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DRILLING Page 1 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
CHAPTER 2
2.1 INTRODUCTION.......................................................................................................................... 3
2.1.1 Purpose ................................................................................................................................... 3
2.1.2 Scope ...................................................................................................................................... 3
2.1.3 Overview ................................................................................................................................ 3
2.2 EXPLORATION WELL PLANNING........................................................................................... 6
2.2.1 Introduction ............................................................................................................................ 6
2.2.2 Activity Flow Chart................................................................................................................ 6
2.2.3 Activity Descriptions.............................................................................................................. 8
2.3 DEVELOPMENT WELL PLANNING ....................................................................................... 17
2.3.1 Introduction .......................................................................................................................... 17
2.3.2 Activity Flow Chart.............................................................................................................. 18
2.3.3 Activity Descriptions............................................................................................................ 19
2.4 COMPLETION/WORKOVER PROGRAMME PLANNING.................................................... 30
2.4.1 Introduction .......................................................................................................................... 30
2.4.2 Activity Flow Chart.............................................................................................................. 31
2.4.3 Activity Descriptions............................................................................................................ 32
2.5 BUDGET FORECASTS AND COST CONTROL ..................................................................... 39
2.5.1 Introduction .......................................................................................................................... 39
2.5.2 Activity Flow Chart.............................................................................................................. 39
2.5.3 Activity Descriptions............................................................................................................ 40
2.6 TENDERING AND CONTRACT MANAGEMENT................................................................. 42
2.6.1 Introduction .......................................................................................................................... 42
2.6.2 Activity Flow Chart.............................................................................................................. 44
2.6.3 Activity Descriptions............................................................................................................ 45
2.7 AUTHORISATION FOR EXPENDITURE ................................................................................ 49
2.7.1 Introduction .......................................................................................................................... 49
2.7.2 Activity Flow Chart.............................................................................................................. 49
2.7.3 Activity Descriptions............................................................................................................ 50
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 2 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 3 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
2.1 INTRODUCTION
2.1.1 Purpose
Planning and scheduling are key to the cost effective and safe conduct of drilling activities.
The objectives of the planning process are to ensure that:
• Well planning activities are carried out in accordance with all relevant legislation.
• Wells are planned and designed in accordance with company standards and agreed
Customer goals.
• Well planning is conducted in a timely manner.
• The relevant departments are involved in the decision making process.
• The necessary approvals are obtained.
• Sufficient resources are in place.
This chapter defines tasks and responsibilities for drilling personnel involved in the
planning process to ensure that the above objectives are fulfilled.
2.1.2 Scope
This chapter covers the following planning activities carried out by drilling personnel in
Malaysia:
• Exploration well planning.
• Development well planning.
• Completion/workover programme planning.
2.1.3 Overview
The planning and scheduling activities undertaken by drilling personnel are shown in
Figure 1, Activity Overview. This diagram shows the major steps required to progress from
a potential prospect at the beginning of exploration through to development drilling. The
drilling activities are shown in relation to the activities carried out by other disciplines.
The transitions between the exploration, appraisal, conceptual and development phases,
together with the major decision points and milestones are shown in the diagram. These
points signify major commitments of resources and are the natural points at which
coordination of activities is required. This coordination is also important for the other
activities within the major phases to ensure smooth and successful progression through the
planned process.
The timings shown in the diagram are approximate. Actual planning and scheduling
timings will be agreed between all parties concerned. Drilling personnel engaged in these
activities will have the opportunity to influence the timings by providing relevant input into
the early stages of each phase. Once agreed, all drilling personnel should be aware of the
agreed timing and their responsibilities in achieving the timely completion of each activity.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 4 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
EXPLORATION APPRAISAL CONCEPTUAL DEVELOPMENT
PHASE PHASE PHASE PHASE
Decide
MANUAL
appraisal
prospect? drill well? approval approval approval
ENGINEERING
drilling?
Evaluation &
Seismic & Input to Input to
development KEY
evaluation NOOP NOOP
proposal
Hold/decision point/milestone
Overpressure 3D
prediction seismic
EXPLORATION
Studies.
Feasibility FDP Well Input to
Design Base
study preparation scheduling NOOP
Memorandum.
Mapping Depletion strategy. Formation Procure Finalise
economics Well spacing. evaluation. completion well targets
PETROLEUM
Completion design. materials
ENGINEERING
& project Tubing sizing.
ranking Production forecast. Materials selection.
SPUD SPUD SPUD
Optimisation
Gather Tender Contract Drill Tender Contract Appraisal Contracts & Development
NOOP NOOP Compare options FDP input & NOOP
info for rig rig wildcat for rig rig drilling materials drilling
procedures
DESIGN/
options schedule impact commissioning
CONSTRUCTION
assessment
24 - 48 months 18 - 36 months
Issue 1
DEM 2
July 1996
Page 5 of 62
DEM 2
DRILLING Page 6 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
Exploration well planning applies to wells which are drilled in new structures and to
appraisal wells which are drilled to obtain more information on an initial discovery to
ascertain if the discovery is commercial.
2.2.2 Activity Flow Chart
DEM 2.2
EXPLORATION WELL PLANNING
(Sheet 1)
Activities Petronas GM Customer DDR DT Related Activities
1. Identify Reqirement for
Drilling Input to Planning Start
Process.
2. Nominate Drilling
Representative.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 7 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DEM 2.2
EXPLORATION WELL PLANNING
(Sheet 2)
Activities Petronas GM Customer DDR DT Related Activities
INPUT TO NOOP
19. Prepare Final Well Design. WDM
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 8 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
Drilling input to the planning process is essential in the screening and feasibility stages of
the conceptual phase when drilling expertise is required by Exploration. It is important that
Drilling are involved as early as possible to help Exploration rank and schedule their
prospects.
2.2.3.2 Nominate Drilling Representative
A Senior Drilling Engineer shall be appointed from within the Drilling Department as
drilling representative to be responsible for drilling input to the well planning and design
process.
2.2.3.3 Prepare Basis for Drilling Plan
The Basis for Drilling Plan (BDP) is prepared in order to establish objectives, evaluation
requirements and design criteria based upon the information available from Exploration
(the Customer). The SDE shall prepare the BDP on the BDP form. Refer to:
! DEM, Chapter 2.2.9.1, Basis for Drilling Plan Form.
The BDP should be accompanied by a Well Data Sheet which will provide a
comprehensive record of the well design as it progresses from conceptual to final well
design.
The SDE shall liaise closely with the Customer to review the available information and
ensure that there is sufficient detailed material to enable the BDP to be prepared. The
review shall be an ongoing two-way process to ensure that the necessary data is obtained
for the BDP prior to proceeding with the Conceptual Well Design.
It is essential that the SDE has all the required information and
that the objectives are fully understood and agreed prior to
commencement of the design. Failure to obtain all the required
data or to fully understand the Customer goals and specifications
may result in extensive re-work of the design.
Delays in the well planning activity caused by Customer failure to supply the required data
shall be reported to the Drilling Manager for appropriate action.
Any subsequent changes to a BDP, either by the Customer or Drilling Department, shall be
discussed at the earliest opportunity, documented on the relevant BDP form and approved
by the Customer and Drilling Manager.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 9 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
When completed, the BDP shall be reviewed and endorsed by the Drilling Manager and
approved by the Customer before commencing the Drilling Project Execution Plan and
Schedule. The purpose of this review is to ensure that the customer objectives have all been
addressed, thus ensuring an accurate, cost effective and fit for purpose design.
2.2.3.5 Prepare Drilling Project Execution Plan and Schedule
Within 10 days of approval of the BDP, the SDE shall prepare a Drilling Project Execution
Plan and Schedule. Refer to:
! DEM, Chapter 2.2.9.2, Drilling Project Execution Plan and Schedule Form.
The purpose of this plan is to ensure that all material, equipment, financial and human
resource requirements and availability are addressed.
