American Oil and Gas Reporter - December 2017 - 74

for long-term implementation.
Well placement issues historically have not been a significant
risk for land wells because of the conventional wide spacing
between wells. However, high-density multiwell pads now can
contain as many as 40 wells in a tight pad space. This tight
spacing poses risks ranging from missing the reservoir target to
an inadvertent wellbore collision. We have experienced a number
of jobs where an operator's well inadvertently intersects another
flowing well within the same pad or a nearby pad. The interwell
fractures may cause rapid increases in both pressure and
flowback rate on the intersected flowing well. The induced
pressure and flow rates may result in an unexpected and
dangerous well control event.
Current well placement technologies allow for enhanced
control of these risks. The placement risks are more complicated
when the need arises to drill a relief well to regain hydrostatic
control of a blowout well that cannot be controlled from the
surface because of surface obstruction, for example. In this scenario, the uncertainty associated with some of those wells is
very large, which adds more time and cost for relief well
drilling. The placement uncertainty can be addressed easily
during the planning and executions phases of well construction,
at a cheaper cost than the post-drilling phase.
Finally, hydraulic fracturing has brought several modifications
to the casing design of a well. The maximum allowable surface
pressure associated with the fracturing process is now accounted
for during the design and selection process. The repeated
thermal cycling of the casing during fracture stages and the
induced fracturing pressures have taken a toll on the tension
load limits. These risks, coupled with the typical risks of
cementing jobs, have manifested in failed casing strings that
lead to a sudden and dynamic high-pressure release into the
backside annular space. Ultimately, this can evolve into a compromise of well control barriers at the surface, resulting in an
uncontrolled release of hydrocarbons.
What lessons should the industry learn from past well
Q:
control incidents in horizontal resource plays? What
common root causes can be identified in these incidents? What
are the indicators that a problem may be developing?
AMER: Crossing the t's and dotting the i's will never fail.
Former Secretary of State James A. Baker III's mantra is the
five p's: "Proper preparation prevents poor performance." We
believe that practice leads to perfection. A well control risk
management program is a classic application of Baker's mantra.
The sources of risk during drilling operations, for example, can
be grouped into drilling contractor risks and well design risks.
Drilling contractor risks include those risks associated with
rig crews, and those associated with rig equipment. A crew's
competency and experience level are usually directly proportional,
with the great handover coming as a knowledge and competency
gap looms. The industry has to be prepared to address this by
developing robust on-site well control training programs that
are based on real-life scenarios, rather than an old-fashioned instructor-led slide show.
In terms of rig equipment risk, with more high-pressure/hightemperature, narrow-margin wells designed and drilled these
days, the more critical it becomes for the well control equipment
to be rated appropriately and adequately rigged up to fit the
application.
As far as mitigating well design risks, multiphase simulations
that assess the well control capacities of casing design by
coupling the geologic model, wellbore pressure analysis and
reservoir flow analysis have proven to have a high level of
accuracy in the past few years.
74 THE AMERICAN OIL & GAS REPORTER

There are examples of how some degree of well-to-well
Q:
interaction during production can be beneficial to daily
flow rates. What has the industry learned about well isolation
during the production phase?
AMER: The industry has focused on reducing surface impact
and environmental exposure. While the focus is on maximizing
productivity, insufficient attention is being paid to the isolation
of wells, similar to the offshore well environment. Shutting
down production and isolating/securing a well for a well control
event within a pad operation may pose a significant risk. For
example, land wells seldom are equipped with surface controlled
subsurface safety valves to shut in and secure flowing wells
within a pad.
Finally, how are HS&E training programs and best pracQ:
tices evolving to meet the specific needs of operations in
horizontal tight oil and shale gas plays?
AMER: On-site training using well-specific content, rather
than generic, irrelevant data, has been proven to add significant
value to the well control emergency response preparedness of
the field personnel, the critical first line of defense to any well
control event. Preplanning is the best "best practice."

Filling All The Gaps

LANDON PLUMER | The IMA Financial Group Inc.

Oil and gas companies have a wide range of risk
Q:
exposures. What are the biggest areas of concern for
producer/operators in terms of having adequate insurance in
place for all business liabilities and contingencies? How can
operators ensure no gaps exist in their liability coverages?
PLUMER: It is important for producers to work with an insurance broker who can help them analyze risk from both a
contractual and operational perspective. The stronger an operator's
contracts, the better the third-party risk can be managed. Good
contract wording includes consistency in the indemnification
and insurance provisions among contractors, especially at multiparty work sites, and receiving insurance protections from the
other party to the contract, including additional insured status,
primary wording and waivers of subrogation.
From an operational perspective, a number of factors
impact risk, including how many people are performing
services at a work site, the safety cultures of an operator and
its contractors, value of third-party property at the site, the
state in which operations are conducted, how close to residences
and/or bodies of water the work is being performed, and
many other factors.
The policy wordings for the operator's commercial general
liability (CGL) and umbrella/excess liability insurance policies
are very important. The best wording is found in policies in
which broker/carriers tailor them specifically for upstream operations. Examples of coverage and policy terms that are most
customized include contractual liability, pollution liability, how
the policy will respond when the insured is a nonoperating
working interest owner and the "other insurance" provision.
Pollution coverage is the most complex because it typically
is found in a number of liability policies (including CGL, umbrella/excess, auto and control of well), all of which must work
well together in the event of a loss. Pollution liability coverage
should be well understood by the broker so that gaps can be
identified and explained to the operator and filled by specialty
pollution legal liability insurance on an excess and difference-

American Oil and Gas Reporter - December 2017

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