vision

people
assets
community
Reducing Well Costs
MLN Field, Algeria
Neal Whatson
Burlington Resources
Algeria LLC
2
The Location
Burlington resources operates the MLN field in block 405 in the
Berkine basin, Algeria. The field lies 280 km SE of the nearest
support facilities located in Hassi Messaoud.
3
Algeria - Block 405a
Block 405
Hassi Messaoud
4
Background
• Burlington Resources acquired block 405 from LL&E in 1997
• At that time 8 wells had been drilled. These were large bore
vertical wells taking 80+ days
• One rig operation drilling 5 to 8 wells / year
• Problems operating in Algeria include:
– Algerian oil ministry policies & regulations can be ambiguous and
difficult to corroborate
– The security issues associated with operating in Algeria elevate well
costs
– New and evolving technology not always readily available and can
be expensive to introduce
– Provision of services is relatively expensive in comparison to NS
5
Burlington’s Original Goals
1. Optimise well design
– Identify ways in which the conceptual design of the wells can be altered
without compromising the well objectives
2. Continue to improve performance in all areas of operation
– Demonstrate that a continuous learning process is in place and further
enhanced
– Establish well performance goals and targets
– Capture lessons learned from previous wells
– Provide specific evidence of where lessons learnt have derived
performance improvements
3. Benchmark performance
– Verify performance and monitor improvement against other operators by
participating in a industry recognized benchmarking process
– Be one of the top three operators in Algeria for overall performance
6
The Impact
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MLN-5 MLN-6 KMD 1 KMD-2
DEC 1998
MARCH 1999
AUG 2001
Nov 2002
18.4 days to TD
7
1. Well Design
• Aim was to optimise well design without compromising well
objectives
• Established that 4 ½” tubing size was optimal for MLN production
• Dual completions were not an option for MLN as both reservoirs
were insufficiently developed in the same areas
• Well design could therefore be modified from large to slim bore
to reduce drilling times and costs
8
Reduced Well Bore
36" HOLE
30" CASING
X-42, 1.5" WT ST-2
30" Shoe @ 70 m
T.O.C @ 150 m
26" HOLE
18-5/8" CASING
K-55, 87.5 lb/ft, BTC
18-5/8" Shoe @ 500 m
DV COLLAR
13-3/8" CSG @ 1,400 m
16" HOLE
13-3/8" CASING
K-55 72 lb/ft BTC T.O.C @ 2,430 m
13-3/8" Shoe @ 2630 m
12-1/4" HOLE
9-5/8" CASING
P110, 53.5 lb/f t, New Vam T.O.L @ 3030 m
9-5/8" Shoe @ 3180 m
7" LINER
P-110, 29 lb/ft, HSC
7" Shoe @ 3700 m
Aquifers
Over-pressured
Brine
Tag-I Reservoir
Sands
F1a Reservoir
Sands
24" HOLE
18-5/8" CASING
K-55, 87.5 lb/f t BTC
18-5/8" Shoe @ 70 m
T.O.C @ 150 m
16" HOLE
13-3/8" CASING
K-55 54.5 lb/ft , BTC
13-3/8" Shoe @ 500 m
9 5/8" DV collar removed. Lite weight cement
12-1/4" HOLE
9-5/8" CASING
N-80, 43.5 lb/f t, BTC T.O.C @ 2,430 m
9-5/8" Shoe @ 2630 m
8-1/2" HOLE
7" CASING
P-110, 29 lb/ft , HSC T.O.L @ 3030 m
7" Shoe @ 3180 m
4-1/2" LINER
SM13Cr S95, 12.6 lb/f t, NVam
4-1/2" Shoe @ 3700 m
9
Evolution of Completion Design
TRSCSSV
3-1/2" 9.20#, N-80 New VAM Tubing
327 joints
0 0 0
Retreivable Packer
Cross-over, 5" x 3-1/2"
2.75" 'XN' Profile Nipple
Perforated Jt.
0
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2.562" 'RN' Profile Nipple