It is of particular importance that forecast timings for the project are aligned with the
Drilling Sequence and that critical timings are highlighted, especially those for the drilling
rig and the site specific survey. The schedule timings shall be prepared as a formal
submission in the form of a bar chart.
2.2.3.6 Approve Drilling Project Execution Plan and Schedule
On completion, the Drilling Project Execution Plan and Schedule shall be reviewed and
endorsed by the Drilling Manager and approved by the Customer. This approval is the
agreement between Drilling and the Customer on the terms and scope of the project.
2.2.3.7 Create Drilling Team
As the workload increases, the Drilling Manager may assign additional drilling personnel
to form a Drilling Team (DT). The DT shall be responsible for all drilling input to the
exploration well planning and design process.
2.2.3.8 Attend Kick-off Meeting
The DT shall attend a Drilling Team Kick-off Meeting for briefing on the conceptual well
design requirements. The briefing shall be given by the Drilling Manager and the
Customer. The objective is to set the terms of reference for the conceptual design, assign
roles and responsibilities, review the available information and define the scope of work.
2.2.3.9 Review Lessons Learned
The DT shall review the Lessons Learned during the planning and design of previous wells
in order to identify improvements for the current design. In particular, past performance,
both good and bad, and HSE incidents shall be fully analysed and addressed in the current
design. This task is very important as it closes the feedback loop in the management
system. Refer to:
" Lessons Learned.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 10 of 62
ENGINEERING PLANNING AND SCHEDULING
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MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The objective of the conceptual well design is to prepare design options for ranking and
selection of the most economical option as shown in the diagram below.
Drilling Department
Output To
Input From Customer Drilling Representative/ Drilling Team Technical Approval
Customer
QA/QC
Prospect
Environmental
Historical Input
Conditions
Customer
Information
Technical New
Geological Constraints Technology
Requirements
Available
Options Ensure
Compile All
and Technical
Petroleum Infrastructure Competitors Options
Cost Feasibility
Engineering
Estimates
Requirements
Cost Analysis
Timing In-house and
Implications Capability Timing Impact
Request for
Information
GM Approval
Duration of Most
Risk Economic
(Production
Management Option
Sharing)
For each of the options identified, the DT shall prepare a cost estimate to facilitate
economic screening using up-to-date cost information. All assumptions used in the
preparation of the estimate shall be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 11 of 62
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The conceptual well design options and cost estimates shall be presented to the Drilling
Manager and the Customer for endorsement, and to the General Manager for selection and
approval of the most economic option.
The presentation shall be based on the following outline:
• Introduction stating well name, planned spud date, location, objectives,
appraisal/development plans, formation evaluation requirements, production testing
and suspension plans.
• Geological prognosis and expected fluid composition, highlighting any incomplete
data.
• Site specific surveys made and results obtained, previous experience in the area,
water depth, potential site hazards and justification for rig choice.
• Outline of well trajectory and targets for deviated wells, justification for reasons for
target selection and target sizes.
• Schematic showing geological column, shallow gas, top hydrocarbon, over pressure
zones and top of primary and secondary objectives.
• Stick chart showing reference wells.
• Problems encountered in reference wells and outline of proposed solutions.
• Proposed casing design, with reference to estimated formation strength and pore
pressure, explaining and justifying:
♦ Shallow gas precautions.
♦ Setting depth and number of casing strings required considering top hydrocarbons,
gas to surface pressures, kick tolerances, over pressure zones, trouble zones, and
well profile.
♦ Selected casing sizes considering minimum cost, BOP and casing standard ratings
and sizes, and required size to cater for test and completion string.
♦ Selected casing weights, grades and connections with reference to design factors.
♦ Contingencies for potential drilling problems and scope for changes (for example
deepening the well).
♦ Formation evaluation, well testing and abandonment considerations.
• Options discarded and the underlying justifications.
• Deviations from Company standards requiring Drilling Manager’s approval.
• Areas requiring further studies and optimisation.
• Any outstanding areas of concern (for example, timing, availability of rig, service
contracts, tool and materials).
• Estimate for well duration and cost.
• Request for approval to proceed with the proposed well design.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 12 of 62
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MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The DT shall review the Drilling Sequence and the Master Integrated Sequence (MIS) in
conjunction with CPL. The objective is to establish the availability of a suitable period for
drilling with a rig that is already on contract. If a space is not available in the sequence, the
economics of drilling with an alternative rig should be considered.
The availability of a suitable drilling rig, whether one is already on contract or not, is one
of the most problematic concerns in planning drilling activities. Rig availability and the
effect on timing and economics can have a major impact on the success of any particular
well. Therefore, this stage of the planning process is one of the most difficult and one of
the most important that the Drilling Team will encounter.
2.2.3.14 Initiate Tendering for Long Lead Items
The DT shall establish if any long lead items are required, such as a drilling rig and special
casing. If there is a requirement, the DT shall initiate the tendering process immediately
after the conceptual design has been approved. The purpose is to ensure the availability of
long lead items, to avoid delays and to avoid having to pay premium prices to ensure
availability. Refer to:
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.2.3.15 Site Specific Survey
The DT shall arrange for a site specific survey to be carried out in accordance with:
" Site Specific Survey Requirements for Drilling Locations.
The site specific survey is arranged in order to assess the suitability of a particular site to
accommodate a specific type of drilling rig. The survey ensures that the selected location
meets the safety requirements for a drilling rig to approach, take up position and carry out
drilling operations at the location.
2.2.3.16 Prepare Hazard Assessment and Environmental Impact Assessment
The DT shall prepare a hazard assessment using the Well Design Hazard Assessment form
as a guide. This should take the from of a brainstorming session where various scenarios
are tabled and the results and controls discussed. This will ensure that all risks are
acceptable and controls are built into the design. Refer to:
! DEM, Chapter 2.2.9.3, Well Design Hazard Assessment Form.
The DT shall prepare input to an Environmental Impact Assessment (EIA). The EIA is
written to assess the environmental impact to the air, water and soil caused by the activities
in each phase of a field development. The main concerns in a drilling project are the type of
mud, disposal of mud and the disposal of cuttings. The EIA shall be prepared in accordance
with:
" The Handbook of EIA Guidelines (Malaysian Department of the Environment).
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 13 of 62
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The Hazard Assessment and EIA shall be reviewed and endorsed by the Drilling Manager,
and approved by the Customer. This endorsement signifies management acceptance that
risks have been identified and addressed. Further action required as a result of the
assessments shall be documented in order to ensure proper tracking and close out.
2.2.3.18 Prepare Site-specific HSE Documents
The final well design includes detailed casing design and optimisation of bit and hydraulics
programmes, and mud and cement formulations. Formation evaluation requirements,
specific procedures and completion diagrams are also specified. The purpose of this task is
to translate the conceptual design into a set of instructions to enable the operations
personnel to construct the well.
The DT shall prepare a Final Well Design in accordance with:
" Well Design Manual.
For additional guidance on well design requirements refer to:
! DEM, Chapter 2.2.3.3.14, Prepare Detailed Well Designs.
2.2.3.20 Prepare Final Well Design Cost Estimate
A minimum of two months before spud, the DT shall prepare a cost estimate for each well
to facilitate economic screening using up-to-date cost information. All assumptions used in
the preparation of the estimates shall be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
2.2.3.21 Approve Final Well Design
On satisfactory completion, the DT shall obtain endorsement of the final well designs and
the cost estimates from the Drilling Manager and approval from the Customer.
The DT shall modify the Final Well Design and the cost estimate as required until approval
is given by all signatories.
2.2.3.22 Prepare Authorisation for Expenditure
The DT shall prepare the Authorisation for Expenditure (AFE) in accordance with:
! DEM, Chapter 2,2.7, Authorisation for Expenditure.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The DT shall submit the AFE to the Drilling Manager and Customer for endorsement, and
to the General Manger for approval. All endorsements and approvals shall comply with:
" Limits of Authority.
