SPE-178265-MS

Cost Benefit Analysis of Vegetable Oils Used As Alternatives to Diesel in

the Formulation of Oil-Based Drilling Muds
Okorie E. Agwu, Isemin A. Isemin, and Moses G. Akpabio, Department of Chemical & Petroleum Engineering,
University of Uyo, Uyo

Copyright 2015, Society of Petroleum Engineers

This paper was prepared for presentation at the Nigeria Annual International Conference and Exhibition held in Lagos, Nigeria, 4 – 6 August 2015.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
of the paper have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflect
any position of the Society of Petroleum Engineers, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written
consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may
not be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract
When water based muds fail to ensure that a usable hole is drilled, oil based mud formulated with No.2
diesel is adopted. Because No. 2 diesel is toxic, the oil and gas industry is looking for other alternatives
to it. One of such alternatives is the use of vegetable oils. These vegetable oils are relatively more
expensive than the No. 2 diesel; hence their use would ultimately increase the cost of drilling fluids. There
are however many types of these vegetable oils. These vegetable oils vary in physical and chemical
properties and in their cost. This paper undertook an investigation into the cost, properties and availability
of these vegetable oils for use in drilling mud formulation; it chronicled the trend of researches available
on the use of vegetable oils as drilling fluids with the findings from each researcher presented. This paper
also presents a detailed cost benefit analysis of major vegetable oils used as drilling muds. To make the
work comprehensive, an evaluation of the viability of each vegetable oil to achieve the objectives of cost
effectiveness, availability, and good rheological and filtration properties were evaluated. The results
showed that of all the vegetable oils studied, olive oil ranked the least in meeting all of these objectives
while palm oil, soybean oil followed by rapeseed oil fulfilled all of the objectives to a considerable extent.
This paper therefore offers an all-inclusive portfolio of cost related issues that border on the use of
vegetable oils as drilling muds which would be useful to wellbore drillers in particular and the E & P
industry at large.

Introduction
Apart from being expensive, one of the biggest complaints against oil based muds (OBMs) – the drilling
fluid with No.2 diesel as its continuous phase – is that it harms the environment. While being held in high
esteem by industry operators for its excellent rheological properties at high temperatures (⬎300°F), its
effectiveness against all types of corrosion, its superior lubricating characteristics and its suitability for
drilling formations easily damaged by water based muds (WBMs) (Bourgoyne et al., 2003), it has also
drawn the ire of environmentalists. These environmentalists have in recent times been highly vocal in their
contempt not just for the use of OBMs but mainly for its disposal. They argue that OBMs have the
potential of polluting water supplies (especially when disposed offshore) and that they contain toxic
chemicals that pose lethal threats to both terrestrial and aquatic beings. These claims certainly do have
2 SPE-178265-MS

merits. From a chemical point of view, diesel due to its high aromatic content is toxic and non-
biodegradable. Again, researches carried out on the effects of OBM disposal in the environment show that
such petroleum-based oils used for drilling mud contain relatively large amounts of aromatics and at least
a substantial concentration of n-olefins both of which may be harmful or toxic to animal and plant life
(Dardira et al., 2014). These problems have made governmental authorities in different oil producing
nations enact laws and impose sanctions on offenders to protect its environment and citizens from the
lethal effects of OBM disposal. For instance, a set of regulations called the Corporate Regulations for
Offshore Drilling Operations in Saudi Arabia established by the Royal Decree No. M/9 of November 18,
1987, stipulates that all oil-based drilling fluids that are designated as toxic fluids, and cuttings must be
hauled back to an approved onshore disposal site, and that cuttings from oil-based mud should be cleaned
using the best practical technology and then be discharged as close as possible to the sea floor (Sanmi,
2011). This move has forced the industry on its toes. This fact is buttressed by Bleier et al. (1992) when
they opined that environmental problems, although nettlesome and often costly, have served to stimulate
new developments in drilling fluid technologies. In a bid to demonstrate compliance, the drilling industry
has over time developed variant forms of oil based muds which are technically called synthetic-based
muds (SBMs). An SBM was used for the first time to drill a well in the Norwegian Sector of the North
Sea in 1990. The first well drilled with an SBM in the UK Sector was in 1991 and in the Gulf of Mexico
in 1992 (Friedeheim and Conn, 1996; Fechhelm et al., 1999). These SBMs combine the desirable
operating qualities of the oil-based mud; lower the toxicity and environmental impact qualities of the
water-based mud. As operators keep searching, researchers are also making impressive strides in the
development of environmentally friendly OBMs. For instance, various researches have been tried on the
suitability of various vegetable oils for use as alternatives to the diesel oil. All these have been done in
a bid to add that extra margin of safety to man, plant and animal life in the area where oil and gas is
produced. Consequently, access to a full range of vegetable oils for mud formulation is necessary to
achieve cost-effective development, especially in deep water or where horizontal or extended reach
drilling is employed. Hence, it is essential to understand the potential cost implications of each vegetable
oil mud option and the full cost analysis of using alternative options. To this end, this paper would focus
on providing useful information on the use of vegetable oils as OBMs. It would x-ray previous researches
done on the use of vegetable oils as OBMs. This would be followed by a review of the physical and
chemical properties of each vegetable oil along with a discussion of the world availability of each of the
oils. A guideline for conducting a cost analysis of each option would be discussed next while a
consideration of the balance of cost and benefit associated with using each vegetable oil would follow.
Finally, an evaluation of the viability of each vegetable oil to achieve the objectives of cost effectiveness,
availability, and good rheological and filtration properties would be evaluated.