Tubing Mule Shoe (Bottom)
PBTD @ 3,735 m
Sliding Side Door
Jt. 3-1/2" Tubing
XO, 4-1/2" NV (Pin) x FOX (Pin)
2 J ts 4-1/2" NV tubing
Pup J t. 4-1/2" NV
SSSV, Mod. 13Cr
w/ 3.81" BR Nipple Profile
4-1/2" 12.6 lb/ft, S13Cr Tubing
Pup J t. 4-1/2" NV
3.75" 'AF' Nipple, Mod. Cr 13
Pup J t. 4-1/2" NV
K-22 Anchor Latch, Cr 13
Millout Extension, 5" x 5', Mod. Cr 13
X-over, 5" NV (Box) x 4-1/2" NV (Pin)
3.75" 'AR' Nipple, Mod. Cr 13
Tie Back Seal Assy.
Pup J t. 4-1/2" NV
Production Packer, model 85 SABL-3 47# x
3.8, Mod. 13Cr
TBSA Mule Shoe (bottom)
10
Future Completion Design
XO, 4-1/2" NV (Pin) x FOX (Pin)
2 J ts 4-1/2" NV tubing
Pup J t. 4-1/2" NV
SSSV, Mod. 13Cr
w/ 3.81" BR Nipple Profile
4-1/2" 12.6 lb/ft, S13Cr Tubing
Pup J t. 4-1/2" NV
Pup J t. 4-1/2" NV
XO, 4-1/2" NV (Pin) x FOX (Pin)
2 J ts 4-1/2" NV tubing
Pup J t. 4-1/2" NV
SSSV, Mod. 13Cr
w/ 3.81" BR Nipple Profile
4-1/2" 12.6 lb/ft, S13Cr Tubing
Pup J t. 4-1/2" NV
Tie Back Seal Assy.
Pup J t. 4-1/2" NV
TBSA Mule Shoe (bottom)
?
11
2. Drilling Optimisation
• Optimise the drilling processes
• Establish achievable but challenging targets and continually
raise these as performance improves
• Identify and prioritise areas with the highest potential for time and
cost savings
12
Continually Raise the Target
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M
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Actual TL AVRG Targets Series15 Series16
TARGET 1999
TARGET 2000
TARGET 2001
164 m / d
63M/D ave
103M/D ave
122M/D ave
128M/D ave
126M/D
152M/D
169M/D
NOTE - MLN 9 WAS A
DIRECTIONAL WELL TAKE
CORRECTED
FOR STRAIGHT HOLE WOULD
HAVE GIVEN US 158 M/D
TARGET 2002
170M/D ave
189m/d
212M/D
13
Technical Limit
Well ‘target curve’ generated by
incorporating the best ever
performance for each
individual section
As performance improved, the
‘technical limit’ improved.
This resulted in a continual moving
goal for the team to aim for
KMD-2 Time Depth Curve
18 5/8in Casing 76m
13 3/8in Casing 424m
9 5/8in Casing 2545m
Cut Tag-I Core
TD 3387m
7in Casing 3120m
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KMD-2 Days Planned (AFE) KMD-2 Actual Days Technical Limit byInterval
14
12 ¼” Section
• The slim bore design placed the 13 3/8” shoe at 450m, and the
12¼” section TD 2,500m
• This section has highly interbedded formations with soft clastics,
salts, dolomites, abrasive sandstones and hard anhydrite
stringers
• Typically took three bit runs to complete
• This section identified as having the greatest potential for time
and cost savings
15
Partnership With Oasis
•BR Well Operations team identified that undertaking a systematic
drilling performance initiative could yield significant efficiency and
cost saving benefits
•As part of that initiative, BR contracted the drilling optimisation
service Baker Hughes Oasis
•The drilling challenge was to increase penetration rates, preserve
borehole stability, reduce the number of bits and lower overall
drilling costs
16
Initial Performance
• Situation in J uly 1999
• MLN-6
• MLNW-1
• Even with a dedicated clean out run two bit runs were required
Size Type TFA /
J ets
Depth In Depth
Out
Metres Bit Hrs Ave.
ROP
12 ¼ FM2943T 8 x 11 405 1656 1251 38 32.9
12 ¼ FM2943T 8 x 11 1656 1913 257 15.7 16.4
12 ¼ DS113HGN 7x11,1x12 1913 2521 608 70 8.7

