Guidelines for preliminary planning of exploration drilling

1 Liaison with Exploration

The Exploration Ventures group, is the customer for the whole single string venture organisation. Their drilling requirements may reflect the maturing of a prospective area or a contractual requirement to drill one or more wells under an exploration agreement with a government. In the latter case there may be a strong desire to limit the drilling budget to a sum committed to be spent under the terms of the exploration agreement. There may also be a time constraint dictated by relinquishment provisions.

It is most important that a good working relationship exists between Operations and Exploration. Drilling requirements should be balanced against resources and commitments. Day-to-day contacts and regular meetings should be held.

Location/ reporting structure of the exploration staff needs to be addressed.

2 Project initiation

Generally, the project has three distinct phases - the seismic acquisition, the evaluation of seismic results, and the drilling of one or more of the identified prospects. Only towards the end of the evaluation phase will it be possible to identify these prospects and do any planning based on firm data. However, due to time constraints implicit in the Concession agreement with the host country, and the lead time required to set up the drilling operation, it may well be necessary to initiate the drilling phase while there is still a greater or lesser amount of uncertainty about the requirements.

Following the exploration phase, and before drilling starts, a small exploration team usually remains in place in the country of operation.

This team should start working on the following:

• Communications: staff home numbers, Hotels and Clubs, Airport, Travel bureaux.
• Administration: initial contacts with administration and finance heads.
• Orientation for reconnaissance: distances, modes of travel within the country, climate, medical precautions.

3 Reconnaissance visit/report

The objectives of this scouting visit are to:

• Discuss the requirements in detail with local management, with particular respect to the range of possible variations in the well proposal(s), and to such timing constraints as climate and contractual obligations.
• Develop a feel for the local conditions.
• Investigate the available facilities, with particular respect to such matters as the general infrastructure, possible access routes, port facilities, the type and quality of contractors, etc.
• Obtain a feel for the costs of locally obtainable services, for later input into the well/campaign cost estimate.
• Obtain any information on constraints such as import/export restrictions, work permit restrictions, requirements for local insurance, etc.
• Propose, and discuss with local management, a drilling campaign strategy including staff requirements, the contracting strategy and a planning time chart.

The team leader should visit any competitors in the area and see if there is any potential for learning from their experience with bureaucratic procedures, etc. or for optimisation by sharing common facilities.

The end product is a visit report which summarises the views of a team of experienced specialists on all aspects of the proposed drilling campaign.

This report is the vehicle for putting on record the team's recommendations concerning the drilling campaign strategy, the skills/staff requirements (including an organigram with timing), the contracting strategy and a operations planning time chart. It should not only cover technical matters but should also contain a "General" chapter covering local politics, labour laws and difficulties, special difficulties in doing business, customs, immigration and residence formalities, climate, health - in fact anything which may have an effect on the operation. It is useful to include maps and photographs where appropriate to illustrate access routes, proposed drilling locations, possible bases, ports, other local facilities, etc. The report should also include a cost estimate on the basis of historical costs for the same type of operation, as modified by the known costs of local services.

The visit report may also be used to draw the attention of the OPCO management, in particular the OM, to previous operations in similar circumstances where relevant experience was gained.

Telecommunications, Aircraft, Medical Services and Security will prepare an individual visit report. They may have already been in the area in connection with the seismic campaign, in which case it will probably not be necessary for them to go again. Costs estimate will also be required.

The visit reports then become the starting point for the Country Manager  assigned to the venture

4 Budget estimate

As a result of the reconnaissance trip the team have a good idea of how the operation will be carried out, and what will be the cost of it. However confident cost estimate can only be made when the tenders for the high-cost items have been received.

5 General support

In general costs related to these services will be recovered by the Central Office via a Service Fee or by a direct charge.