Previous Studies on Using Vegetable Oils as Drilling Fluids

Table 1 shows the research efforts by various researchers on the use of vegetable oils as base fluids in the
formulation of environmentally friendly OBMs. The review of the research efforts is taken from 1991 up
until 2014. The table highlights the specific vegetable oil studied by each researcher, the type of
experiment each researcher carried out and the major findings of the researchers. From the table, it is
observed that about 64%, 43%, 43% and 36% of the researchers tested for the rheological properties,
density, filtration and toxicity respectively of the oils they studied. It is observed that the researchers
agreed that the oils had the potential of being used as base fluids for OBMs. Finally, all the researchers
were unanimous in their submission that the vegetable oils were non-toxic compared to diesel oil.
SPE-178265-MS 3

Table 1—Summary of research findings by researchers

4 SPE-178265-MS

Table 1—Continued.
SPE-178265-MS 5

Physical and Chemical Properties of Vegetable Oils

A review of the physico- chemical properties of the vegetable oils used as base-fluid in the formulation
of the OBM is presented. By knowing these parameters, an early description of mud composition and
behaviour can be estimated. These properties include:
Specific Gravity: Specific gravity shows the weight of base-fluid. This will indicate the density of
developed mud.
Pour Point: This is the lowest temperature at which the base-fluid will be able to flow.
Flash Point: This is the temperature at which the fluid begins to burn.
Kinematic Viscosity: This is the resistance of a base fluid to flow under the influence gravity force.
Cloud point: This is the temperature at which dissolved solids are no longer completely soluble,
precipitating as a second phase giving the fluid a cloudy appearance.
Fire point: This is the temperature at which the vapour of oil will continue to burn after being ignited
even if the source of ignition is removed.
Aniline Point: The aniline point of oil is defined as the minimum temperature at which equal volumes
of aniline (C6H5NH2) and the oil are miscible. The value gives an approximation for the content of
aromatic compounds in the oil, since the miscibility of aniline, which is also an aromatic compound,
suggests the presence of similar (i.e. aromatic) compounds in the oil.
Interestingly, some research work has been done by researchers to determine these aforementioned
base fluid properties. Table 2 presents the physico-chemical properties of these oils.

Table 2—Physico-Chemical Properties of vegetable oils used for OBM formulations

Oil Density Viscosity Pour point Flash point Cloud point Aniline point Fire point

Palm oil 915kg/m3 @ 47.8 Cst @ 23-40°C[27] 280°C[27] 31°C[27] 118°F[31] 341°C[25]
20°C[27] 37.8°C[45]
Coconut oil 924kg/m3 @ 29.8-31.6 Cst 23°C[30] 298°F[31] - 116°F[31] 329°C[25]
15°C[45] @
37.8°C[45]
Palm kernel oil 886kg/m3[35] 115 Cst @ 22°C[35] 242°C[35] - - -
40°C[35]
Groundnut oil 914 kg/m3@ 85 Cst @ ⫺ 3°C[27] 258°C[27] 9°C[27] - 342°C[25]
20°C[27] 20°C[27]
Rapeseed oil 920kg/m3 @ 54.1 Cst @ ⫺ 2°C[27] 285°C[27] ⫺ 11°C[27] - 344°C[25]
20°C[45] 37.8°C[45]
Cotton seed oil 926kg/m3 @ 37.9 Cst @ 2°C[27] 243°C[27] ⫺1°C[27] - 342°C[25]
15°C[45] 37.8°C[45]
Soybean oil 920 kg/m3 @ 61 Cst @ 20° ⫺ 20°C[27] 330°C[27] ⫺4°C[27] 140°F[31] 342°C[25]
20°C[27] C[27]
Olive oil 800-920k g/m3 43.2 Cst @ ⫺9°C[3] - - - -
@ 20°C[45] 37.8°C[45]
Sunflower seed 920kg/m3 @ 58 Cst @ ⫺ 16°C[27] 316°C[27] ⫺ 5°C[27] - 341°C[25]
oil 20°C[45] 20°C[27]
Castor seed oil 956.1 259-325 Cst @ ⫺33°C[3] - - - -
Kg/m3[45] 37.8°C[45]
@ 25°C
Diesel No. 2 850 kg/m3[40] 2.7 – 3.4 Cst ⫺ 18°C[40] 66°C[40] ⫺17°C[14] 145°F[31] 108°C[50]
@ 15°C @ 40°C[40]

– means No Data available

According to Yassin et al. (1991), for an oil to be used as a base fluid for drilling mud, it has to meet
the following requirements:
6 SPE-178265-MS

1. It should be non-toxic and have low aromatic content.

2. The base oil must form a stable emulsion.
3. The kinematic viscosity should be as low as possible. This would allow the oil based mud to be
formulated at lower oil water ratios and give better rheology (lower Plastic viscosity) especially
at low mud temperature.
4. Flash point should be greater than 100°F. Higher flash points would minimize fire hazards as less
hydrocarbon vapours is expected to generate above the mud.
5. The pour point should be lower than the ambient temperature to allow for pumpability of mud
from storage tanks.
6. The Aniline point of the oil should be above 65°C [149°F] to minimize the deterioration of rubber
components on the rig.
These properties are summarized in Table 3.

