Content in this article originally appeared in a Circular written for the Lloyd’s Market Association’s Joint Natural Resources Committee in April 2024 in support of the JNRC Well Review Guideline – JR2018-012 and has been modified in format for a wider audience.
Hartford Risk Engineering (Marine and Energy International division) has undertaken a review of recent loss of control of well (COW) claims. This is part of an established lessons learned process within the Risk Engineering function and designed to inform underwriters and assureds alike as to trends and possible opportunities for risk improvement, which are summarised in this article.
Whilst most influxes and COW claims occur during well construction, a considerable number of losses occur in other life cycle phases. The largest known, by dollar value, single market COW loss in 2023 occurred as result of loss of well integrity from a prolific gas production well.
Learning from past lessons is an important part of any risk management process. By analysing recent COW claims to which the industry has been exposed, improved guidance can be given, while also informing planned routine technical updates of documents such as the JNRC Well Review Guideline JR 2018-012.
Understanding all aspects of a well’s lifecycle, from design to final plug and abandon, allows for the right people, process, and equipment to be engaged as part of loss prevention and mitigation.
Understanding the Design and Cost of the Well
Look for evidence of the level of risk tolerance that is associated with a given well design. Exploration wells are associated with a higher degree of formation and reservoir uncertainty, which can be informed by seismic studies (of varying quality) and offset experience.
Further, be aware that risk is often viewed as different for a reservoir engineering and well engineering perspective. For instance, underestimated pore pressure will create field issues when ‘drilling ahead’ into formations weaker than expected. All too often a redrill solution after a loss is an added casing, which ideally should have been available and used in the original design and construction when problems were identified in the well bore.
Completion costs and completion complexity of the well should be known as claims have been seen in relation to this area. In one recent case, the completion cost was equal to the original dry hole drilling cost. During the complex completion it was not fully understood by the technicians that there was a crucial point in the procedure where they were (incorrectly) reliant on a single well barrier, which subsequently failed. Use of completing well on paper (CWOP) studies are encouraged.
Have Competent, Risk Aware Staff
Ensure there is a learning culture embedded in the operator’s approach to a well’s life-cycle design. Kicks, or a flow of formation fluids into the wellbore during drilling operations, should be investigated as ‘near misses’ and used to address deficiencies in the well engineering process.1
Well control incidents should be subjected to root cause analysis, ideally led by the operator in partnership with the drilling contractor and other well service providers, with visible demonstration of lessons learned. Publicly available lessons learned publications and websites such as those produced by the International Oil and Gas Producers Association (IOGP) and the International Association of Drilling Contractors (IADC) should be routinely reviewed by operators, drilling contractors and service providers. The need for a competent and informed drilling contractor cannot be overstated.
The very nature of drilling, particularly exploration wells, is that well programs are based on engineering interpretation of significant amounts of data, with a wide confidence range, and ‘in-hole’ reality can be significantly different. How the field manages change is crucial in this regard, combined with the formality of the change approval process and approval of all parties involved in the well engineering process.
It is important to consider if there is a ‘call-off contract’ with an expert well control company who can supply independent opinion on the diagnosed condition of a well, and possibly avoid extended down hole intervention. In many loss examples, an earlier move to a plug and abandonment plan (P&A) and redrill may have been a more cost-effective solution.
Lastly, management system failures and human factors are the dominate cause of malfunction. According to recent analysis by Safe Influx, an automated well control specialist, 80% of such incidents fall into categories that are influenced by human behaviour based on analysis of 3,673 incidents from 8 publicly available databases.
Managed Pressure Drilling Specialist Role
Increased use of managed pressure drilling (MPD) where combination of mud (underbalanced) and surface backpressure applied through a rotating control device (RCD) and surface MPD skid allows for more accurate control of bottom hole pressure, enabling wells with narrow ‘drilling windows’ to be drilled safely, and in turn may eliminate the need for additional casings.