2.2.3.24 Initiate Tendering for Remaining Items
Immediately the Final Well Design is finalised, the DT shall initiate the contract tendering
process for all outstanding services, equipment and materials in accordance with:
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.2.3.25 Check Drilling Sequence and Master Integrated Sequence
The DT shall check the Drilling Sequence and the Master Integrated Sequence to ensure
that there is no conflict between the timing of drilling activities and other scheduled
activities.
" Drilling Sequence.
" Master Integrated Sequence.
2.2.3.26 Prepare Notice of Operation
A minimum of one month before spud, the DT shall prepare the Notice of Operation
(NOOP) in accordance with:
! DEM, Chapter 2.2.8, Notice of Operation.
2.2.3.27 Approve Notice of Operation
The DT shall submit the NOOP to the Customer and the General Manager for endorsement
and to Petronas for approval. Endorsements shall comply with:
" Limits of Authority.
2.2.3.28 Prepare Drilling Optimisation Plan
In the final lead up to spud, the DT shall prepare a Drilling Optimisation Plan in full
consultation with the suppliers and contractors to ensure that logistics and other critical
aspects of the operation are fine tuned. The purpose of this is to ensure that the following
are fully addressed prior to the pre-spud meeting:
• Definition of team and contractor members.
• Procedures and techniques specific to the operation.
• Specific concerns and critical success factors.
• Carigali/Contractor interfaces.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 15 of 62
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
The DT shall monitor the availability of the drilling rig and make a final check to ensure
that all services, equipment and materials are available or alternatives have been resourced.
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.2.3.30 Hold Rig Move Meeting
A rig move meeting shall be held a minimum of one month prior to each rig move. The
purpose of the meeting is to address the following issues and ensure that the necessary
preparations are in hand:
• HSE.
• Logistics.
• Marine operations.
• Mobilisation of equipment and materials.
The meeting shall be attended by representatives of:
• The Customer.
• The Drilling Team.
• The drilling contractor and service contractors.
• Marine/supply coordinator.
• The XGT, logistics and HSE departments.
The following topics shall be reviewed and discussed at the meeting:
• Requirements for tugs, anchor handling vessels, positioning vessels.
• Anchor pattern.
• Loading of casing and bulk materials.
• Approach and anchoring procedure prepared by the drilling contractor.
• Special positioning navigation equipment requirements proposed by XGT
department.
• Special equipment requirements (piggy backs, etc).
• Timing and coordination of resources.
• Customs and immigration requirements (if any).
• Communications equipment.
For a new rig the following shall also be discussed:
• Compliance with HSE requirements based on the rig inspection action points.
• Inventory and stocktaking.
• Contractual matters outstanding.
• Familiarisation with Carigali rig move requirements.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 17 of 62
ENGINEERING PLANNING AND SCHEDULING
Issue 1
MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
Green field developments are new fields which have been declared as commercial
propositions following exploration and appraisal. The main features of a green filed
development
At the beginning of each green field development a multi-disciplinary Project Team is
established under the leadership of a Project Manager. The Project Team exists within the
Development Division with the Project Manager reporting to the General Manager. The
Project Team includes representatives from all relevant technical disciplines who are
appointed by their respective departmental managers.
In the early stages of the conceptual phase, drilling input is provided by a Senior Drilling
Engineer appointed as Drilling Representative to the Project Team. As the workload
increases, a Drilling Team is created by the Drilling Manager. The drilling team is led by
the Drilling Team Leader (DTL) who reports to the Project Manager. Within the Project
Team, the Drilling Team works in close liaison with the petroleum engineering
representatives on well planning and with the design and construction representatives on
facilities.
Although the Drilling Team members are primarily responsible to the Project Team, the
Drilling Department provides supporting services and has a QA/QC role through reviews
and audits.
The objectives of the Project Team, and hence the Drilling Team, are to optimise data
gathering and interpretation, apply the correct technology with balanced risk management
to minimise technical unit cost and well intervention, while maximising potential well
productivity. This will assist in the objective of planning and designing wells that meet
Customer requirements, to provide maximum hydrocarbon recovery for the lowest possible
cost for the well’s life cycle, while ensuring technical feasibility with due consideration on
technical risks, without compromising health, safety and the environment.
Brown Field Developments
A brown field development is an upgrade of an existing field which is carried out under the
control of the Asset Manager. The schedule of events is similar to that for a green field
development, although the amount and type of work will depend on the upgrade
requirements. In some cases there may be no drilling input to the upgrade. Where a drilling
input is required, a similar team will be formed to that for a green field development and
the planning requirements will be similar.
Typical requirements for brown field upgrades are infill drilling, sidetracking,
recompletion, well repair, additional perforations, stimulation, acidizing and abandonment.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DEM 2.3
DEVELOPMENT WELL PLANNING
(Sheet 1)
Activities Petronas GM Customer DDR DT Related Activities
/Project
1. Identify Requirement for
Drilling Input to Planning Start
Process.
2. Nominate Drilling
Representative.
Sequence.
18. Initiate Tendering for Long
DEM 2.6
Lead Items.
19. Prepare Hazard Assessment
and Environmental Impact
Assessment.
No
20. Approve Hazard Assessment
and Environmental Impact
Assessment.
21. Prepare Site-specific HSE
Documents.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
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PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
DEM 2.3
DEVELOPMENT WELL PLANNING
(Sheet 2)
Customer
Activities Petronas GM /Project DDR DT Related Activities
INPUT TO NOOP
25. Prepare Authorisation for
DEM 2.7
Expenditure.
No
26. Approve Authorisation for
Expenditure.
Drilling input to the planning process is essential in the conceptual phase when drilling
expertise is required by the Customer.
It is important that Drilling are involved as early as possible in any field planning process
to ensure that the development options and reservoir drainage points take advantage of the
most efficient methods of drilling.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
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ENGINEERING PLANNING AND SCHEDULING
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MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
A Senior Drilling Engineer shall be appointed from within the Drilling Department as
drilling representative to be responsible for drilling input to the conceptual well planning
and design process.
2.3.3.3 Prepare Basis for Drilling Plan
The purpose of the Basis for Drilling Plan (BDP) is to establish objectives, evaluation
requirements and design criteria based upon the information available from the Customer.
The SDE shall prepare the BDP on the BDP form. Refer to:
! DEM, Chapter 2.2.9.1, Basis for Drilling Plan Form.
The BDP should be accompanied by a Well Data Sheet for each well. Well Data Sheets
provide a comprehensive record of the well design as it progresses from conceptual,
through detailed design to final well design.
The SDE shall liaise closely with the Customer to review the available information and
ensure that there is sufficient detailed material to enable the BDP to be prepared. The
review shall be an ongoing two-way process to ensure that the necessary data is obtained
for the BDP prior to proceeding with the Conceptual Well Design.
Delays in the well planning activity caused by Customer failure to supply the required data
shall be reported to the Drilling Manager for appropriate action.
Any subsequent changes to a BDP, either by the Customer or Drilling Department, shall be
discussed at the earliest opportunity, documented on the relevant BDP form and approved
by the Customer and Drilling Manager.
2.3.3.4 Approve Basis for Drilling Plan
When completed, the BDP shall be reviewed and endorsed by the Drilling Manager and
approved by the Customer before commencing the Drilling Project Execution Plan and
Schedule. The purpose of this review is to ensure that the customer objectives have all been
addressed, thus ensuring an accurate, cost effective and fit for purpose design.
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
DEM 2
DRILLING Page 21 of 62
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MANUAL
PROPRIETARY INFORMATION - For Authorised Company Use Only July 1996
Within 10 days of approval of the BDP, the SDE shall prepare a Drilling Project Execution
Plan and Schedule. Refer to:
! DEM, Chapter 2.2.9.2, Drilling Project Execution Plan and Schedule Form.
The purpose of this plan is to ensure that all material, equipment, financial and human
resource requirements and availability are addressed and that critical timings are
highlighted. The schedule timings shall be a formal submission in the form of a bar chart
based on the timings shown in the following diagram:
CONCEPTUAL PHASE DEVELOPMENT PHASE
SPUD
WELL
N
Feasibility.
