INSTRUCTOR © 2017, John R. Fanchi All rights reserved. No part of this manual may be reproduced in any form without the express written permission of the author. © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

To the Instructor The set of files here are designed to help you prepare lectures for your own course using the text Introduction to Petroleum Engineering, J.R. Fanchi and R.L. Christiansen (Wiley, 2017) File format is kept simple so that you can customize the files with relative ease using your own style. You will need to supplement the files to complete the presentation topics.

DRILLING PRIMER © 2017, John R. Fanchi All rights reserved. No part of this manual may be reproduced in any form without the express written permission of the author. © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Outline History of Drilling Rights and Contracts Homework: IPE Ch. 8

HISTORY OF DRILLING

Evolution of Drilling Rigs Cable Tool 1859 1900 – 1930 Today Rotary Drilling

Cable Tool Rig Bit Derrick Bull Wheel Engine Walking Beam

Rotary Drilling Rig

Basic Drilling Functions Prime Movers Engines Hoisting System Raise and lower pipe (e.g. drillstring, casing, tubing) Derrick, drawworks, blocks and hook Rotating System Rotate drillstring and bit Swivel, kelly, rotary table Circulating System Circulate drilling fluid Pumps, standpipe, return line, solids control equipment Controlling System Control pressure Blowout preventers, choke system

Wellbore

RIGHTS AND CONTRACTS © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

Mineral Rights and Real Estate Transactions Example contract language: Seller’s Negotiating Position “Seller retains mineral rights.” Buyer’s Negotiating Position “Mineral rights to convey to buyer. Copy of any current leases associated with the property to be provided to buyer prior to closing.”

Lease Mineral Rights Owner (lessor) Bonus - $25 to $250/acre Royalty – 1/8th to 3/16th Oil Company (lessee) Right to explore and drill Own the oil and gas Right to produce

Primary and Secondary Terms of Lease Primary Term Exploration period Typically 1 to 5 years Secondary Term Production period

Landman in U.S. Identifies Mineral Rights Owner at County or Parish Courthouse Negotiates Lease

Companies Multinational or International company operates in many countries National or host company owned by central government

International Agreements Central (Federal) government owns mineral rights Exploration and Production contract(s) required Service Contract: fee for specific services Production Contract: contractor takes over existing or underdeveloped field and improves production Concessions (Royalties and Taxes) Production Sharing Agreements (PSA) Joint Operating Agreements

QUESTIONS? © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.

SUPPLEMENT © 2004 John R. Fanchi All rights reserved. Do not copy or distribute.