Training, competence, and communication are seen as critical. Often, a MPD specialist will be contracted to assist in the drilling of lower hole sections, although this should not relinquish the overall responsibility of the drilling contractor for well control. Claims have been seen when MPD was used and a drilling contractor was over reliant on the expertise of the MPD specialist, which ultimately led to the misinterpretation of the well condition.
Another recent example associated with MPD was where a ‘twist-off’ occurred of the drilling string above the rotary table when drilling, which resulted in the well immediately going underbalanced and taking a large kick that could not be circulated out without formation breakdown. Ensure correct torquing of drill string assembly and reinspection, noting good practice to ‘move the breaks’ on stands during tripping.
Inter Formation Flow
A “zombie well” is a well that has long since been abandoned to a standard applicable at that time but has “come back to life” and having uncontrolled flow and leaks detected at the surface. Such failures in well integrity could also allow for inter formation movement of fluids in areas of remaining high production and exploration activity. Because of this, be aware of potential changing formation conditions over a field life.
Inter formation flow has also given rise to recent claims which have resulted from ‘man-made’ shallow gas pockets. Further, in a recent offshore loss injection, water was found returning to surface via the outer casing of a production well, after injection tubing and casing failure.
Operational Well Integrity
Operational well integrity is still in many cases the ‘elephant in the room’, with operators often having an incomplete view of the integrity of all operational or suspended pressurised wells, and often absent or flawed annulus pressure monitoring.
Critical in this regard is a demonstration of Well Integrity Management System (WIMS) with routine monitoring and testing and a Well Operational Risk Assessment (WORA) process that handles deviation from an agreed well integrity standard. There is often over reliance on the prescribed regulatory environment (the rigour of which can vary globally and sets a ‘low bar’) rather than following recognized industry good practice. This issue is of increasing importance with a globally ageing well stock.
Operational well losses are often caused by legacy well construction issues, and a WIMS process is important to be able to ‘listen’ to often ‘weak signals’ alerting to possible deterioration in the well integrity.
Formation Integrity Testing and Leak off Testing
It is important to ensure there is clarity and compliance of both the formation integrity test (FIT) or the leak off test (LOT) requirements when drilling out of a shoe. Kick tolerances for a given formation should be calculated, and are adequate and understood, to inform safe well design and drilling operations.
Extended drilling ahead whist taking significant mud losses should be an ‘alarm bell’ to an increased probability of a well taking a kick, which could lead to either an underground or surface blowout. Such losses need to be arrested before drilling ahead, and as necessary to use a contingent casing to isolate the loss zone.
Having the Right Equipment to Ensure Operational Safety
Be prepared to challenge well program decisions, which appear to be driven by desire for early release of the drilling rig. Two recent losses arose during cementing using an under-specified workover rig in one case, and use of off-line cementing in the other case. Such techniques were justified based on releasing the more expensive drilling rig for other duties yet resulting in reduced integrity of well control.
It is also essential that a minimum of two proven and independent well control barriers are present at all stages of a well life cycle.
An operator should be prepared to consider use of automated well control, knowing that instrumentation reliability and supporting technology has improved in recent years.
Noting examples of recent twist off events, which occurred due to failure of the drill pipe, efforts should be made to verify that drill pipe is subject to a rigorous and audited integrity management policy and program.
To learn more about The Hartford’s International Marine & Energy solutions, visit TheHartford.com/London.
Use is encouraged of the tiered JNRC Well Review Guidelines, JR-2018-12 as part of Underwriter risk management, and as necessary to trigger a third-party review either on a specific well basis, else to use a Tier 4 Corporate Well Risk Engineering Survey to get much broader view of an operator’s approach to well design, well engineering, drilling operations and operational well integrity.
The Well Review Guideline’s objective is to assist underwriters in the identifying the appropriate level of technical review to support ongoing risk management. The guidelines support principles such as: ensuring well design is fit for purpose, drilling and well control equipment is suitable and verified, correct procedures are put in place and subject to audit, competent employees are working across the well’s life cycle and emergency plans are put in place, and frequently exercised, to successfully mitigate an event.
1 “Explore the Energy Glossary,” SLB Energy Glossary, June 2024