Contracts and materials. O
Evaluate options. FDP preparation. Development drilling
NOOP preparation. O
Project economics.
P
Basis for Well Design. Detailed Hazard assessment .
Drilling Project Execution Plan. Well Design. SIPROD.
Conceptual Well Design. Environmental Impact
Assessment.
On completion, the Drilling Project Execution Plan and Schedule shall be reviewed and
endorsed by the Drilling Manager and approved by the Customer. This approval is the
agreement between Drilling and the Customer on the terms and scope of the project.
2.3.3.7 Create Drilling Team
As the workload increases on the conceptual phase, the Drilling Manager shall assign
additional drilling personnel to form a Drilling Team (DT). The DT shall be responsible for
all drilling input to the development well planning and design process.
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The DT shall attend a Drilling Team Kick-off Meeting for briefing on the conceptual
design requirements. The briefing shall be given by the Drilling Manager and the Project
Manager. The objective is to set the terms of reference for the conceptual design, assign
roles and responsibilities, review the available information and define the scope of work.
2.3.3.9 Review Lessons Learned
The DT shall review the Lessons Learned during the planning and design of previous wells
in order to identify improvements for the current design. In particular, past performance
and HSE incidents shall be fully analysed and addressed in the current design. This task is
very important as it closes the feedback loop in the management system. Refer to:
" Lessons Learned.
2.3.3.10 Prepare Conceptual Well Design Options
The objective of the conceptual well design is to prepare design options for ranking and
selection of the most economical option. This process is illustrated in:
! DEM, Chapter 2.2.3.10, Figure 4, Conceptual Design Overview.
The conceptual well design options are prepared by a multi-disciplinary team which
includes representatives from drilling, petroleum engineering, design, construction and
operations. During the ranking process the conceptual well designs are considered along
with other aspects of the field concept such as the number of platforms and the type of
facilities.
The conceptual well design options shall be prepared by the DT in accordance with:
" Well Design Manual.
2.3.3.11 Prepare Conceptual Well Design Cost Estimates
For each of the options identified, the DT shall prepare a cost estimate to facilitate
economic screening using up-to-date cost information. All assumptions used in the
preparation of the estimate shall be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
2.3.3.12 Select and Approve Most Economic Option
The conceptual well design options and cost estimates shall be presented to the Drilling
Manager and the Customer for endorsement, and to the General Manager for selection and
approval of the most economic option. The selected option becomes part of the Design
Base Memorandum which forms the basis for field development planning. For details of
the presentation requirements refer to:
! DEM, Chapter 2.2.3.12.
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DEM 2
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The DT shall arrange for a site specific survey to be carried out in accordance with:
" Site Specific Survey Requirements for Drilling Locations.
The site specific survey is arranged in order to assess the suitability of a particular site to
accommodate a specific type of drilling rig. The survey ensures that the selected location
meets the safety requirements for a drilling rig to approach, take up position and carry out
drilling operations at the location.
2.3.3.14 Prepare Detailed Well Designs
The detailed well design (DWD) consolidates the results of the optimisation studies of the
multi-disciplinary team and the development strategy decided in the conceptual design
phase. The DWD is prepared as part of the Field Development Plan (FDP) for Company
and Government approval. The casing scheme and rig type chosen are specified in the
DWD for tendering of rig and service contracts.
The first objective of the detailed well design is to complete the casing design so that the
tendering process for long lead items can be commenced. In the event that lead times for
contracting rig and procuring materials are critical, early approval for detailed well design,
prior to FDP approval, may be necessary.
When notification is received to proceed with the FDP, the DT prepares a DWD for each
well in accordance with:
" Well Design Manual.
In the preparation of the DWD, the DT shall pay particular attention to the following:
• Ensure potential problems and contingencies are addressed.
• All HSE issues have been addressed.
• Customer objectives detailed in the BDP are met.
• The DWD conforms to all relevant standards and policies.
• Design integrity is incorporated.
• The well design is fit-for-purpose and cost effective.
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During the course of the detailed well design the points outlined below shall be taken into
account at all stages. These points shall also be reviewed at the mid-point of the design
process and immediately prior to submission for approval.
• Summarise progress of project, highlighting milestones achieved in the Project
Team, forward planning and timing. Review project schedule including hold points
and milestones.
• Highlight areas of concern, outstanding studies, pending decisions, potential for
scope change, project timing.
• Requirement for early approvals for tendering contracts and procuring materials.
• Comparison of well design options chosen and discarded.
• Prepare basis for minimum cost well (the cheapest possible well design assuming the
slimmest design and minimal scope perceived by drilling). This can be used to
demonstrate to the Customer the cheapest option and the additional cost of their
requested scope.
• Justification for the proposed well design option stating technical, economic and
Company resource factors.
• Highlight potential for improvement applying relevant technology and procedures.
Check that input from contractors and suppliers has been incorporated. Check if
studies, research or development are required to implement new technology.
• Specify the amount of standardisation achieved on hole sizes, casing and completion
items.
• Quantify assessment of risks for shallow gas, highest hydrocarbon, overpressure,
omitting intermediate casing strings, formation stability and amount of contingency
envisaged. Compare risks with anticipated cost savings.
• Ensure Customer requirements and scope are being met, including reservoir
management, ultimate recovery and formation evaluation, in order to reduce
operational risks and costs.
• Identify and assess viable techniques to ensure expected quality can be assured in
areas where success is critical. For example, landing well in target area, minimisation
of formation damage, production of good quality logs, achievement of zonal
isolation, and pressure integrity of completion. Ensure that the well and completion
design optimise intervention costs and risks of early workovers. Ensure that the
design and material selection match the anticipated well life.
• Outline the procurement strategies including the scope for partnering, quality and
performance incentives. Ensure that the contractors are invited to contribute to the
design, performance optimisation, execution plan and procedures. Ensure that time is
available for tendering for services and that the required rig will be available. Check
the rig rate, deadlines for awarding rig contract and procurement of long lead items.
• Ensure that there are adequate plans for simultaneous operations and that conflict
with construction activities is minimised.
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The DT shall prepare a cost estimate for each well to facilitate economic screening using
up-to-date cost information. All assumptions used in the preparation of the estimates shall
be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
2.3.3.16 Approve Detailed Well Designs
The DT shall submit the detailed well design and cost estimate to the Drilling Manager and
Customer for endorsement, and to the General Manager for approval. All endorsements
and approvals shall comply with:
" Limits of Authority.
2.3.3.17 Input to Drilling Sequence and Master Integrated Sequence
The DT shall review the Drilling Sequence and the Master Integrated Sequence (MIS) in
conjunction with CPL. The objective is to establish the availability of a suitable period for
drilling with a rig that is already on contract. If a space is not available in the sequence, the
economics of drilling with an alternative rig should be considered.
The availability of a suitable drilling rig, whether one is already on contract or not, is one
of the most problematic concerns in planning drilling activities. Rig availability and the
effect on timing and economics can mean the difference between success and failure for
any particular well. Therefore, this stage of the planning process is one of the most difficult
and one of the most important that the Drilling Team will encounter.
2.3.3.18 Initiate Tendering for Long Lead Items
Immediately the detailed well design is approved, the DT shall initiate the tendering
process for casing, for other long lead items and, if necessary, for the drilling rig. If a
drilling rig is to be contracted at this stage, the specifications for it shall be fit for purpose.
The objective of early tendering is to ensure the availability of casing and other long lead
items, to avoid delays and having to pay premium prices at a later date to ensure
availability. Refer to:
! DEM, Chapter 2.2.6, Tendering and Contract Management.
Note: Material selection and delivery time are greatly increased if there is a corrosive
condition to be considered.
2.3.3.19 Prepare Hazard Assessment and Environmental Impact Assessment
The DT shall prepare a hazard assessment using the Well Design Hazard Assessment form
as a guide. This should take the from of a brainstorming session where various scenarios
are tabled and the results and controls discussed. This will ensure that all risks are
acceptable and controls are built into the design. Refer to:
! DEM, Chapter 2.2.9.3, Well Design Hazard Assessment Form.