Table 3—Base properties of oil for use as OBMs

Kinematic
Aniline point viscosity @ Aromatic
Property (°C) Pour point (°C) Flash point (°C) Fire point (°C) 40°C, Cst content (%)

Base oil required ⬎ 65 ⬍ Ambient temp. ⬎ 66 ⬎ 80 2.3 – 3.5 4–8

properties

Source: Yassin et al., (1991)

Comparison of the Physico-Chemical Properties of Vegetable Oils with the

Base Oil Required Properties
Table 4 shows a comparison of the physico-chemical properties of vegetable oils with the base oil required
properties. The red colour depicts that the vegetable oil under consideration doesn’t meet the base oil
required property value while the green colour shows that the vegetable oil meets the base oil required
property and the white region depicts properties that have not been determined. The high flash point of
oil means that it does not burn as easily as gasoline, which is a safety factor. Too low a flash point will
cause oil to be a fire hazard. In this direction, except for olive and castor seed oil, the flash point of the
vegetable oils is higher than that of mineral oils. This would reduce the hazards of oil vapour in mud
processing areas. It is also noticed that all the vegetable oils possess high kinematic viscosities greater than
the base oil requirement; hence, the application of these oil might lead to high plastic viscosities. In terms
of pour point, the high pour point of palm oil, coconut oil and palm kernel oil makes them undesirable
for use in cold climates while the pour points of groundnut oil, rapeseed oil, cotton seed oil, soybean oil,
olive and sunflower and castor seed oil met the base oil requirements. For the aniline point requirement,
the low aniline point of palm oil, coconut oil and soybean oil would cause deterioration of rubber products
on the rig. However, as a preventive measure, the rubber products can be substituted with neoprene to
avoid degradation (Yassin et al., 1991).
SPE-178265-MS 7

Table 4 —Comparison of properties of vegetable oils with base oil required properties

World Main Sources of Vegetable Oils

Palm oil
Palm oil is one of the world’s largest commodities, which production is dominated currently by Malaysia
and Indonesia and that accounts for 80-85% of world’s production. Smaller fractions are produced in
Sub-Saharan Africa and South America. According to the United States Department of Agriculture
(USDA), Palm Oil Production in the year 2013 was 59.6 million tons. The estimated figure for year 2014
of 63.29 million tons could represent an increase of 3.7 million tons or a 6.21% in palm oil production
around the globe. The productions in Metric tons indicate that Indonesia produced: 33,500,000, Malaysia
produced: 21,250,000, Thailand produced: 2,250,000, Colombia produced: 1,070,000, Nigeria produced:
930,000 and others produced: 4,293,000.
Coconut oil
Coconut oil is an edible oil extracted from the kernel or meat of matured coconuts harvested from the
coconut palm (Cocos nucifera). It has various applications in food, medicine, and industry. Because of its
high saturated fat content, it is slow to oxidize and, thus, resistant to rancidification, lasting up to two years
8 SPE-178265-MS

without spoiling. Currently, in 2014, the statistics for coconut oil production by country according to
Index Mundi shows that Philippines tops the chart with 1,530,000 metric tons, Indonesia: 972,000, India:
400,000, Vietnam: 153,000.
Soybean oil
Soybean oil is the world’s most widely used edible oil and is commonly called “vegetable oil”. Soybean
oil is very popular because it is cheap, healthy and has a high smoke point. Liquid soybean oil is low in
saturated fat, contains no trans fat, and is high in poly- and monounsaturated fats. The largest producers
of soybean oil include China, USA, Argentina, Brazil and the EU-27 with production capacities of
13,164,000; 9,273,000; 7,465,000; 7,215,000 and 2,315,000 metric tons respectively.
Rapeseed (canola) oil
Rapeseed oil, also known as Canola, has a mild flavour and can be produced in either liquid or in solid
form. It’s about 7% lower in saturated fats than any other oil, and benefits from more mono-unsaturated
fats, which have shown to reduce blood cholesterol level. Data from Index Mundi shows rapeseed
producing countries; as can be appreciated the four largest producers, by order of importance, are the EU,
China, Canada and India with production capacity for the year 2014 to be 9,841,000; 6,169,000;
3,160,000; and 2,600,000 metric tons respectively.
Palm kernel oil
Palm kernel oil is an edible plant oil derived from the kernel of the oil palm Elaeis guineensis. Palm kernel
oil is semi-solid at room temperature and is more saturated than palm oil and comparable to coconut oil.
It is commonly used in commercial cooking because of its relatively low cost, and because it remains
stable at high cooking temperatures and can be stored longer than other vegetable oils. From the data at
Index Mundi, two countries stand out as the largest producers of this vegetable oil and they include:
Indonesia with 3,780,000 metric tons and Malaysia with 2,400,000 metric tons respectively. Nigeria and
Thailand follow with a production capacity of 330,000 and 202,000 metric tons respectively.
Cotton seed oil
Cottonseed oil is a cooking oil extracted from the seeds of cotton plants of various species, mainly
Gossypium hirsutum and Gossypium herbaceum, that are grown for cotton fiber, animal feed, and oil.
Cotton seed has a similar structure to other oilseeds such as sunflower seed, having an oil-bearing kernel
surrounded by a hard outer hull; in processing, the oil is extracted from the kernel. Cottonseed oil is used
for salad oil, mayonnaise, salad dressing, and similar products because of its flavor stability. From the data
at Index Mundi, three countries stand out as the largest producers of this vegetable oil and they include:
China with 1,410,000 metric tons, India with 1,390,000 metric tons and Pakistan with 560,000 metric tons
respectively. Brazil, the United States and Uzbekistan follow with a production capacity of 380,000;
349,000 and 230,000 metric tons respectively.
Groundnut (Peanut) oil
Groundnut (peanut) oil is high in mono-unsaturated fats and is more stable than any other type of oil. It
usually does not require artificial additives. It is extremely robust and produces fewer flavour defects with
long term use as compared with many other oils. Groundnut oil has a characteristic, slightly nutty taste
whilst being odourless. From the data at Index Mundi, two countries stand out as the largest producers of
this vegetable oil and they include: China with 2,720,000 metric tons and India with 1, 190,000 metric
tons respectively. Myanmar and Nigeria follow closely with a production capacity of 270,000 and 263,000
metric tons respectively.
Olive oil
Olive Oil is the highest quality olive oil smelling and tasting just like the olive from which it came from.
It is obtained from the olive tree exclusively with mechanical means or with physical means in thermic
conditions without producing alterations in the oil. The oil has less than 0.8% acidity. From data available
SPE-178265-MS 9

