Drilling Rig, Drill String, Rotary Table, Kelly, Drill Collars, Drilling Mud, Blowout Preventers, Casing, Fracking and Sucker-Rod Pump

Posted by PITHOCRATES - September 19th, 2012

Technology 101

The Kelly is the Section of the Drill Pipe the Rotary Table Grips to Spin the Tool

There are places where oil oozes out of the ground.  All by itself.  Because of the great weight of that dirt and rock pressing down on it from above.  But there’s a lot more oil underground crushed by the weight of the earth.  That only needs a pathway up to the surface.  And because we like oil so much we provide that pathway.  By drilling deep holes into the ground.  And when we do that oil will come to the surface all by itself.  Making oil extraction rather simple and straight forward.  But getting to that point is a whole other story.

The drilling rig.  This is where it all starts.  The tall, tapered steel derrick that we see in the movies.  Even in Bugs Bunny cartoons.  This is a lot taller than your average drill because the drill bit is a lot longer.  Or, more accurately, the drill string.  A bunch of 30-foot sections, or joints, of hollow pipe screwed together.  As the drill makes its way underground they stop drilling, pull another joint up the derrick, screw it into the drill string and continue drilling.  Hence the tall height of the steel derrick.

At the end of the drill string is the bit, or tool, that does the actual drilling.  Which they spin with a rotary table back up on the rig platform.  Where the roughnecks work.  Manhandling together joints with giant pipe wrenches called tongs.  They break apart the drill pipe.  Hoist a joint up the derrick.  Screw it together to the drill string.  Then reattach the kelly to the drill string.  The kelly is the section of the drill pipe the rotary table grips to spin the tool.  As the table spins the kelly it slowly lowers through the hole in the rotary table.  Pulled down by a heavy section of pipe just above the tool.  Called drill collars.  That weighs about 10 times as much as a joint.

To get the Oil to Flow up through the Well and not into the Soil on the way up they Place a Casing in the Well

There’s a reason why the drill string is hollow.  Because something flows through it.  And, no, it’s not oil.  It’s mud.  A special kind of mud that they pump down from the rig to the drill bit.  Like oil used during drilling on a drill press this drilling mud provides lubrication for the cutting surface.  And being a thick fluid it does two other things.  Chunks of rock will stay suspended in the mud.  So it will rise up with the mud instead of settling at the bottom of the hole.  And it resists other fluids from seeping into the drill hole.  The pressure of the mud pumping down inside the drill pipe forces it back up the drill hole in the space around the drill pipe. As it exits the drill hole up top they examine the mud to see what’s happening at the bottom of the hole.

Below the rig platform are blowout preventers.  For unlike in the movies they want to prevent any gushers of oil (or anything else for that matter) out of the hole.  Because that would be dangerous.  And costly.  So to prevent a blowout they have a series of valves mounted to the wellhead that exits the ground.  At any sign of a back pressure that could blow out of the well they close these valves.  To continue drilling they make the drilling mud thicker.  Thick enough to hold back the back pressure from blowing out around the drill pipe.

To get the oil to flow up through the hole and not into the soil on the way up they place a casing in the hole.   Which is a steel pipe they line the hole with after they’re done drilling.  They pump cement down into the casing and mud behind it.  Forcing the cement out of the casing and up through the space between the casing and the wall of the earthen hole.  When the cement comes out at the top it fills the void between the casing and the hole.  Surrounding the casing in cement.  Which then sets and bonds the casing to the earthen walls of the well.  Providing a clean pathway down from the surface to the rock containing the oil.

Over Time the Pressure pushing the Oil up to the Surface dissipates as the Oil leaves Voids in the Rock

Yes, rock.  There isn’t a big underground lake of oil underground.  The oil is in the pours of rock.  Like a sponge holding a liquid.  One hole in the rock isn’t going to bring a lot of oil to the surface.  So they bust open some of that rock.  With explosions.  Chemicals.  Or high pressure water.  Once they crack open the rock they hold the cracks open by pumping in some porous material that can withstand the crushing weight of the earth above.  We call this fracking.  Short for fracturing.  Which allows the oil to accumulate around the well.  Where the weight of the earth above will push it up through the well casing to the surface.