Size Type TFA /
J ets
Depth In Depth
Out
Metres Bit Hrs Ave.
ROP
12 ¼ GTXG3 OPEN 468 473 5 0.5 10.0
12 ¼ DS113HGN 4x10,4x11 473 2249 1776 78.3 22.7
12 ¼ M68P 4x13,4x10 2249 2644 395 47.0 8.4

17
The Process
•Continual improvement process
– Planning, execution, post well analysis, knowledge capture
•Pre well optimisation study
– A detailed study identified operations where improvement
could be achieved. Offset log data and analysis of rock
mechanics helped define in-situ rock drilling properties. A
detailed set of hole section drilling guidelines formation by
formation was produced
18
The Process
•Drilling implementation
– The rig site team ensured full implementation of the well plan
– A drilling optimisation engineer (DOE) was stationed on the
rig floor throughout drilling to focus input from all rig
disciplines – geologists, mud engineers, mud loggers and bit
engineers
– Rig site awareness campaigns ensured recommended
practices were followed
•Post well evaluation and knowledge capture
– A critical post well evaluation captured lessons that were then
incorporated into the next pre-drill study
19
The Incentive
• The drilling of MLC-2 was a significant success. The well was
drilled six days ahead of the AFE which represented a 15%
reduction in well time. In addition, at least one 12 ¼” bit was
saved at a cost of +/- $60k
• For MLC-2 Oasis contracted on a straight day rate
• For future wells, BR wanted Oasis to be incentivised to improve
their performance and push the technical limit, thereby further
reducing costs
20
The Incentive
• A bonus system introduced that was calculated as a percentage
of time (cost) saved between the AFE and the technical limit.
– If the AFE was not reached no bonus was applicable
– Full bonus was achieved if the technical limit was reached or
exceeded.
• Since the bonus system was linked to the technical limit, as
Oasis performance improved, the more stringent their targets
became.
• As the formations in MLN became better understood and targets
became less onerous, the bonus system evolved to ensure that
the partnership remained beneficial to both BR and Oasis.
21
12 ¼” Bit Development
• Pre-drill study identified the section as a good candidate to run
an experimental bit - the DP-0139
• The initial success of DP-0139 to drill the section in one run was
partly due to the ability of its cutters to resist impact damage
• To build on this achievement, throughout the drilling campaign
the bit design and cutting structure was modified by the BR /
Oasis / Hughes team to increase the ROP without compromising
durability
• The result was the Hughes Genesis bit - the HC-607
22
12 ¼” Bit Development
The original experimental
Bit DP-0139 from MLC-2
Final Version: The HC-607
23
Initial Results
• By November 2001, the 12 ¼” section was consistently being
drilled in one run and with higher ROPs
• This performance helped place BR in the top three operators in
Algeria according to an independent Rushmore benchmarking
survey
Well Type TFA /
J ets
Depth In Depth
Out
Metres Bit Hrs Ave.
ROP
MLN-8 DP 0367 7 x 11 454 2603 2149 70.5 30.4
MLSE-6 HC607 7 x 11 448 2550 2102 66.7 31.5
KMD-1 DP 0367 7 x 11 457 2571 2114 76.8 27.5

24
Continuous Improvement
•In 2002 lessons from the Oasis project allowed BR to move on to
a new generation of bits untested in the area and continue to
improve performance
•By the end of 2002:
Well Type TFA /
J ets
Depth In Depth
Out
Metres Bit Hrs Ave.
ROP
KMD-2 DSX113HGVW 8 x 12 428 2550 2122 49.1 43.1
MLN-11 DSX113HGVW 8 x 12 494 2632 2138 46.8 45.6

25
Continuous Improvement
12-1/4" Performance
18.1
13.5
22.6
8.5
29.0
29.6
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3. Benchmarking
• Burlington wanted to be able to verify performance enhancement
through ‘benchmarking’
• Burlington joined the Rushmore Drilling Performance Review in
1999 and the Completion Review in 2002
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Benefits of Benchmarking
Rushmore Associates provide an international forum for collating
and presenting drilling and completion performance data
Our participation:
– Establishes our competitive performance
– Provides a ‘driver’ for improvement
– Targets the big gaps and potential for improvement
– Proves and publicises achievement
– Identifies best in class and obtains indications of what best in
class companies do differently
– Validates the technical limit process
– Sets targets that are both challenging but achievable
28
BR Rushmore Ranking
No. of
Operators
Average
m/day
Average
cost/m
1999 6 3rd
2000 5 1st
2001 7 1st 2nd
2002 6 2nd 1st
2003 5 2nd 2nd
29
Normalising Rushmore
•For the last two years Burlington has had the second highest
average m/day, but drilled, on average, 600m shallower than the
1
st
placed operator
•When compared to the only well of similar depth drilled by the first
placed operator in 2003, Burlington were best in class both for
m/day and cost/m
30
Burlington Progress M/day
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160
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1999 2000 2001 MLN-9
(Deviated
Well)
MLN-10 MLNW-6 KMD-2 MLN-11
Metres
/day
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Burlington Progress Average Cost/well
2002 data includes MLN-9 which was a deviated well, with higher
associated costs.
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1998 1999 2000 2001 2002
MLN-9
Eff ect
$mm
32
‘All Inclusive’ Continuous Improvement
•As part of the continuous improvement process, well operations
monitor all areas of the operation, analyse and identify areas for
improvement
– Rig move times
– Hole section times
– Flat times
– Completion times
– Performance relative to technical limit
33
Drilling Performance 1997 to End 2002
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Total Well Cost - Drill & Complete, Civils & Security Cost to TD, Civils & Security Time to TD
Time to Final Well Spud to TD Trend Spud to Rig Release Trend
Cost To TD, Civils & Security Trend Total Well Cost Trend