Reducing the cost and environmental impact of oil and gas exploration.

New technology being developed under the U.S. Department of Energy’s ambitious two-year-old Microhole Initiative already is yielding new tools perched on the edge of commercialization. Some of these tools, designed to drill ultrasmall-diameter natural gas and oil wells, have been successfully field-tested in real-world drilling conditions, and await a final decision later this year for full-scale commercialization. Other microhole projects are wrapping up and will soon move into the field-test stage.

Microhole technology, by virtue of its ability to dramatically reduce drilling costs, risks and environmental impacts, could change the way America’s oil and natural gas wells are drilled. It entails using coiled tubing drilling rigs – small, easily transportable rigs that unspool coils of thin tubing – to drill “grassroots” wells with diameters of less than 4 1⁄2 inches or equally small-diameter “sidetrack” boreholes from existing wells. This approach leaves a much smaller footprint in environmentally sensitive areas, and produces much less drilling waste compared with rigs that deploy standard-size drill pipe to drill larger-diameter holes.

The new tools developed under the Energy Department’s microhole program will help further the application of coiled tubing drilling in the United States, in turn improving the economics of recovering previously unattainable oil and natural gas resources in marginal or declining fields.

Coiled tubing drilling generally has been limited to high-cost areas such as Alaska and Canada, but is gaining traction in the lower 48 states. For the first time, a Canadian coiled tubing drilling company, Xtreme Coil Drilling Corp., is drilling grassroots wells in the lower 48 for an American company, Anadarko Petroleum Corp. Recently, Shell Technology Ventures B.V. agreed with Xtreme Coil to form a jointly owned company, Coil-X, that would use Xtreme’s coiled tubing drilling technology to drill conventional and unconventional resource exploration wells throughout the United States and Canada.

Although microhole technology’s roots extend back a decade with early experimentation funded by DOE in the mid-1990s, the agency’s National Energy Technology Laboratory (NETL) formally launched the new initiative in 2004. About 20 projects are active under the $20 million, cost-shared program. The program’s main driver is to find a way to economically develop America’s vast untapped oil and natural gas resources lying at shallow depths in tens of thousands of declining or depleted reservoirs that are operated mostly by thousands of small, independent companies. The United States has more than 218 billion barrels of by-passed conventional oil at less than 5,000 feet subsurface that is nonrecoverable with current technology. If one-tenth of that by-passed oil could be recovered, it would equal roughly 10 years of OPEC imports at current levels. A similar scenario exists for trillions of cubic feet of by-passed natural gas. Microhole drilling also could slash drilling waste volumes by as much as 80 percent compared with conventional drilling.

Microhole drilling’s reduced costs and environmental impacts could render viable many currently uneconomic deposits. That was borne out by the recent success of a NETL-sponsored hybrid coiled tubing drilling rig that opened a marginally economic play totaling as much as 1 trillion cubic feet of natural gas in the mid-continent region.

Microhole coiled tubing drilling also offers the potential to support the economics of drilling thousands of low-cost injector wells needed to inject carbon dioxide for enhancing oil recovery and for capturing and storing this principal greenhouse gas. DOE’s program focuses on developing technology and equipment to facilitate microhole drilling, notably the miniaturization of key tools. Among the most advanced of these projects is a microhole “smart” steering motor and logging-while-drilling (LWD) system developed by Baker Hughes INTEQ. The system provides the capability to more accurately steer the drill bit to drill smooth, straight boreholes, while providing real-time information about the rock being drilled. The result is faster drilling, improved well-path accuracy, better hole quality, and longer horizontal sections (essential for exposing more of the reservoir to the well).

While such technology is not new in the oil and natural gas industry, it has never been deployed in tools so small – a mere 23⁄8 inches in diameter. BP America Inc.’s Alaska unit used the two components to drill a well on Alaska’s North Slope, one of the world’s most challenging drilling environments. Baker Hughes INTEQ describes the tools’ performance as “an overall technical success, showing that both components add benefit when drilling re-entry wells.” In noting that it will make a decision on full commercialization of the tools in 2007, Baker Hughes INTEQ adds, “The investment of the DOE was a substantial contribution to the development of new techniques to recover oil and gas for the American market.”

Baker Hughes INTEQ also is developing a miniaturized, wireless steering-while-drilling system that enables precise, real-time geosteering by incorporating a two-way power and communications module, and a surface control system that communicates with the downhole tool assembly. Plans call for field trials of the two tools, and DOE is funding 75 percent of the cost of the two projects, each valued at about $1 million.

Among other NETL-funded microhole tools making progress toward commercialization:

  • Western Well Tool Inc. is deploying its prototype microhole drilling tractor in three demonstration wells on Alaska’s North Slope. One of the shortcomings of drilling with coiled tubing is that it buckles easily, making it difficult to impart enough weight on the drill bit to rapidly drill through rock. Fast penetration rates are critical to coiled tubing drilling to keep drilling costs down. Western Well Tool’s miniaturized (31⁄4 inch) drilling tractor thrusts the drill bit into the subsurface formation while pulling the coiled tubing along behind, thus speeding penetration rates. DOE is funding 80 percent of the nearly $1 million cost of the project.

  • Stolar Research Corp. recently was awarded a prestigious R&D 100 Award for its NETL-funded project to develop a radar navigation and radio data transmission system for microholes. Stolar’s invention, originally developed for the coal mining industry, provides a real-time measurement-while-drilling capability to guide and navigate coiled tubing drilling through oil and gas reservoirs, while also providing two-way inductive radio data transmission on the coiled tubing. The system tracks the boundaries of oil and gas reservoirs, and transmits data from borehole to the surface in real time, essentially “seeing” ahead of the drill bit. Stolar completed field tests on the system last summer and is preparing a final report. DOE is funding 56 percent of the roughly $900,000 cost of the project.

Widespread adoption of a low-cost, low-impact new paradigm for oil and gas exploration such as microhole technology would help bolster domestic production, thus creating thousands of jobs, improving America’s energy security, and putting downward pressure on oil and gas prices.