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The DT shall prepare input to an Environmental Impact Assessment (EIA). The EIA is
written to assess the environmental impact to the air, water and soil caused by the activities
in each phase of a field development. The main concerns in a drilling project are the type of
mud, the disposal of mud and the disposal of cuttings. The EIA shall be prepared in
accordance with:
" The Handbook of EIA Guidelines (Malaysian Department of the Environment).
2.3.3.20 Approve Hazard Assessment and Environmental Impact Assessment
The Hazard Assessment and EIA shall be reviewed and endorsed by the Drilling Manager,
and approved by the Project Manager. This endorsement signifies management acceptance
that risks have been identified and addressed. Further action required as a result of the
assessments shall be documented in order to ensure proper tracking and close out.
2.3.3.21 Prepare Site-specific HSE Documents
The final well design optimises well trajectories, bit and hydraulics programmes, and mud
and cement formulations. Formation evaluation requirements, specific procedures and
completion diagrams are also specified. At this stage the casing design will only require
fine tuning. The purpose of this task is to translate the detailed design into a set of
instructions to enable the operations personnel to construct each individual well on the
development. At this time consideration may also be given to preparing a specific field
operations manual.
The DT shall prepare a Final Well Design for each well in accordance with:
" Well Design Manual.
2.3.3.23 Prepare Final Well Design Cost Estimates
A minimum of two months before spud, the DT shall prepare a cost estimate for each well
to facilitate economic screening using up-to-date cost information. All assumptions used in
the preparation of the estimates shall be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
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DEM 2
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On satisfactory completion, the DT shall obtain endorsement of the final well designs and
the cost estimates from the Drilling Manager and approval from the Project Manager.
The DT shall modify the Final Well Design and the cost estimate as required until approval
is given by all signatories.
2.3.3.25 Prepare Authorisation for Expenditure
The DT shall prepare the Authorisation for Expenditure (AFE) in accordance with:
! DEM, Chapter 2,2.7, Authorisation for Expenditure.
2.3.3.26 Approve Authorisation for Expenditure
The DT shall submit the AFE to the Drilling Manager and the Project Manager for
endorsement, and to the General Manger for approval. All endorsements and approvals
shall comply with:
" Limits of Authority.
2.3.3.27 Initiate Tendering for Remaining Items
Immediately the Final Well Design is finalised, the DT shall initiate the contract tendering
process for all outstanding services, equipment and materials in accordance with:
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.3.3.28 Check Drilling Sequence and Master Integrated Sequence
The DT shall check the Drilling Sequence and the Master Integrated Sequence to ensure
that there is no conflict between the timing of drilling activities and other scheduled
activities.
" Drilling Sequence.
" Master Integrated Sequence.
2.3.3.29 Prepare Notice of Operation
A minimum of one month before spud, the DT shall prepare the Notice of Operation
(NOOP) in accordance with:
! DEM, Chapter 2.2.8, Notice of Operation.
2.3.3.30 Approve Notice of Operation
The DT shall submit the NOOP to the Project Manager and the General Manager for
endorsement and to Petronas for approval. Endorsements shall comply with:
" Limits of Authority.
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In the final lead up to spud, the DT shall prepare a Drilling Optimisation Plan in full
consultation with the suppliers and contractors. The purpose of this is to ensure that all
Carigali/Contractor interfaces are fully addressed prior to the pre-spud meeting and that
logistics and other critical aspects of the operation are fine tuned.
2.3.3.32 Check Delivery of Rig, Services, Equipment and Materials
The DT shall monitor the availability of the drilling rig and make a final check to ensure
that all services, equipment and materials are available or that alternatives have been
resourced.
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.3.3.33 Hold Rig Move Meeting
A rig move meeting shall be held a minimum of one month prior to each rig move. The
purpose of the meeting is to address the following issues and ensure that the necessary
preparations are in hand:
• HSE.
• Logistics.
• Marine operations.
• Mobilisation of equipment and materials.
The meeting shall be attended by representatives of:
• The Customer.
• The drilling team.
• The drilling contractor.
• Service contractors.
• Marine/supply coordinator.
• The production, XGT, logistics and HSE departments.
The following topics shall be reviewed and discussed at the meeting:
• Requirements for tugs, anchor handling vessels, positioning vessels.
• Anchor pattern.
• Loading of casing and bulk materials.
• Approach and anchoring procedure prepared by the drilling contractor.
• Special positioning navigation equipment requirements proposed by XGT
department.
• Special equipment requirements (piggy backs, etc).
• Timing and coordination of resources.
• SIPROD requirements.
• Customs and immigration requirements (if any).
• Communications equipment.
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DRILLING DEPARTMENT
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DEM 2
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Drilling input to the planning process is required in the early stages of the conceptual phase
when drilling expertise is required by Petroleum Engineering (the Customer).
2.4.3.2 Create Drilling Team
The Drilling Manager shall assign drilling personnel to a Drilling Team (DT) which shall
be responsible for all drilling input to the completion/workover programme design process.
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The DT shall review the Lessons Learned during the planning and design of previous
completion/workover programmes in order to identify improvements for the current design.
In particular, all HSE incidents shall be fully analysed and addressed in the current design.
This task is very important as it closes the feedback loop in the management system. Refer
to:
" Lessons Learned.
2.4.3.5 Prepare Basis for Completion/Workover Programme
It is essential that the Drilling Team has all the required information and that the
objectives are fully understood and agreed prior to commencement of the design.
Failure to obtain all the required data or to fully understand the Customer goals
and specifications may result in extensive re-work of the design.
Delays in the programme design activity caused by Customer failure to supply the required
data shall be reported to the Drilling Manager for appropriate action.
Any subsequent changes to a BCWP, either by the Customer or Drilling Department, shall
be discussed at the earliest opportunity, documented on the relevant BCWP form and
approved by the Customer and Drilling Manager.
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When completed, the BCWP shall be reviewed and endorsed by the Drilling Manager and
approved by the Customer before commencing the Drilling Project Execution Plan and
Schedule. The purpose of this review is to ensure that the customer objectives have all been
addressed, thus ensuring an accurate, cost effective and fit for purpose design.
2.4.3.7 Site Specific Survey
The DT shall arrange for a site specific survey to be carried out in accordance with:
" Site Specific Survey Requirements for Drilling Locations.
The site specific survey is arranged in order to assess the suitability of a particular site to
accommodate a specific type of drilling rig or tender. The survey ensures that the selected
location meets the safety requirements for the rig or tender to approach, take up position
and carry out drilling operations at the location.
2.4.3.8 Prepare Drilling Project Execution Plan and Schedule
Within 10 days of approval of the BCWP, the DT shall prepare a Drilling Project
Execution Plan and Schedule. Refer to:
! DEM, Chapter 2.2.9.2, Drilling Project Execution Plan and Schedule Form.
The purpose of this plan is to ensure that all material, equipment, financial and human
resource requirements and availability are addressed and that critical timings are
highlighted. The schedule timings shall be a formal submission in the form of a bar chart.
2.4.3.9 Approve Drilling Project Execution Plan and Schedule
On completion, the Drilling Project Execution Plan and Schedule shall be reviewed and
endorsed by the Drilling Manager and approved by the Customer. This approval is the
agreement between Drilling and the Customer on the terms and scope of the project.
2.4.3.10 Prepare Detailed Completion/Workover Programme Design
The detailed programme design is prepared for Company and Government approval and
the design details are specified in the tendering and contracting process. The Detailed
Completion/Workover Programme Design is prepared by the DT and the Customer. In the
preparation of the detailed programme, the DT and the Customer shall pay particular
attention to the following:
• Ensure potential problems and contingencies are addressed.
• All HSE issues have been addressed.
• Customer objectives detailed in the BCWP are met.
• The programme design conforms to all relevant standards and policies.
• Design integrity is incorporated.
• The programme design is fit-for-purpose and cost effective.