This completes the drilling process.  They put a stack of valves on top of the wellhead.  Called the Christmas tree.  They close all the valves and break down the drilling derrick.  Pack everything up and leave the drilling site.  Leaving nothing behind but the wellhead with the Christmas tree on top.  Open a valve and the oil flows.  For awhile, at least.  Over time the pressure pushing the oil up to the surface dissipates as the pumped oil leaves voids in the rock.  Which eventually lowers the pressure to the point it no longer reaches the surface.  So to keep the well working they install a pump.

The pump they use has a rocking beam that is pushed up and down on one side.  The other end has cables draped over what looks like a horse’s head.  These cables attach to a string of sucker rods that enter the well and reach all the way to the bottom of the well.  Hence the name sucker-rod pump.  At the bottom of the well is a cylindrical chamber.  When the beam rocks down over the wellhead the sucker rods descend into the well.  At the same time a valve opens and the cylindrical chamber fills with oil.  When the beam pulls up one valve closes and another opens.  And pulls up the sucker rods.  Drawing up some oil into the well casing.   Forcing the oil further up the well with each pump cycle.  Until it reaches the surface.  Then it’s on to a refinery.  And into our car.

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FT110: “You can’t blame our dependence on foreign oil for high gas prices AND say that producing more domestic oil won’t lower gas prices.” -Old Pithy

Posted by PITHOCRATES - March 23rd, 2012

Fundamental Truth

The Combination of Low Demand and High Supply caused Oil Prices to Fall over 70% by 1986

The Organization of the Petroleum Exporting Countries (OPEC) is a cartel.  Made up currently of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.  Their purpose is to set oil quotas for their oil-producing members.  To limit the amount of oil they bring to market.  To reduce supply.  And increase oil prices.  At least that’s the idea.  It’s been hard to keep the individual OPEC members from cheating, though.  And a lot do.  Often selling more than their quota.  Because when oil prices are high selling a few percentages above their quota can be very profitable.  Unless everyone else does so as well.  Which they usually do.  For their choice is either not to cheat and not share in any of those ‘excess’ profits (beyond their agreed to quota).  Or cheat, too.  Thereby increasing supply.  And lowering oil prices.  Not something any oil producer wants to do.  But it’s the only way to share in any of those ‘excess’ profits.

But that’s not the only problem OPEC has.  There are a lot of oil producers who aren’t members of OPEC.  Who can bring oil to market in any quantity they choose.  Especially when they see the high price OPEC is charging.  OPEC’s high price allows non-OPEC suppliers to sell a lot of oil at a slightly lower price and reap huge profits.  Which puts pressure on the OPEC target price.  Forcing them to lower their target price.  For if they don’t lower their price they will lose oil sales to those non-OPEC producers.  Which is exactly what happened in the late Seventies.  While OPEC was cutting back on production (to raise prices) the non-OPEC nations were increasing production.  And taking over market share with their lower prices.  Causing OPEC to reverse policy and increase production during the mid-Eighties.  Giving us the 1980s oil glut.

Of course, this rise in non-OPEC production was a direct result of the 1973 Oil Crisis.  Many of the OPEC members are Muslim nations.  Who don’t like the state of Israel.  In response to the West’s support of Israel in the Yom Kippur War (1973) OPEC announced an oil embargo on those nations who helped Israel.  Giving us the 1973 oil crisis.  Where this sudden reduction in supply caused the price of oil to soar.  Making the oil business a very profitable business.  Causing those non-OPEC producers to enter the market.  Then the Iranian Revolution (1979) disrupted Iranian crude production.  Keeping Iranian oil off the market.  This reduction in demand caused oil prices to rise.  Then Jimmy Carter broke off diplomatic relations with the Iranian state.  And boycotted their oil when it returned to the market.  Further encouraging the non-OPEC producers to bring more oil to market.  Meanwhile U.S. demand fell because of those high prices.  And our switch to smaller, 4-cyclinder, front wheel drive cars.  Saying goodbye to our beloved muscle cars of the Sixties and Seventies.  And the V-8 engine.  The combination of low demand and high supply caused oil prices to fall over 70% by 1986.  Giving us the oil glut of the 1980s.  When gasoline was cheap.  Enticing the V-8 engine back into the market.

