Rig builders adapt to changing well profile in Western Canada

Demand for automated rigs up as wells shift sideways

October 12, 2011

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Illustration by Jeff Kulak

Roughnecks need not fear that the surge in building so-called “automated” drilling rigs will make them redundant. “Even by mechanizing key parts and automating some controls on a rig, the process still involves high levels of human interaction,” says Kevin Neveu, president and CEO of Calgary’s Precision Drilling Corp.

Those are soothing words for the foot soldiers of Western Canada’s drilling industry. The mere mention of automated drill rigs conjures up troubling images for these workers. The fear is that machines will replace men and women on rigs with giant robot arms twisting and motors whirring, while pipe is moved, adjuste and connected at a drill site with a single worker looking on from an enclosed booth, pushing buttons and flicking switches like some high-tech puppet master.

It turns out the reality is quite different. Yes, someone will run the controls of a drill rig with automated functions. But those rigs still need sizeable crews to make sure everything runs smoothly. Neveu says it’s not like the automation of a manufacturing facility where machines have replaced people. Rather, using automated functions on a drill rig is kind of like setting a car on cruise control.

Make no mistake though, automation has arrived and it’s here to stay. As drilling becomes more complex with more horizontal wells and hydraulic fracturing being used in the Western Canadian Sedimentary Basin (WCSB), the time it takes to complete a well is increasing. That makes drilling more costly for operators and, as a result, they are looking for ways to trim costs and be more efficient. Automated drilling presents an opportunity to do just that.

Take Precision Drilling’s 133 “Tier 1” Super Series rigs – the firm’s most-automated fleet. The Super Series rigs have taken the human element out of pipe handling and pipe connecting. Cables and levers are used on them to remove pipe from the racking board, move it along the catwalk, position it on the derrick and connect it with consistent torque. But rather than bring in automation to reduce the number of people in a crew, Neveu says it’s meant to increase efficiency. “Automating some functions provides consistent, predictable and repeatable actions,” he says. “You get the same outcome you want every time.”

Employing rigs with this kind of gadgetry is not inexpensive – Neveu estimates automated rigs are 10 to 20 per cent more expensive to use than conventional rigs – but that isn’t stopping explorers from renting them. Precision’s second-quarter results provide a window into the impact high-tech machinery can have on a driller’s balance sheet. The firm’s net earnings were $16 million in the second quarter of 2011 compared to a net loss of $69 million during the same period in 2010. Its average drilling rig revenue per day also increased over the same quarter the previous year by US$3,347 in the company’s U.S. operations and $2,199 in Canada. This occurred even though drilling activity was frustrated by an exceptionally wet spring across the WCSB.

Automation is hardly a new concept in the drilling sector. The industry started moving away from mechanical drilling in the 1970s. Dave Richard, president of Calgary-based Automated Rig Technologies Ltd., has been involved in building and designing automated rig equipment for 30 years. A company he formed in 2004, Iron Derrickman Ltd., was behind the development of a robotic arm used to handle pipe on the racking board, instead of having a person do it. The business was sold to Weatherford International Ltd. in 2009.

Richard’s latest venture is working with drilling companies and manufacturers to further develop automation of pipe handling and hoisting systems. He says much of the inspiration for automated drilling techniques is arriving from offshore rigs, so the technology has to be adapted to the realities of onshore drilling. “In offshore drilling you set up the rig and it stays there for a while,” Richard says. “In land-based drilling, every one, two, three or four weeks the rigs are taken apart and put back together somewhere else.”

The need to move land-based drilling rigs from location to location in short order has caused some industry skepticism about the reliability of automated rigs. Richard says the setup and takedown time of an automated rig doesn’t take any longer than conventional rigs, but troubleshooting a bad connection can take time. “They have been viewed as unreliable, but they are getting better and better,” he says.

Precision Drilling says its Super Series line can be set up and taken down faster than the company’s other two levels of rigs. The automated pipe handling may take a few rig hands off the racking board, but extra bodies are needed for maintenance and moving the rig. Precision has a 357-rig fleet and its Super Series rigs are running at full capacity. “They will squeeze more efficiency out of the rigs and because they’re more mobile, demand will grow,” Neveu predicts.

Precision isn’t the only drilling company expected to continue adding automated rigs to its fleet. Mark Scholz, the Canadian Association of Oilwell Drilling Contractors’ new president, says the market for automated rigs is still in its infancy, but there’s an aggressive push for more of them. “Operators are starting to demand them and there’s a market for it. It saves money in the long run by creating faster and more efficient drilling,” Scholz says. “It’s a recipe that has been written for a while and the trend will continue.”

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