (Scheduling)

• Geological/ Petrophysical Data

4.3. Process steps


OperationsManager

1 Accepts assignment by co-signing the WellRequest.

WEI, Para. 4.4 and Appendix

1

Head of Drilling 2 Ensures the mobilisation of offshore staff,and the assignment of sufficient onshoresupport staff to the Well ConstructionTeam.

Head of Drilling 3 Clarifies Permit applications with theStatutory Authorities, as necessary.


4 Ensures that all offshore staff are fullyfamiliar with the requirements of the wellprogramme, procedures, and othercontrolling documentation that apply forthe well construction operation.

WEM, chapter 8

WCM, chapter 1


5 Calls and chairs a pre-spud meeting, andensures timely distribution of the wellprogramme to all involved parties.





6 Ensures that materials and services forspud, including the drilling unitcommunication equipment with all DailyDrilling Reporting hardware and softwareare mobilised. Ensures that data/ tele-communication links are commissioned indue time before spud.


7 Plans and carries out rig move


8 Ensures drilling unit is positioned correctly,and that necessary reporting to theappropriate RoK and other Authorities andorganisations is carried out.


9 Spuds well, when Permit from theappropriate RoK Authorities has beenobtained.


10a Implements the work programme andmaintains a regular contact with the drillingunit in order to remain abreast ofdevelopments and provide advice andassistance as required:• ensuring that the drilling unit operation is conducted

safely and efficiently, and in accordance with theapproved programmes and regulatory requirements;

WCM

• requesting the offshore staff to prepare a look aheadplan as the basis for forward planning of materialsand logistical support by the logistical engineer;

• through the project accountant monitoring wellexpenditure against well budget ensuring that thereis always sufficient budget cover and control suchthat targets are not exceeded.

Head of Drilling 10b Maintains contact with the well sponsor inorder to keep him fully aware of anydevelopment of the well that need furtheraction and/ or clarification with regard tochange in programme and/ or budgets.

WEI, Para. 4.4.3


10c On a daily basis carries out the followingactivities:

• quality control and authorisation of Daily DrillingReports to Well sponsor, appropriate RoKAuthorities and Partners;

WCM, chapter 2

• following up reports from experience and events;

• maintaining daily progress curve (time/ depth graph);

• monitor actual costs vs planned costs.


10d Performs specific HSE activities:




• recording and handling of non-conformities andincident reports;

WEM, chapter 6

• following up specific HSE roles and responsibilitiesas defined in controlling documentation;

WEM, chapter 1 &WCM

• requests Heads of Safety/Environment to executeactivities identified in the well specific HSE plan;

WEM, chapters 5 & 9

• ensuring follow up and implementation of the Plan forcontinued supervisory activities, ref. Permitapplication;

WEM, chapter 10

• reporting of environmental discharge data; WEM, chapter 9

• measuring the effectiveness of risk reductionactivities.

WEM, chapter 5

Head of Drilling 10e Maintains correct communication channelsto the Statutory Authorities with respect toprogress of operations, and possiblechanges to the programme, when required.

Head of Drilling 10f Controls the operations through verificationof controlling documentation issued in thisconnection."Ring-fences" the Well Construction Teamfrom other tasks of the department, andensures additional support as may berequired in order to address unforeseenevents in the operation.Ensures operational consistency andexperience transfer between rig operationgroups.

OperationsManager

10g Together with the well sponsor approvesoperational changes to the wellprogramme, and clarifies as necessarychanges in well objectives with wellsponsor, prior to implementation.Communicates with the Authorities on allnon routine aspects not covered by step10e.

WEM, chapter 10

Head of Drilling 11 Clarifies end of well scenario with wellsponsor (Plugging, Suspension, ProductionTesting).

WEM, chapter 8

Sr. OperationsEngineer

12 Prepares necessary programmes andPermit applications.

Head of Drilling 13 Seeks well sponsor's input and approvalbefore submitting permit applications tothe appropriate RoK Authorities.