at Index Mundi, this vegetable oil is seen to be mostly produced in the EU-27 countries with a production
capacity of 2,450,000 metric tons for the year 2014. Other countries that follow include: Turkey, Syrian
Arab Republic, Tunisia and Morocco with production capacities of 170,000; 150,000; 150,000 and
120,000 metric tons.

Sunflower oil
This pale yellow coloured oil, extracted from sunflower seeds, is a very stable oil with a long shelf life
and without hydrogenation. It is a combination of monounsaturated and polyunsaturated fats with low
saturated fat levels. From data available at Index Mundi, this vegetable oil is seen to be mostly produced
in Ukraine, Russia, EU-27, Argentina and Turkey with production capacities of 4,259,000; 3,755,000;
3,060,000; 1,060,000 and 854,000 metric tons.
A summary of the world supply and distribution of these vegetable oils in the last five years is shown
in Table 5 and graphically presented in figure 1.

Table 5—World Supply and Distribution of major vegetable oils in million metric tons
2010/11 2011/12 2012/13 2013/14 Sep 2014/15 Oct 2014/15

Production (million metric tons)

Coconut oil 3.71 3.41 3.66 3.45 3.43 3.43

Cottonseed oil 4.96 5.21 5.21 5.14 5.11 5.2
Olive oil 3.25 3.24 2.38 3.03 3.19 3.19
Palm oil 48.84 52.11 55.97 59.6 63.29 63.29
Palm Kernel oil 5.73 6.13 6.52 6.96 7.31 7.31
Groundnut oil 5.31 5.3 5.49 5.58 5.55 5.55
Rapeseed oil 23.47 24.12 24.98 26.05 26.46 26.47
Soybean oil 41.29 42.6 42.89 44.57 47 46.88
Sunflowerseed oil 12.43 14.87 13.48 15.59 15.48 15.44
Total 148.98 156.99 160.57 169.97 176.82 176.76

Source: USDA (Online)

10 SPE-178265-MS

Figure 1—World supply of vegetable oils in the last six years

It is seen from figure 1 that palm oil has the highest supply followed by soybean oil and rapeseed oil.
Olive oil and coconut oil have the lowest supply values.

Prices of vegetable oils used as base fluids in OBMs

The cost of each vegetable oil is summarized in Table 6. The prices are denominated in US dollars per
barrel. The cost of each oil in the last six years is presented.

Table 6 —Average price (US Dollars) per barrel of vegetable oils in the last six years
Palm Sun
Olive oil Canola oil Coconut Palm oil Soybean kernel oil flower oil Groundnut Diesel
Year ($/bbl) ($/bbl) oil ($/bbl) ($/bbl) oil ($/bbl) ($/bbl) ($/bbl) oil ($/bbl) ($/bbl)

2009 499.04 131.29 106.72 97.39 119.58 105.16 154.71 166.35 81.48
2010 403.58 148.12 165.23 125.20 135.39 167.18 173.59 204.15 92.22
2011 390.73 200.08 254.61 156.79 177.98 232.44 237.41 279.03 126.63
2012 399.13 181.35 163.32 136.85 168.61 156.60 217.94 345.08 130.76
2013 486.31 158.22 138.33 111.22 147.98 126.44 196.28 257.82 126.66
2014 483 136.27 193.01 111.81 123.68 165.77 159.39 188.27 124.46

Source: Indexmundi.com, (online)

The trend of the prices of these vegetable oils is shown graphically in Figure 2. It is seen that Olive
oil has a remarkably high cost followed by groundnut oil while palm oil shows low cost values in the last
six years.
SPE-178265-MS 11

Figure 2—Trend of vegetable and diesel oil cost in the last six years

Figure 3 presents a projection of prices for the vegetable oils over the next ten years.

Figure 3—Projected prices of vegetable oils for the next ten years

Cost analysis of using various vegetable oil as OBMs

The cost of oil based drilling fluids depends on costs for the base oil, barite and other additives, the cost
of maintaining the muds properties or the cost for adjusting mud properties to suit downhole conditions,
12 SPE-178265-MS

the cost of preparing excess mud volumes to combat hole problems as well as the cost of solids removal
among others. Estimates of these costs are also highly dependent on assumptions used for the analysis, e.g.
the volume of the well drilled, the length of time required to drill a well, and estimates of increased drilling
time due to hole problems among others. The following section summarizes the factors that need to be
considered in performing a cost analysis and discusses an example cost analyses for a series of likely
vegetable oil mud scenarios. Data needed for the cost analysis were drawn from both published sources
and contacts with industry staff. Factors to be considered in a cost analysis include the following:

Volume of hole drilled per well

The volume of hole drilled is directly proportional to the cuttings waste generated and can be related to
the volume of mud required to clean the well. In addition to this, the volume of drilling fluid retained on
the cuttings is also an important factor to consider when making a cost analysis for drilling mud for a well.
It is assumed in this work that a 10,000 ft well is drilled with capacity for each well section as specified
by Baker Hughes INTEQ (1999) with some practical adjustments made for hole washouts, caving in of
well sections among others.