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The following options and considerations shall be addressed during the programme design:
• Add on slots.
• Add on structures.
• Extended reach wells.
• Subsea wells tired back to platform.
• Multi lateral wells.
• Recompletions.
• Conventional sidetracks.
2.4.3.11 Prepare Detailed Completion/Workover Programme Design Cost Estimate
The DT and the Customer shall prepare a cost estimate to facilitate economic screening
using up-to-date cost information. All assumptions used in the preparation of the estimate
shall be documented. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
2.4.3.12 Approve Detailed Completion/Workover Programme Design
The DT and the Customer shall submit the detailed completion/workover programme
design and cost estimate to the Drilling Manager for endorsement, and to the General
Manager for approval. All endorsements and approvals shall comply with:
" Limits of Authority.
2.4.3.13 Prepare Hazard Assessment and Environmental Impact Assessment
The DT shall prepare a hazard assessment using the Well Design Hazard Assessment form
as a guide. This should take the from of a brainstorming session where various scenarios
are tabled and the results and controls discussed. This will ensure that all risks are
acceptable and controls are built into the design. Refer to:
! DEM, Chapter 2.2.9.3, Well Design Hazard Assessment Form.
The DT shall prepare input to an Environmental Impact Assessment (EIA). The EIA is
written to assess the environmental impact to the air, water and soil caused by the planned
activities. The main concerns in a drilling project are the type of mud, disposal of mud and
the disposal of cuttings. The EIA shall be prepared in accordance with:
" The Handbook of EIA Guidelines (Malaysian Department of the Environment).
2.4.3.14 Approve Hazard Assessment and Environmental Impact Assessment
The Hazard Assessment and EIA shall be reviewed and endorsed by the Drilling Manager,
and approved by the Customer. This endorsement signifies management acceptance that
risks have been identified and addressed. Further action required as a result of the
assessments shall be documented in order to ensure proper tracking and close out.
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DEM 2
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The DT shall prepare the Authorisation for Expenditure (AFE) in accordance with:
! DEM, Chapter 2,2.7, Authorisation for Expenditure.
2.4.3.17 Approve Authorisation for Expenditure
The DT shall submit the AFE to the Drilling Manager and the Customer for endorsement,
and to the General Manger for approval. All endorsements and approvals shall comply
with:
" Limits of Authority.
2.4.3.18 Initiate Tendering for Rig, Services, Equipment and Materials
The DT shall check the Drilling Sequence and the Master Integrated Sequence to ensure
that there is no conflict between the completion/workover programme and other scheduled
activities.
" Drilling Sequence.
" Master Integrated Sequence.
2.4.3.20 Prepare Notice of Operation
A minimum of one month before operations are due to commence, the DT shall prepare the
Notice of Operation (NOOP) in accordance with:
! DEM, Chapter 2.2.8, Notice of Operation.
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The DT shall submit the NOOP to the Customer and the General Manager for endorsement
and to Petronas for approval. Endorsements shall comply with:
" Limits of Authority.
2.4.3.22 Prepare Drilling Optimisation Plan
In the final lead up to operations, the DT shall prepare a Drilling Optimisation Plan in full
consultation with the suppliers and contractors. The purpose of this is to ensure that all
Carigali/Contractor interfaces are fully addressed prior to the pre-operations meeting and
that logistics and other critical aspects of the operation are fine tuned.
2.4.3.23 Check Delivery of Rig, Services, Equipment and Materials
The DT shall monitor the availability of the drilling rig and make a final check to ensure
that all services, equipment and materials are available or that alternatives have been
resourced.
! DEM, Chapter 2.2.6, Tendering and Contract Management.
2.4.3.24 Hold Rig Move Meeting
A rig move meeting shall be held a minimum of one month prior to each rig move. The
purpose of the meeting is to address HSE issues and ensure that the necessary preparations
are in hand. The meeting shall be attended by representatives of:
• The Customer.
• The drilling team.
• The drilling contractor.
• The boat company.
• The production, construction, XGT, logistics and HSE departments.
The meeting shall discuss the following:
• Platform status and any shutdown requirements.
• Approach and anchoring procedure prepared by the drilling contractor.
• Special positioning navigation equipment requirements proposed by XGT
department.
• Special equipment requirements (piggy backs, etc).
• Timing and coordination of resources.
For a new rig the following shall also be discussed:
• Compliance with HSE requirements based on the audit action points.
• Inventory and stocktaking.
• Contractual matters outstanding.
• Familiarisation with Carigali rig move requirements.
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DRILLING DEPARTMENT
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This procedure defines the tasks and responsibilities necessary for drilling personnel to
prepare drilling cost estimates for various requirements and levels of accuracy.
Drilling cost estimates are required to justify funding of activities and as a means of
establishing a basis for cost control during the various planning processes.
The following procedure shall be applied to ensure consistency of drilling cost estimates
between planning processes and to ensure the necessary level of accuracy required for
drilling planning. All drilling cost estimates shall comply with:
" Limits of Authority.
2.5.2 Activity Flow Chart
BUDGET FORECASTS
DEM 2.5
AND COST CONTROL
Activities Customer DT Related Activities
1. Initiate Requirement for Drilling Cost DEM 2.2
Start DEM 2.3
Estimate. DEM 2.4
Figure 10, Budget Forecasts and Cost Control Activity Flow Chart
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For each planning process, a drilling cost estimate shall be prepared by the DT at the stages
indicated in the following table:
The DT shall establish the accuracy requirement for the drilling cost estimate as follows:
Application Accuracy
Preparation and selection of conceptual design options. (35%)
Preparation of detailed well design. (20%)
Preparation of Authorisation for Expenditure. (10%)
Table 2, Drilling Cost Estimate Accuracy Requirements
2.5.3.3 Prepare Basis for Drilling Cost Estimate
The DT shall prepare a basis for drilling cost estimate using the following form:
! DEM, Chapter 2.2.9.5, Basis for Drilling Cost Estimate.
2.5.3.4 Review and Approve Basis for Drilling Cost Estimate
The Customer shall review the basis for drilling cost estimate and approve it when satisfied
that the scope and accuracy are adequately covered. If these requirements are not met, the
DT shall rework the cost estimate until it is acceptable for approval.
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The DT shall prepare a drilling cost estimate using the following form:
! DEM, Chapter 2.2.9.6, Drilling Cost Estimate.
Where appropriate, the DT shall include an itemised listing under each main heading
shown in the drilling cost estimate summary. Refer to:
! DEM, Chapter 2.2.9.7, Drilling Cost Estimate Summary Form.
The cost estimate shall be based on a combination of the following:
• Current day rate tariff or tariff projections.
• Actual cost of hardware (casing, completions, etc).
• Historical costs for mud, bits, cement, services, etc.
When using historical costs, care must be taken that the wells from which the costs are
taken are recent (ie, less than five years old) and are similar to the well being considered,
particularly with regard to:
• Casing schematic.
• Rig type.
• Mud type.
• Pressure profile.
• Depths.
Estimated costs shall be allocated entirely to one of the following categories or shared
between them as appropriate:
• Dry hole basis.
• Formation evaluation.
• Production testing.
2.5.3.6 Prepare Drilling Cost Estimate Summary
The DT shall prepare a drilling cost estimate summary based on the detailed estimate using
the following form:
! DEM, Chapter 2.2.9.7, Drilling Cost Estimate Summary Form.
2.5.3.7 Review and Endorse Drilling Cost Estimate Summary
The Customer shall review the drilling cost estimate summary and endorse it when
satisfied that all requirements have been met.
2.5.3.8 Apply the Drilling Cost Estimate to Appropriate Planning Process
On completion, the drilling cost estimate is applied to the appropriate planning process.
DRILLING DEPARTMENT
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Drilling contracts are required for the provision of rigs, services, equipment and materials.
This procedure defines the tasks and responsibilities necessary for drilling personnel
participating in the tendering and contracting process which is owned by Commercial
Procurement Department (exploration wells) and Development Procurement Department
(development wells and completions/workovers).
