Introduction to MPD system

Managed Pressure Drilling (MPD) and underbalanced drilling (UBD) are shown to enable successful drilling programs for unconventional wells. Both from a performance aspect and for providing a flexible approach to drilling wells that may otherwise be un-drillable. MPD is an adaptive drilling process used to precisely control the annular pressure profile throughout the wellbore. MPD process employs a collection of tools and techniques which may mitigate the risks and costs associated with drilling wells that have narrow downhole environmental limits, by proactively managing the annular hydraulic pressure profile. MPD may include control of back pressure, fluid density, fluid rheology, annular fluid level, circulating friction, and hole geometry, or combinations thereof. It may also allow faster corrective action to deal with observed pressure variations. The ability to dynamically control annular pressures facilitates drilling of what might otherwise be economically unattainable prospects.

MPD Service is provided using five pieces of equipment: Rotating Control Device (RCD), Manifold, Mass Flowmeter, Mud-gas Separator System, and Hose and Pressure Piping.

 Picture courtesy of Beyond Energy

RCD is a backbone of the MPD business. It is used to seal the wellbore in order to manage the pressure. It also allows drill string to rotate while the wellbore is sealed and under pressure.

Manifold chokes back wellbore return fluid to create surface back pressure (SBP). There are different types of manifold in the market. 

Flowmeter comes after manifold and is used to measure flow rate, density and temperature. It is used to detect kick or losses litre by litre by using mass balance. 

Mud-Gas Separator System. The mud gas separator is also vital to the ensuring the process and personal safety of this system. The system is used to flare off any nuisance or hydrocarbon gas. The MGS should be operated within its limits at all times. The limits of the MGS are established via the flare line effective length, flare line diameter, and mud leg height. For these operations this can change depending upon the location, rig, and depth in hole. It also has two different types, which are atmospheric and pressurized. The biggest difference between two types is the limit of gas separation. Atmospheric system can only handle 5 MMSFCD while pressurized can go as high as 30 MMSFCD.

Hose and Pressure Piping. Due to the expectation of taking HCs to surface during operations, it is important to ensure that the piping is rated for the proper pressure, and gas service with the proper API certifications (6A and 16C). 

MPD Service Components

MPD is a niche and complicated service due to its highly technical nature. Technology is an important aspect of the business coming hand in hand with engineering solutions that team brings with it.

In addition to unique technology with niche strategy, engineering expertise is a key to success. In the past, running an MPD business or division without having enough technical team or expertise in operations and engineering used to be a mistake by some companies.   

Engineering Software is a part of the MPD Engineering Service. Weatherford is currently the leader in smart MPD software product development and there are other companies who are working towards increasing their market share.

MPD Service Types

MDP has been segmented into various technologies including mud cap drilling (MCD), dual gradient drilling (DGD), constant bottom hole pressure (CBHP), and return flow control drilling (RFCD).

The CBHP method is extensively used for drilling wells with higher uncertainties on the narrow mud weight window and pressure limits with kicks/losses. This technology is widely used in regions like North America onshore and offshore, where drilling environments are expected to be tough. The technology is also used to overcome other operational challenges, such as non-productive time due to lost circulation or gas influxes in the high-pressure procedures and formations. 

CBHP technique provides site safety by monitoring the annular pressure while detecting kicks and fluid losses early in drilling. Bottom hole pressure or annular pressure is determined mainly by two factors: the hydrostatic pressure of the drilling mud and the friction pressure generated when the pumps are operating. The CBHP technology dominates the market, accounting for over 40% and is estimated to grow at a Compound Annual Growth Rate (CAGR) of 4.1% from 2016 to 2024. 

CBHP emerged as the largest technology segment of MPD accounting for 43% of the global MPD revenue in 2015 ($1.6B). This technique facilitates better safety of sites by controlling the pressure and detecting early fluid losses. 

Mud cap drilling (MCD) technique is likely to lose share to CBHP and dual gradient drilling (DGD) technologies owing to the high cost associated with this technology.

Who to rent the equipment from?

MPD Service has many benefits and in order to gain from its benefits, there are several ways of contracting it: via Rig, Service Company direct, or own it.

If contracted via Rigs, then there are higher chances to lower the cost of service and keep drilling company accountable for the service. On the other hand, Rig company might have less skilled team to operate the equipment as well as continuously improve it, and it’s not always the case that having both rig and MPD services under one company will provide an improved accountability.

If contracted via service company, higher chances to receive a better quality service in both operation and continuous improvement. Unfortunately, this is not always the case and the service cost could be higher due to single source of revenue for this company.

Similarly, owning the equipment typically benefits with lower costs, higher service quality due to direct control of value drivers. Owning the equipment would also prevent continuous improvement to the equipment design and would not work if drilling program reduces making it more expensive to own.

Commercial evaluation

There are three most common ways to pay for the MPD service.

• Day-Rate: the most common way to hire an MPD contractor is to pay them a day-rate and require including all auxiliary service and products (maintenance, back-up equipment) into this day-rate. It’s also easy to evaluate proposals using flat day-rate by being careful to consider which well section requires this service and which will be require equipment stand-by. 
• Monthly-Rate: paying monthly for service (and equipment if want to separate these two) regardless of number of days the equipment is used. This is typically more attractive to service provider due to stable revenue stream but risky to operator who does not have a clear committed drilling program.
• Per well or other outcome. This way of payment requires contractor to deliver certain service and be paid for the delivered service. This could be payment by well, regardless of number of days to drill. This works the best to operator and adds more uncertainty to MPD service provider, who would be interested in increasing service cost.

Regardless of which option is selected, the service could be contracted on a Service Order/Call-off or a commitment basis. Committed contract would be lower cost but higher liability due to reduced scope of work, while the former will provide flexibility for scope change at an additional cost of service.

MPD service is a quickly growing service sector with the demand increasing monthly. This increases margins of MPD service companies and often owning the equipment and/or service is more cost effective than paying higher margins to service providers.