Drilling fluid consumption

Three factors contribute to net consumption of muds during the drilling process. They include: Retention
of mud in the cuttings waste stream, downhole mud loss, losses due maintenance, losses due to downhole
problems such as lost circulation, wellbore washout, mud that becomes contaminated during use, and
additional mud added to maintain desired fluid properties. For the purpose of the example analysis, it is
assumed that downhole and maintenance losses are accounted for in the excess volumes added.

Mud cost categories

The prices are based on build cost for a certain mud weight and not a daily maintenance expense. These
costs vary from different mud types and are dependent on the chemicals and weighting material required
and on the base fluid phase. Miscellaneous cost of specialty products such as hydrogen sulfide scavengers,
lost-circulation materials, and hole-stability chemicals are not included in the study. Table 7 shows the
build cost for a typical mud system which includes the price for the individual components and mixing
requirements. The cost component of the oil muds are presented in a descriptive breakdown with a typical
composition of an oil based mud as used by many companies and also on current prices of each
component.

Table 7—Typical composition for an oil based mud

Component (Additive) Volume Cost ($)/bbl Cost of component ($)

Base oil 0.55 bbls* - -

Emulsifier/Wetting agent 8.0 lbs* 1.5 12
Water 0.09 bbls* 0 0
Gel 4.0 lbs* 1.2 4.8
Calcium Chloride 15.0 lbs* 0.35[46] 5.25
Lime 3.0 lbs* 0.1 0.3
Barite 500 lbs* 0.075[19] 37.5
Total (1 bbl) 59.85

*Baker Hughes (1999)

SPE-178265-MS 13

Table 8 —Typical cost for formulating 1 bbl of mud with each vegetable oil
Palm
Olive Canola Coconut Palm Soybean kernel Sunflower Groundnut Diesel
oil oil oil oil oil oil oil oil oil

Cost of vegetable oil/bbl 483 136.3 193 111.8 123.68 165.76 159.63 188.27 124.46
Volume required (bbl) 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55
Cost of vegetable oil for mud 265.65 74.97 106.15 61.49 68.024 91.168 87.79 103.55 68.45
to be formulated
Cost of mud Additives ($) 59.85 59.85 59.85 59.85 59.85 59.85 59.85 59.85 59.85
Total Cost of oil ⴙ additives 325.5 134.81 166 121.34 127.874 151.018 147.65 163.398 128.3
for formulating 1 bbl
mud

Figure 4 presents a comparison of build costs for an oil-based mud (invert type). The build cost
includes purchasing the initial mud system and excludes the expenses involved with increasing mud
weight in the well as it is drilled.

Figure 4 —Cost of building a barrel of mud with each vegetable oil

Drilling Mud Cost Analysis for Drilling Each Well Section

For this example, an assumption was made that bentonite mud was only utilized when drilling the top
sections of the well down to about 300 m and a reserve is kept in the mud tanks when drilling the next
section, just in case there is need for the drilling mud for sweeps. The well is assumed to be a deep well.
When calculating the total amount of drilling mud required, the capacity of the hole which was obtained
from Baker Hughes INTEQ (1999) was multiplied by the depth of the well and an excess added. The
excess is added because the actual volume of drilling mud required is assumed to be twice the theoretical
value for the well, to cover losses into the formation. This was added to the amount of drilling mud
reserved on the two mud tanks. As a rule of thumb, the total capacity of mud tanks on rigs should be about
three times the well volume. Table 9 shows how the calculations were made.
14 SPE-178265-MS

Table 9 —Typical cost for formulating 1 bbl of mud with each vegetable oil
Depth Capacity Hole volume Excess Hole volume ⴙ excess Mud tanks volume

From (ft) To (ft) Hole (bbl/ft) (bbls) (%) (bbls) (bbls)

26ⴖ hole 0 200 0.6567 131.34 100 262.68 1000

17-1/2ⴖ hole 200 1000 0.2975 238 100 476 1000
12-1/4ⴖ hole 1000 4000 0.1458 437.4 0 0 0
8-1/2ⴖ hole 4000 10000 0.0702 421.2 0 0 0

The build cost for a barrel of each mud type from the work compares favorably with the work done
by Petrowiki (2014) as shown in Figure 5. The costs for building a barrel ranges from 125 – 250 USD
for invert muds. The range of the build cost for the vegetable oils studied in this work show a range of
121 – 325 US Dollars.