The objectives of tendering and contracting are to control costs, ensure cost effectiveness,
and reduce business and commercial risks by ensuring that comprehensive terms,
conditions and schedules are specified and agreed.
This procedure shall be applied to ensure that the tendering and contracting processes
conform to Carigali policies and standards and that the following business practices are
applied at all times:
• Impartiality.
• Confidentiality.
• Auditability.
All tendering and contract approvals shall comply with:
" Limits of Authority.
Application of this procedure will ensure that the integrity of the Company and its
employees is preserved, and that the risk of misconduct is minimised.
Requirements for tenders and contracts arise from the exploration, development and
completion/workover planning processes. In the case of exploration wells, smaller
developments and completions/workovers, drilling tendering and contracting is
consolidated under the umbrella principle. The drilling activities are carried out by the
Drilling Department with input from drilling engineers assigned to the various projects.
For some major projects, where the Project Manager has elected that tendering and
contracting shall be carried out by members of the project team on a project specific basis.
The drilling team members shall provide the tendering and contracting input and the
Drilling Department shall provide an advisory role on request together with a QA/QC
function.
It is important to consider the type of contract which will be the most effective in terms of:
• Cost.
• Fit for purpose technology.
• Availability of internal resources.
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2. Specify Requirements.
Note
The process depicted in this activity flow chart applies to planning activities where
3. Consolidate Requirements. drilling contracts are consolidated under the umbrella principle.
Where a contract is specific to a major project, the drilling input is provided by the
4. Pre-qualify Bidders. drilling team members and the role of DDR is reduced to mainly QA/QC and advisory
activities. In these cases, the rest of the process remains the same.
These variations are explained fully in the accompanying description.
5. Prepare Bidders List.
11. Approve Contracting Strategy (Exp). Development Wells Only Exploration Wells Only
DEM 2.2
25. Distribute Contract. Finish DEM 2.3
DEM 2.4
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The tendering and contracting process shall be initiated as a result of one of the following
planning processes:
! DEM, Chapter 2.2.2, Exploration Well Planning.
! DEM, Chapter 2.2.3, Development Well Planning.
! DEM, Chapter 2.2.4, Completion/Workover Programme Planning.
Throughout this process the DT in the drilling team or in the Drilling Contracts Section
shall maintain a record of the progress of each tendering and contracting process on the
following check list:
! DEM, Chapter 2.2.9.8, Tendering and Contracting Check List.
2.6.3.2 Specify Requirements
The DT in the drilling team shall detail the technical specifications for the rig, services,
equipment and materials required on the following form:
" Survey Questionnaire.
The questionnaire shall be obtained from:
• Commercial Procurement Department (CPM) for exploration wells.
• Development Procurement Department (DPM) for development wells and
completions/workovers.
2.6.3.3 Consolidate Requirements
For major projects where the drilling team are carrying out the tendering and contracting
activities, this step shall be omitted.
The Drilling Contracts Section, in conjunction with CPM or DPM as appropriate, shall
consolidate the drilling requirements for all other drilling projects into a small number of
contracts for the provision of rigs, equipment, equipment and materials.
2.6.3.4 Pre-qualify Bidders
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The DT or the Drilling Contracts Section shall prepare a Bidders List in conjunction with
CPM or DPM. The bidders list shall be based on the pre-qualification exercise above.
2.6.3.6 Prepare Bid Package
The DT or the Drilling Contracts Section shall prepare a Bid Package in conjunction with
CPM or DPM. The Bid Package shall contain:
• Instructions and Information to Bidder.
• Proposal Form.
• Bidder’s Questionnaire.
• Exceptions Form.
• Contract Form.
• Special Provisions and Scope of Work.
• Equipment, Materials, Supplies and Services to be Provided by Contractor.
• Summary of Responsibilities.
• Contract Price and Depreciation Schedule.
• Operations and Applicable Rates.
• Contractor’s Minimum Personnel.
• Requirement and Base Cost.
• Basic Safety Requirement.
• Performance Guarantee Format.
• Bank Guarantee Format.
2.6.3.7 Functional Review Meeting
The DT and the Drilling Contracts Section shall attend a functional review meeting in an
advisory capacity with CPM or DPM, Finance Department (CFA) and Legal Department
(LCS).
2.6.3.8 Technical and Commercial Evaluation Criteria
The DT and the Drilling Contracts Section shall prepare the technical and commercial
evaluation criteria in conjunction with CPM or DPM.
The objective of technical evaluation is to ensure that the technical content of the tender
meets or exceeds the following:
• The specifications contained in the scope of work in the tender document.
• Normal oilfield practice for Malaysia.
• Carigali HSE requirements.
• Petronas PDO requirements.
• Government legislative requirements.
DRILLING DEPARTMENT
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DEM 2
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A checklist shall be prepared which contains the above topics divided into more detailed
categories in relation to the complexity of the well. For example, a drilling rig checklist
would extend to several pages concentrating on equipment, whereas a tender for coring
equipment would concentrate on the quality requirements.
Each item on the checklist should be marked:
• Meets requirements.
• Exceeds requirements.
• Does not meet requirements.
Where any item exceeds the requirements, an assessment should be made on whether it is
worth paying a premium price for this. Drilling engineers must bear in mind that, in
general, items should be fit for purpose unless a clear HSE or technical benefit can be
demonstrated when an item does not meet requirements. An assessment shall be made as to
whether this will affect the overall suitability and is worth considering if a low cost is
obtained.
During the technical evaluation the tenderer shall be required to submit more information if
necessary. All contracts must be made by the commercial departments in accordance with
Carigali procedures.
The output from this task shall be a brief review of each tender discussing where it exceeds
or fall short of requirements and a ranking of the contractors. In making this ranking a
tenderer which exceeds technical requirements should not be placed above one which
meets requirements if it is not worth a premium price.
2.6.3.9 Prepare Tender Committee Submission
The DT and the Drilling Contracts Section shall prepare the Tender Committee Submission
in conjunction with CPM or DPM. The Tender Committee Submission should contain:
• Objective.
• Drilling Programme.
• Drilling Schedule.
• Scope of Work.
• Cost Estimate.
• Procurement Mode.
• Highlights of Bid Document.
• Market Survey Result.
• Summary of Survey Result.
• Recommended Bidders List.
• Procurement Schedule.
• Technical Evaluation Criteria.
• Evaluation Team Members.
• Recommendation.
• Bidders Profile.
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DEM 2
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For exploration wells CPM shall submit the Tender Committee Submission to the relevant
tender committee for endorsement. For development wells and completions/workovers
DPM shall submit the Tender Committee Submission to the relevant tender committee for
approval. The relevant tender committee is dependent on the value of the tender, refer to
the table below.
The DT and the Drilling Contracts Section shall carry out a technical and commercial
evaluation of the bids in conjunction with DPM, CFA and Petronas. The evaluation shall
include a technical inspection of the rig, services, equipment and materials by the DT and
the Drilling Department.
Note: The remaining steps take place outside the Drilling Department. This is part of a
process owned by other departments which does not involve the Drilling
Department, except for step 2.6.3.19 which requires a DT representative and the
Drilling Manager to attend the pre-award meeting to answer any relevant
questions.
DRILLING DEPARTMENT
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DEM 2
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This procedure defines the tasks and responsibilities necessary for drilling personnel to
prepare Authorisations for Expenditure (AFEs) for various requirements.
AFEs are the formal means of acquiring funding for drilling activities.
The following procedure shall be applied to ensure the necessary level of accuracy required
by the drilling planning processes and to ensure consistency between them.
Preparation of each AFE is preceded by preparation of a drilling cost estimate within the
relevant planning process. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
2.7.2 Activity Flow Chart
AUTHORISATION FOR
DEM 2.7
EXPENDITURE
Activities Customer DDR DT Related Activities
DEM 2.2
1. Initiate Requirement for AFE. Start DEM 2.3
DEM 2.4
2. Prepare AFE.
3. Review AFE. No
4. Endorse AFE.
No
5. Review AFE.
6. Approve AFE.
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DEM 2
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The requirement for an AFE originates from one of the following processes:
! DEM, Chapter 2.2.2, Exploration Well Planning.