OperationsManager

14 Monitors progress of operations, preparesa Demobilisation Plan, in order to givecontractors timely notification as regards totermination dates, declaration of contractoptions, etc.


15 Implements the end of well programme. WCM


16 Demobilises well services contractors andequipment, releases the drilling unit fromthe contractor, ormoves drilling unit to next location (go toStep 7).



5. ANALYSE WELL CONSTRUCTION OPERATIONS

5.1. Purpose

To examine the results from the drilling operation, as well as analysing the performance of allpreceeding processes (Plan, Schedule, Well Construction) in relation to the objectives.

To establish final well costs and carry out the mandatory end of well reporting.


Inputs: • Well Summary Data Deliverables: • Operational Final Well Report

• Well Cost Data • Contractor Appraisal/ Evaluation

• HSE Statistics andReports

• End of Well File

• Materials Inventory • Experience Analysis

• Well Abandonment Data

5.3. Process steps


Head of Drilling 1 Ensures the continuation of project staff inorder to:

• capture experiences;

• ensure experience transfer;

• perform other mandatory Post Mortem activities.


2 Initiates the activities for:

• finance to close all accounts; reset material

inventories, write off/ buy back unused consumables,

and review, reconcile charges against actual

provision/ use of materials and supplies in the

operation;

• finance to close out all outstanding invoicing from

contractors and vendors.


3 Prepares the Operational Final WellReport:

• carries out a critical well review (meeting);

• calls post-well meetings with well sponsor,

contractors, etc. as deemed necessary in each case;

• collects experience/ performance reports from

contractors;




• summarises the sequence of events during the well

construction operations.

Sr. OperationsEngineer

4 Collects all records and compiles the WellFile:

• collects all well construction/ evaluation records,

disposes records of non-historic interest, and logs/

indexes the remaining records as required for later

retrieval in the archives.


5 Reviews lessons learnt gathered during theoperations, and selects those worthcarrying over in the Operational Final WellReport. In addition, they shall be reviewedfor inclusion in the controlling documents.


6 Carries out contractor appraisals/evaluations, to capture good and/ or badexperiences with the contractors used.

Head of Drilling 7 Ensures that relevant “lessons learned” arecaptured and that applicable manuals andprocedures are updated.

Head of Drilling 8 Verifies deliverables prior to being finallyissued.

OperationsManager

9 Approves the Experience Analysis and theOperational Final Well Report before beingissued to well sponsor, Authorities,Partners, etc.



6. IMPROVE WELL CONSTRUCTION PROCESS

6.1. Purpose

To propose and justify remedies and improvements to Company methods and technologies, based onwhat has been learnt from the whole exploration drilling campaign. (Close the Management Loop).


Inputs: • Conceptual plan report Deliverables: • Proposal to remedy drilling unit/equipment problems

• Deliverables issued for thewell (procedures,programmes, AFE, HSE-Case, reports, etc.)

• Proposal to improve technicalintegrity, capacity, availabilityand reliability of drilling unit/equipment

• Well Summary Data • Cost estimate for remedies/improvement initiatives

• Well File • Up-dated controllingdocumentation for WellConstruction Operations

• Experience Analysis

6.3. Process steps


Head of Drilling 1 Assigns a Project Leader to lead thereview and propose remedies andimprovements based on the experiencesof the exploration drilling campaign.

Project leader 2 Initiates activities / studies to proposeremedies to drilling unit / equipmentproblems, as well as improvements totechnical integrity, capacity, reliability andavailability.

SeniorOperationsEngineer

3 Proposes up-dates to time and costestimating norms, based on a review ofresource expenditures, and actual progresscurve / drilling performance.




Project leader 4 Proposes and justifies improvements tostandards, procedures, practices andcontrols, enhancing the technical integrity,performance and efficiency of drilling unit /equipment, as well as to administrativeand operating policies and procedures.

Head of Drilling 5 Reviews the proposed remedies andimprovement initiatives, and obtainsformal change control prior toimplementation.

OperationsManager

6 Approves proposed remedies andimprovement initiatives.

wem - chapter 2 - well construction process - rev.0

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