Figure 5—Build mud cost analysis for 1 bbl of invert emulsion muds (Petrowiki, 2014)

Table 10 —Typical cost of mud for drilling a 10,000ft well with each vegetable oil
Rapeseed Coconut Soybean Palm Sunflower Groundnut
Olive oil oil oil Palm oil oil kernel oil oil oil Diesel oil

(Cost of oil ⴙ 325.5 134.81 166 121.34 127.874 151.01 147.64 163.39 128.3
additives)/bbl
Cost of drilling a 10,000 162750 67407.5 83000 60670 63937 75509 73823.25 81699.25 64151
ft TD well

Cost Benefit Analysis of the Vegetable Oils

Cost– benefit analysis (CBA), sometimes called benefit– cost analysis (BCA), is a systematic approach to
estimating the strengths and weaknesses of alternatives that satisfy transactions, activities or functional
requirements for a business (Wikipedia, 2014). It is a technique that is used to determine options that
provide the best approach for the adoption and practice in terms of benefits in labor, time and cost savings
etc. Cost-benefit analysis is fundamental in choosing and utilizing economic, effective and efficient
document management schemes because it provides the possibility of identifying cost-effective and
beneficial document management strategies for different types of information (David et al., 2013). Table
11 shows the cost benefit analysis for using the vegetable oils to formulate oil based muds. Since diesel
is the base fluid commonly used in OBM formulation, it is not out of place to use its cost as the baseline
SPE-178265-MS 15

against which the cost of vegetable oil based muds must be compared. Hence, a base case value of $128.3
USD which is the price of diesel oil was chosen for the analysis.

Table 11—Cost benefit analysis summary

Olive oil Rapeseed oil Coconut oil Palm oil Soybean oil Palm kernel oil Sunflower oil Groundnut oil

Base case cost ($) 128.3 128.3 128.3 128.3 128.3 128.3 128.3 128.3
Costs ($) ⫺325.5 ⫺134.815 ⫺166 ⫺121.34 ⫺127.874 ⫺151.018 ⫺147.6465 ⫺163.3985
Benefits ($) ⫺197.2 ⫺6.51 ⫺37.69 6.962 1.3 ⫺22.69 ⫺19.34 ⫺34.69

Figure 6 gives a graphical presentation of the results from Table 11.

Figure 6 —Cost benefit analysis for building 1 bbl of oil muds

Comprehensive Evaluation of the Vegetable Oils

To make the assurance for each oil for use as drilling mud double sure, each vegetable oil option is
evaluated relative to various objectives such as the cost effectiveness, availability, rheological and
filtration properties as illustrated in Tables 12 and 13. Rankings were taken from low medium and high
in Table 12. The cost, rheological and filtration properties and availability of the oils are extracted from
Tables 8, 1 and 5 respectively.
16 SPE-178265-MS

Table 12—Evaluation matrix example

Objective

Vegetable oil Cost Effectiveness Rheological properties Availability Filtration properties

Olive oil Low - Low -

Rapeseed oil High High Medium -
Coconut oil Medium - Low -
Palm oil High Medium High Low
Soybean oil High High High Medium
Palm Kernel oil Low - High -
Sunflower oil Medium - Low -
Groundnut oil Low Medium Low High

Table 13—Evaluation matrix example with point ratings

Objective

Vegetable oil Cost Effectiveness Rheological properties Availability Filtration properties Total points

Olive oil 1 - 1 - -
Rapeseed oil 4 3 3 -
Coconut oil 2 - 2 - -
Palm oil 5 3 5 2 15
Soybean oil 4 4 4 3 15
Palm Kernel oil 2 - 2 - -
Sunflower oil 3 - 2 - -
Groundnut oil 2 3 2 4 11

To make each objective have equal weight, a more quantitative system is used. Each vegetable oil
option is rated from 1 (worst) 2 (bad) 3, (good), 4 (very good) and 5 (best) for each objective. These
ratings are then summed to create total points for each vegetable oil as illustrated in Table 13. The
maximum point is 20 while the minimum point is 4. For an oil to be considered good for use, it should
score a minimum of 12 points.
Discussion
The prices of vegetable oils is expected to remain firm and above historical levels, with the exception of
sunflower and palm oil prices, which, after an initial fall, are projected to level off as shown in Figure 3.
Led by developing countries, global vegetable oil production is expected to increase by over 30% by 2025.
In formulating muds from each vegetable oil, it is seen that the highest cost of the muds was from that
which is formulated with olive oil while the least was from that which was formulated with palm oil. From
Tables 11, 12 and 13, the benefits of the vegetable oils is in this order: palm oil, soybean oil, groundnut
oil, canola oil, sunflower oil, coconut oil and olive oil.
Conclusion
Based on the study, the following conclusions are drawn:
1. That vegetable oils have the potential to replace diesel oil as base for OBMs.
2. That the higher costs of the vegetable oils would be offset by the superior properties of vegetable
based oils especially lower cost of cuttings disposal, and reduced liabilities in the event of spillage.
3. Except for olive oil, the additional cost to use vegetable oils as OBMs represents less than 10%
of the cost of using diesel. Hence, it makes perfect sense to champion the use of these renewable
and environmentally friendly vegetable oil products.
SPE-178265-MS 17

4. It is important to be aware of the fact that any cost data that does happen to be out in the public
domain is very high level: one may see total project costs, but finding costs for specific individual
components, such as drilling fluids, is very difficult. Nevertheless, as this work has shown, it is
possible with some assumptions to come up with figures that are adequate for drilling fluid cost
analysis.
5. It should be noted that not all benefits of a drilling fluid system are measurable in financial terms;
other benefits include improved hole quality, good rheological properties at various downhole
conditions, good filtration and filter cake properties among others.