! DEM, Chapter 2.2.3, Development Well Planning.
! DEM, Chapter 2.2.4, Completion/Workover Programme Planning.
2.7.3.2 Prepare Authorisation for Expenditure
The DT shall prepare the AFE on the standard form supplied by CFA.
The complete AFE shall consist of the above form together with the approved drilling cost
estimate. Refer to:
! DEM, Chapter 2.2.5, Budget Forecasts and Cost Control.
On completion, the DT shall submit the AFE to the Drilling Manager for review.
2.7.3.3 Review Authorisation for Expenditure
The Drilling Manager shall review the AFE to ensure that the scope and accuracy are
adequately covered. The Drilling Manager shall ensure that the AFE accuracy reflects the
cost estimate which provided the input.
2.7.3.4 Endorse Authorisation for Expenditure
When satisfied that the scope and accuracy are correct, the Drilling Manager shall endorse
the AFE.
On completion of endorsement, the Drilling Manager shall submit the AFE to the
Customer for endorsement. For details of the Customers refer to the table below.
The Customer shall review the AFE and approve it when satisfied that all requirements
have been met. The Customer shall return the AFE to the Drilling Manager for amendment
until it is correct and ready for approval.
DRILLING DEPARTMENT
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DEM 2
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When satisfied that the scope and accuracy are correct, the Customer shall approve the
AFE.
2.7.3.7 Apply the Authorisation for Expenditure to Appropriate Planning Process
On approval by the Customer, the DT shall apply the AFE to the appropriate planning
process.
DRILLING DEPARTMENT
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DEM 2
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This procedure defines the tasks and responsibilities necessary for drilling personnel to
prepare a Notice of Operation (NOOP) in order to obtain the regulatory permission for
drilling operations.
The following procedure shall be applied to ensure the necessary level of accuracy required
by the drilling planning processes and to ensure consistency between them.
NOOP preparation is carried out by members of the appropriate drilling team with
assistance from the following personnel as required:
• Petroleum Engineering Department.
• Drilling Department.
2.8.2 Activity Flow Chart
2. Prepare NOOP.
3. Review NOOP. No
4. Endorse NOOP.
DRILLING DEPARTMENT
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DEM 2
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The requirement for a NOOP originates from one of the following processes:
! DEM, Chapter 2.2.2, Exploration Well Planning.
! DEM, Chapter 2.2.3, Development Well Planning.
! DEM, Chapter 2.2.4, Completion/Workover Programme Planning.
2.8.3.2 Prepare Notice of Operation
The DT shall prepare the NOOP using the following as a checklist and guide:
! DEM, Chapter 2.2.9.9, Notice of Operation Cover Sheet.
The contents of the NOOP shall be prepared in accordance with:
" Well Design Manual, Chapter 5, Final Well Design.
" Procedures for Drilling Operations.
The DT shall ensure that the NOOP is completed one month prior to the spud date and that
all the documents listed on the cover sheet are completed and attached.
On completion, the DT shall sign the NOOP and submit it to the Rig Superintendent for
endorsement.
2.8.3.3 Review Notice of Operation
The Rig Superintendent shall review the NOOP and ensure that it is completed one month
prior to the spud date, that all the documents listed on the cover sheet are completed and
attached and that the NOOP complies with:
" Well Design Manual, Chapter 2, Well Design Standards.
" Procedures for Drilling Operations.
If these requirements are not met, the Rig Superintendent shall return the NOOP to the DT
for amendment until it meets the requirements.
2.8.3.4 Endorse Notice of Operation
On completion, the Rig Superintendent shall endorse the NOOP and return it to the DT.
2.8.3.5 Apply the Notice of Operation to the Appropriate Planning Process
DRILLING DEPARTMENT
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DEM 2
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2.9 FORMS
2.9.1 Basis for Drilling Plan Form
PETRONAS
CARIGALI
OBJECTIVES
The purpose of this form is to ensure common understanding of the objectives of the well design and planning processes.
The form shall be completed and approved prior to commencing conceptual well design.
Initiated
DT
Endorsed
DDR
Approved
Customer
DRILLING DEPARTMENT
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DEM 2
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PETRONAS
CARIGALI
DRILLING PROJECT
EXECUTION PLAN AND SCHEDULE
DRILLING
OBJECTIVES
The purpose of this form is to map the key milestones to be achieved that will ensure successful completion of the well planning and
design process.
Project name
EXECUTION PLAN
SCHEDULE
Initiated
DT
Endorsed
DDR
Approved
Customer
DRILLING DEPARTMENT
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DEM 2
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PETRONAS
CARIGALI
WELL DESIGN
HAZARD ASSESSMENT
DRILLING
OBJECTIVES
The purpose of this form is to ensure that potentially hazardous situations are identified and that the necessary controls are in place.
Project name
Shallow gas
Collision potential
Overpressure
H2S
Kick capacity
Initiated
DT
Endorsed
DDR
Approved
Customer
DRILLING DEPARTMENT
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DEM 2
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PETRONAS
OBJECTIVES
The purpose of this form is to ensure common understanding of the objectives of the completion/workover programme planning
processes.
Proposed perforated
interval Brief completion/
workover activity
Reference log description
Sand control
Reservoir properties requirements
Formation Stimulation
requirements
Other relevant
information
Initiated
DT
Endorsed
DDR
Approved
Customer
DRILLING DEPARTMENT
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DEM 2
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PETRONAS
CARIGALI
BASIS FOR
DRILLING COST ESTIMATE
DRILLING
OBJECTIVES
The purpose of this form is to summarise the data on which the drilling cost estimate is based.
Well/project name
Depth
7 in liner
Total (days)
Initiated
DT
Approved
Customer
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD
2.9.6
MANUAL
DRILLING
ENGINEERING
PETRONAS
CARIGALI
FORM'N
Drilling Cost Estimate Form
July 1996
Page 59 of 62
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PETRONAS
CARIGALI
DRILLING COST ESTIMATE
SUMMARY
DRILLING
OBJECTIVES
The purpose of this form is to summarise the drilling cost estimate.
1. TANGIBLES Tubing
Wellhead
Casing accessories
Completion equipment
2. SUPPLIES Cement
Bits
Fuel, water & lubricant
Other materials & supplies
3. CONTRACTED Rig
SERVICES D/drlg, b/hole, sur & MWD
Mud logging
Electric logging
Cementation services
Mud engineering
Wellhead services
Fishing
Other drilling services
Coring services
Tubular handling
Liner hanging
Weather forecasting
D/string tool rental
Inspection services
Wireline services
Filtration services
Stimulation services
5. MISCELLANEOUS Insurance
Total
Initiated
DT
Endorsed (Exploration)
Approved (Development)
Approved (Comp/workover) Customer
Approved (Exploration)
DDR
DRILLING DEPARTMENT
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PETRONAS
CARIGALI
TENDERING & CONTRACTING
CHECK LIST
DRILLING
OBJECTIVES
The purpose of this form is to provide a record of the key steps required for completion of the tendering and contracting process.
Exploration Well
Location Tender Number
Development Well
Specify Requirements
Consolidate Requirements
Pre-qualify Bidders
Technical Inspection
Pre-award Meeting
Finalise Contract
Review Contract
Distribute Contract
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PETRONAS
CARIGALI
NOTICE OF OPERATION
DRILLING
OBJECTIVES
The purpose of this document is to gain formal approval for intended drilling operations and to provide official notification of the
operations.
Well/project name
CONTENTS
PAGE
1 Well Summary.
ATTACHMENTS
2 Completion Programme.
3 Completion Schematic.
6 Supplementary Requirements/Comments.
APPROVALS
Prepared DT
Endorsed Customer
Endorsed GM
Approved Petronas
DRILLING DEPARTMENT
PETRONAS CARIGALI SDN BHD