Improved Fuel Economy AND Increased Oil Supplies can Reduce the Price at the Pump

So, yes, Virginia.  The amount of oil entering the market matters.  The more of it there is the cheaper it will be.  As history has shown.  When less oil entered the market prices rose.  When more oil entered the market prices fell.  And anything that can affect the supply of oil making it to market will affect the price of oil.  (And everything downstream of oil.  Jet fuel.  Diesel.  And gasoline.)  Wars.  Regional instability.  And governmental regulation. 

So what are things that will bring more oil to market?  Well there’s the obvious.  You drill for more oil.  This is so obvious but a lot of people refuse to accept this economic principle.  As supply increases prices fall.  The 1980s oil glut proved this.  Even John Maynard Keynes has graphs showing this in his Keynesian economics.  The economics of choice for governments everywhere.   Yet there are Keynesian politicians who avert their eyes to this economic principle.  So there’s that.  More drilling.  You can also make the permitting process easier to drill for oil.  You can open up federal lands currently closed to drilling.  And once you find oil you bring it to market.  As quickly as you can.  And few things are quicker than pipelines.  From the oil fields.  To the oil refineries.  (And then jet fuel, diesel and gasoline pipelines from the refineries to dispensing centers).  So before oil fields are ready to produce you start building pipelines from those fields to the refineries.  Or you build new refineries.

Improving fuel economy did help reduce our demand for imported oil in the Eighties.  As well as lowered the price for that imported oil.  But it wasn’t fuel economy alone.  The non-OPEC nations were increasing production from the mid-Seventies through the mid-Eighties.  Without that oil flooding the market oil prices wouldn’t have fallen 70%.  And they won’t fall again if we ONLY try to reduce our demand for foreign oil.  For reducing demand is marginal at best in reducing oil prices. 

Only if we Drill and Build Pipelines can we Reduce the Price at the Pump

For there are no electric airplanes.  The cost to electrify all railroad tracks is too prohibitive to consider.  The capital costs to build that electrical infrastructure.  The maintenance costs to maintain it.  And the electricity costs from the increased demand for electrical power while supply remains the same.  Or falls.  Because excessive regulation inhibits the building of new power plants.  And speeds up the shutdown of older plants.  Especially coal-fired because they pollute too much.  And hydro power.  Because of the environmental impact of dams.  Severely straining our electric grids.  And moving into electric cars will stress our electric grids even further.  Leading to brown outs.  And rolling blackouts.   Or worse.  Causing wires to overheat and sag, coming into contact with trees.  Shorting out.  Causing cascading blackouts as power plants disconnect from the grid to prevent damage from the resulting current surges.  Like they did in the Northeast Blackout of 2003.

You can’t replace oil with electricity.  In some cases there is just no electric equivalent.  Such as the airplane.  Or the cost of moving from oil to electricity is just prohibitive.  Such as updating the nation’s electrical infrastructure to meet an exploding demand.  Which leaves oil.  We need it.  And will keep using it.  Because there is no better alternative.  Yet.  So we need to produce it.  And do everything we can to help bring that oil to market.  Not fight against it.  And it all starts with drilling. 

We must drill.  Bring that oil up from under the ground.  Put it into a pipeline.  And pump it to a refinery.  If we do this enough we will be less dependent on foreign oil.  And have more control over the price at the pump.

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