References
1. Adesina, F., David, O. and Olugbenga, F. (2013). Investigating the Cuttings Carrying Capacity
and the Effect of Drilling Cutting on Rheological Properties of Jatropha Oil-Based Mud. Paper
SPE 167551 presentation at the Nigeria Annual International Conference and Exhibition held in
Lagos, Nigeria.
2. Adesina, F; Anthony, A; Gbadegesin, A; Eseoghene, O; Oyakhire, A. (2012). Environmental
Impact Evaluation of a safe Drilling Mud. Paper SPE 152865 presented at the SPE Middle East
Health, Safety, Security and Environment Conference and Exhibition held in Abu Dhabi, UAE,
April, 2 – 4.
3. Ajithkumar, G. (2009). Analysis, Modification and Evaluation of the Cold Flow Properties of
Vegetable Oils as Base Oils for Industrial Lubricants. PhD Thesis work submitted to the School
of Management Studies, Cochin University of Science & Technology
4. Akintola, S., Oriji, A.B. and Momodu, M. (2014). Analysis of Filtration Properties of Locally
Sourced Base Oil for the Formulation of Oil Based Drilling Fluids. Scientia Africana, Vol. 13, No.
1. P. 171–177
5. Amoco Production Company (2001). Drilling Fluid manual. Palmer Publishers, Los Angeles.
6. Anawe Paul A.L; Efeovbokhan, V. E; Ayoola, A. A; Akpanobong O. A. (2014). Investigating
Alternatives to Diesel in Oil Based Drilling Mud Formulations Used in the Oil Industry. Journal
of Environment and Earth Science Vol.4, No. 14, 2014
7. Apaleke, A.S., Abdulaziz, A., and Hossain, M.E. (2012). State of The Art and Future Trend of
Drilling Fluid: An Experimental Study. Paper SPE-153676 prepared for presentation at the Latin
America and Caribbean Petroleum Engineering Conference 16-18 April, 2012 Mexico City,
Mexico
8. Auta, M. (2013). Extraction and Characterization of Drilling Fluid from Castor Oil. International
Journal of Innovation and Applied Studies Vol. 3 No. 2 June 2013, pp. 382–387
9. Baker Hughes (2006). Drilling Fluids Reference Manual. Houston, Texas.
10. Baker Hughes INTEQ (1999). Fluid facts Engineering Handbook, Baker Hughes, Houston, USA.
P 397
11. Bleier, R; Leuterman, A.J.J and Stark, C.L. (1992). Drilling fluids: Making peace with the
environment. Paper SPE 24553-MS presented at the SPE Annual Technical Conference and
Exhibition, 4-7 October, Washington, D.C 1992
12. Bourgoyne, A. T., Chenevert, M. E., Millheim, K. K., Young, F. S. (2003). Applied Drilling
Engineering. SPE Textbook Series, Volume 2, Richardson, Texas.
13. Caenn, R. and Chillingar, G. (1996). Drilling fluids: State of the art. Original Research Article
Journal of Petroleum Science and Engineering, Volume 14 (Issues 3– 4), pp. 221–230.
14. Calabria, A and Capata, R. (2012). Power Generation with Vegetable Oils in the Italian Scenario:
A 20 MW Case Study. Technical Feasibility Analysis and Economical Aspects. Scientific
Research, Engineering 2012, Volume 4. Pp 548 –556
15. Dardira, M. M., Ibrahimea, S., Solimanb, M., Desoukya, S. D. and Hafiza, A. A. (2014).
18 SPE-178265-MS

Preparation and Evaluation of Some Esteramides as Synthetic Based Drilling Fluids. Egypt
Journal of Petroleum, Vol. 23, No. 1, p. 35–43.
16. David, R., Ngulube, P. and Dube, A. (2013). ‘A cost-benefit analysis of document management
strategies used at a financial institution in Zimbabwe: A case study’, SA Journal of Information
Management 15(2). http://www.sajim.co.za/index.php/SAJIM/article/view/540/640
17. Diesel Fuel No 2ICSC:1561 (online) www.inchem.org/documents/icsc/icsc/eics1561.htm Ac-
cessed 10th July, 2014.
18. Dosunmu, A and Ogunrinde, J. O. (2010). Development of Environmentally Friendly Oil Based
Mud Using Palm-Oil and Groundnut-Oil Paper SPE-140720-MS presented Nigeria Annual
International Conference and Exhibition, 31 July – 7 August, Tinapa - Calabar, Nigeria.
19. Downholetrader (online) Trade Board offerings. http://downholetrader.com/ Date accessed:
2/11/14
20. Ebike, K. (2014). Formulation of Oil-Based Drilling Mud Using Soya Bean Oil as Base Fluid.
B.Eng. Project Submitted to the Department of Chemical and Petroleum Engineering, University
of Uyo (Unpublished)
21. Fadairo A.S., Adesina, A. A., Ameloko, A. and Olugbenga, F. (2012). Modeling The Effect Of
Temperature On Environmentally Safe Oil Based Drilling Mud Using Artificial Neural Network
Algorithm. Petroleum & Coal 54 (1) 1–12.
22. Fadairo, A.; Falode, O.; Ako, C., Adeyemi, A. and Ameloko, A. (2012). Novel Formulation of
Environmentally Friendly Oil Based Drilling Mud. New Technologies in the Oil and Gas Industry.
INTEC Open Science.
23. Fechhelm, R. G., Gallaway, B. J. and Farmer, J. M. (1999). Deepwater Sampling at a Synthetic
Drilling Mud Discharge Site on the Outer Continental Shelf, Northern Gulf of Mexico, SPE
52744. Pages 509 –513 in: 1999 SPE/EPA Exploration and Production Environmental Confer-
ence. Austin, TX.
24. Friedheim, J. E. and Conn, H. L. (1996). Second Generation Synthetic Fluids in the North Sea:
Are they better? IADC/SPE 35061. Pages 215–228 in: IADC/SPE Drilling Conference. New
Orleans, 12-15 March, 1996.
25. German Society for fat science [DGF] (online) Physical properties of fats and oils. www.dg-
fett.de/material/physikalische_eigenschaften.pdf. Date accessed: 16/11/14
26. Hammond, E. G., Johnson, L. A., Caiping, S., Tong, W. and White, P. J (2005). Soybean Oil.
Bailey’s Industrial Oil and Fat Products, Vol. 2, No. 13.
27. http://www.proceedings.scielo.br/img/eventos/agrener/n4v1/064t01.gif Accessed: 11th July,
2014.
28. Index Mundi (online) Commodity prices. http://www.indexmundi.com/commodities/ Accessed:
11th July, 2014
29. Ismail, A.R. (2011). Managing the environmentally friendly drilling fluids in petroleum indus-
tries. The 2nd International Conference on Disaster Management, Surabaya, Indonesia, 3-5 May,
2001.
30. Jayadas, N.H, Nair, K.P and Ajithkumar, G. (2005). Vegetable oils as base oil for industrial
lubricants – Evaluation oxidative and low temperature properties using TGA, DTA and DSC.
Proceedings of WTC 2005 World Tribology Congress III, September 12 – 16, 2005, Washington
D.C, USA.
31. Khan, J.R, and Hossain, M.I. (online) Study of vegetable oils produced in Bangladesh as
alternative fuels for internal combustion engines.
32. Majewski, W. A. and Jaaskelainen, H. (2013). What is Diesel? DieselNet Technology Guide. Eco
Point Inc.
SPE-178265-MS 19

