Loss Categories

Loss Categories Guideline

Page 2April 20, 1999

Loss Categories

Guidelines for Allocation of Time & Dollars

April 21, 1999

Application:To be used for allocation of actual time / dollars during the execution of drilling and completing a well.

Background:The intent of this effort is to help the drilling department identify opportunities for improvement in support of our efforts to be recognized as a best in class drilling organization. Having a tool that captures our losses enables us to focus our resources on those items that will have the most impact on our overall performance. While not perfect, the information captured will be beneficial to our desire to become more of a learning organization.

Process:This should involve three people (foreman, engineer and superintendent). The initial allocation is to be done by the foreman on the rig (using the daily report), the engineer and superintendent should be in agreement with chosen loss category and associated time / dollars. If not, the engineer or engineering assistant should correct the permanent record at the office then contact the foreman and explain the reason for the given change (foreman do not have to alter the morning report to reflect the discussed change).

Equipment Failure - This is a broad category, but events captured would be items that occur while in either the P&A or drilling phase (including surface & subsurface failures) and that dont necessarily have a dedicated category. Examples;

Contractors rig equipment fails (i.e. pumps, brake-clutch, SCR, top-drive etc.)

Liner hanger equipment failure

Drillpipe twist-off

Wellhead problem or failure during installation

Execution - This category is for items that are within the control of the assigned foreman and caused either a shut-down / delay of the rig operations or backwards progress to correct an item. Examples;

Failed to have an RTTS on board and needed to squeeze after drilling out shoe

Casing crew not on-board because of last minute call-out

Bit breaker or other equipment not on-board.

Environmental spills.

Weather - If the weather prevents the planned operation from being executed and thus shuts down the rig operation then use this category. Examples;

Hurricane evacuation

Seas/wind prevent off-loading boat

New Technology - A new tool or equipment that Spirit has not used previously or with any routine, granted some items require subsequent runs for further evaluation but eventually the tool has a track record with Spirit. Examples;

Auto-Trak tool during its initial field trials

Rotary Steerable Tool

Pore Pressure / Well Control - If a kick is taken or the well becomes underbalance due to the pore pressure (not failure to execute good practices) and requires the drilling or trip operations to be suspended. Examples:

A 2 ppg saltwater kick is taken while drilling and requires MW to increase

Cement / Casing - An unplanned event that is related to the running and/or cementing of casing or cement services in general. Examples;

A wet shoe requiring a subsequent squeeze

Over-displacement of the shoe volume requiring a squeeze

Sticking casing off-bottom of significant distance

Casing service equipment failure causing a delay

Failed kick-off plug if it is the root cause, not a directional kick-off problem

Drilling / Completion Fluids - Failure to maintain the planned fluid properties and manage the fluid aspects at the rig-site to the point of adversely affecting the downhole conditions. Examples;

Failure to maintain chemical additions

Not enough product or inventory available

Unable to trip due to incorrect mud properties

Behind on weight-up schedule

Cuttings build-up adversely affecting ECD

Transportation Delays - If the planned execution is adversely affected by the delayed deliver of equipment / personnel to the rig-site and is considered the true root of the problem (failure to not call-out earlier would be an execution category).

The trucking company is delayed in delivery

Shorebase activity causes a delay in off-loading or loading operations

Planning / Engineering - An event that causes the rig to shutdown or take alternate action due in part to a failure that engineering / planning should had previously addressed. Examples;

Delay of MMS approval

Incompatible equipment

Decision making required from office professionals (wait on orders).

Failed to anticipate and plan for upcoming weather conditions that caused subsequent delays.

Geological - An event that causes a change of plans or adversely affects the drilling / completion operation but was a result or influence of unknown geological factors at the time of planning. This could include the anticipated geologic picture is different than what the data supports. Examples;

Unknown or New fault

Miss-interpretation of pore pressure prediction (abnormal or subnormal)

Shallow gas

Stressed shale

Salt

Geological interpretation is significantly different while drilling than during the planning phase

Hole Stability - Wellbore instability that can be identified by a known cause and causes the drilling / tripping operation to be suspended until the situation is remedied. Examples;

Proximity to a salt dome

Crossing or parallel to a fault

Over-stressed shales

Shallow-water flows

Incompatible mud chemistry causing the hole to slough would be captured in Drilling Fluids category.

Completion This category should be used for the completion phase of the well when the event / loss does not have a dedicated or related category. Examples;

Tree and tubing adapter serviced incorrectly causing a delay or downtime.

A screen-out occurred during the gravel pack and required coiled tubing to cleanout.

Change in Scope - A change of plan (drilling / completion) in the execution portion that is subsequently requested and approved for which no allowance of time / dollars was given in the agreed upon estimate. All change of scope allocations are the only items to be considered Additional and should be initiated by the engineer or superintendent, not the foreman. Examples;

Revised directional target

Drilling of additional footage

Additional logging run

A dual completion as compared to the planned single alternative.

Stuck Pipe / Fishing While drilling the planned operations are suspended when downhole forces prevent pulling the drilling string out of the hole and subsequent fishing services are initiated to correct the situation. Examples;

Stuck the drill string on a connection and required a backoff and fishing run to resume drilling

Tripping out of the hole pulled into a key-seat and stuck the assembly

Important, if a drill string is stuck and the primary reason is believed to be one of the following; hole stability, geological, drilling fluids then allocate the dollar to that category.

Directional This category should be used for losses that are specific to a directional tool or an inability to perform the directional requirement. Historically our problems have been equipment failures (i.e. MWD, motor, LWD) of directional related tools. Examples;

MWD not providing a tool face or incorrect reading

LWD not pulsing the log to surface and requires a trip

Motor has failed relatively premature

Unable to kick-off from vertical

Motor setting and sliding efforts not producing adequate build/turn and require a trip

PWD tool failure

Logging (Open hole & Cased Hole) An event associated with the equipment / personnel / execution of a open / cased hole logging operation that adversely affects the next phase of operation or requires an alternative method or repeat process. Examples;

Schlumberger induction tool failed while logging out the hole

Dia-logs tubing cutter failed to effectively cut the tubing causing a repeat

An RFT tool was stuck and required a fishing operation

Unable to initialize tools and requires back-up tools to be placed in service

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