33. Mittelbach, M. and Remschmidt, C. (2005). Biodiesel the Comprehensive Handbook. Second
Edition, Boersedruck Ges.m.b.H, Vienna.
34. Moser, B. R. (2008). Influence of Blending Canola, Palm, Soybean, and Sunflower Oil Methyl
Esters on Fuel Properties of Biodiesels. Energy and Fuels, Vol. 22, No. 6, p. 4301–4306
35. Musa, J.J. (2009). Evaluation of the Lubricating Properties of Palm Kernel Oil. Leonardo
Electronic Journal of Practices and Technologies. Issue 14, January-June 2009 p. 107–114
36. Nowatzki, J., Shrestha, D., Swenson, A., and Weisenborn, D. P. (2012). Biodiesel Cloud Point
and Cold Weather Issues. Farm Energy. www.extension.org/pages/26611/biodiesel-cloud-point-
and-cold-weather-issues Accessed 11th July, 2014.
37. Okie-Aghughu, O., Aluyor, E.O. and Adewole, E.S. (2013). Use of rubber seed oil as base fluid
in the formulation of oil based drilling mud. Advanced Materials Research Vol. 824(2013) pp
401–405. Trans Tech Publications, Switzerland.
38. Petrowiki (online) AFE: Drilling fluids. http://petrowiki.org/AFE%3A_drilling_fluids. Date ac-
cessed: 2/11/14
39. Prassl, W.F (xxxx) A Textbook in Drilling Engineering. Curtin University of Technology
40. Rabia, H. (2000). Well Engineering and Construction. Graham and Trotman Ltd, London
41. Sanmi, A. A. (2011). Development of an environment-friendly oil-based mud using canola oil.
Thesis work submitted to the Department of Petroleum Engineering, King Fahd University of
Petroleum and Minerals, Saudi Arabia.
42. Setyawan, W; Ashfahani, A.S; Fajarwati, K; Marbun, B., Manurung, R. (2011). Alternative use
of castor oil for vegetable oil based mud environmentally friendly potential domestic oil based
mud. Proceedings, Indonesian Petroleum Association. Thirty-Fifth Annual Convention & Exhi-
bition.
43. Shell Petroleum Development Company (2000). Shell Intensive Training Manual.
44. Tapavicza, S.V in Oil and Gas Journal (2005). Special Report: Vegetable esters make drilling
fluids more environmentally friendly. http://www.ogj.com/articles/print/volume-103/issue-22/
drilling-production/special-report-vegetable-esters-make-drilling-fluids-more-environmentally-
friendly.html
45. The Engineering ToolBox (online) Material Properties. http://www.engineeringtoolbox.com/
material-properties-t_24.html. Accessed 12th October, 2014.
46. United States Department of Agriculture (Online) World palm oil production. http://
www.worldpalmoilproduction.com/?gclid⫽CMTJiZvkycECFaHMtAodil4ARA. Accessed 12th
July, 2014.
47. United States Department of Agriculture- Foreign Agricultural Service (online) Production,
supply and distribution reports. http://apps.fas.usda.gov/psdonline. Date accessed: 2/11/14
48. Walker, M. (2011). What is the Average Cost of Calcium Chloride per ton/lb? Average Calcium
Chloride Price. http://www.kaycircle.com/What-Is-the-Average-Cost-of-Calcium-Chloride-per-
ton-lb-Average-Calcium-Chloride-Price. Date accessed: 2/11/14
49. Wikipedia (2014). Cost Benefit Analysis. http://en.wikipedia.org/wiki/Cost%E2%80%93benefit_
analysis. Date accessed: 2/11/14
50. Yassin, A.M; Kamis, A and Abdullah, M.O. (1991). Palm oil diesel as a base fluid in formulating
oil based drilling fluid. Paper SPE 23001. pp. 190 –206.