by Jaime Kammerzell | Rigzone Contributor
Tuesday, December 20, 2011
There is a growing shortage of barite supply, which has the oil and gas drilling industry looking for alternatives. Barite, the mineralogical name for barium sulfate, is used primarily in oil and gas drilling, but also is used as non-toxic filler, extender or weighting agent in plastics, paints and rubber, and as a shield around nuclear power plants. It also has medical uses such as blocking x-ray and gamma-ray emissions, and a pharmaceutical grade barite is used for barium milkshakes for intestinal x-rays.
To understand the barite market today, Brian O’Connell, Senior Category Manager of Mined Products, Baroid Supply Chain Group of Halliburton, explained that “the cost of barite over the past 10 years has quadrupled, in the last 5 years it has tripled, and over the past 2 years it has doubled.”
In addition to the cost increase, a decrease in quality related to metals and contaminants and a decrease in availability of 4.2 g/cu cm, which has historically been the API specification, are contributing to the current supply issues.
Most barite comes from China, which was responsible for 51 percent of the global supply in 2010. India had a 14 percent share of the barite market followed by the U.S. with 9 percent, Morocco with 7 percent and the rest of the world with 19 percent, according to the Barytes Association. Mined barite in 2010 totaled 7 million tons.
“China is the major barite source and leads the market,” O’Connell said.
China’s mining industry is undergoing a safety overhaul as many accidents and deaths in non-oil and gas related mining industries have prompted the government to enforce stricter regulations comparable to U.S. regulations. With these new regulations comes additional expense that smaller mines can’t meet. Thus, the supply burden has fallen on the larger mines.
However, in some cases, the local and regional Chinese authorities have reduced production from the larger mines.
“Up until about 2 1/2 years ago in Xiangzhou County, otherwise known as Elephant County, in Guangxi province, the Chinese were producing 1.2 million tons of barite per year. This year, the volume has fallen to 300,000-350,000 tons, which is a reduction of almost 1 million tons out of China,” O’Connell explained. “With global barite production of 7 million tons in 2010, a 1 million ton reduction is a big hit to the market.”
To add to the cost, as miners produce more and more barite, they have to dig deeper and further away from export ports. Recent weather-related problems like flooding, droughts and earthquakes not only impacted barite mining, but also transportation to these export ports.
O’Connell also points to the U.S. dollar/Chinese Yuan exchange rate, which has seen a 25 percent change since 2005, as a source of rising barite costs.
According to O’Connell, the high level of worldwide drilling activity correlates to an increase in barite demand. Peak demand and a reduction of barite coming out of China are driving the price and quality issue. “With this kind of imbalance, the scale tips in favor of sellers,” O’Connell said.
India’s barite market also is impacting the global barite market. India is the second largest producer of barite in the world. However, the country only has one major source of barite and the government owns it. The government entity that manages the mine, APMDC, holds two tenders every three years. The first tender calls for bids to mine the barite, and the lowest qualified bid wins the business. The second tender calls for bids for the barite that comes out of the mine. This goes to the highest qualified bidder.
The latest tender in 3Q 2011 resulted in a dramatic overnight price increase of more than 70 percent on a freight on board (FOB) Chennai basis.
The United States produced about 9 percent of the world production in 2010 of barite and imports much of its demand. As major world-wide buyers, Baroid and other fluid service companies typically ship in large lot sizes — 60,000 tons in one shipment — from China to the U.S. Gulf Coast. But Chinese traders are having increasing difficulties accumulating that much material at one time, O’Connell explained, and as a result, lower quality material is making its way into cargoes to fill out vessels, resulting in inconsistent material quality.
Back in 2006, a major barite producer with Nevada mining operations converted to a lower grade of barite, 4.1, to extend their U.S. reserve base and reduce their reliance on imports. According to O’Connell, Baroid immediately followed, and the other two barite producers in Nevada followed soon after.
The Baroid mine in Dunphy, NV
The 4.2 and 4.1 barite grades from U.S. sources have basically the same types of impurities. All four of the Nevada producers sold the lower grade product prior to API approval with general customer acceptance. At the same time that this grade was being used in the field, the four major fluid service companies encouraged API to add the lower grade to the approved products list, which has been done.
“We are trying to get operators to stop using material that has a higher density than what they really need. As an industry, we’ve been pretty successful,” O’Connell explained.
O’Connell indicated that the trend toward 4.1 barite is spreading globally and is helping to reduce pressure on miners to dig deeper for of 4.2 barite.
Regardless, the current supply is so tight, fluid service companies are considering alternative materials or even lighter weight barite than 4.1.
“We’ve looked at hematite and calcium carbonate, but each has characteristics not suitable for weighting of mud like barite, which is why we are looking into lighter barite instead of alternatives,” O’Connell said.
Source – RIGZONE
Cairn Energy PLC, the Edinburgh-based oil and gas exploration and production company, has successfully deployed Centek’s Itsfu Auto Fill Sub in drilling operations in its 2011 Greenland Drilling campaign. The Itsfu provides controlled drill string filling in one third of the time of alternative methods and prevents uncontrolled, hazardous spillage of well drilling fluids onto the rig floor.
“After learning how the Itsfu works, we are now able to fill 10 stands of 5 7/8″ TT585 connection string in around three minutes,” said John Boyle, Drilling Manager, with Cairn Energy. “This saves both time and ensures the immediate area of the rotary table remains clean compared with conventional filling practices.”
Around every 1,000 feet of running in, the drill string must be filled with fluid to equalize the pressure inside and outside the pipe to avoid it collapsing and to balance the well. The filling process interrupts running in, so speed is very important.
Every 10 stands the Itsfu is made up to the drillpipe by means of the integral swivel and the charge pump is started. The gooseneck outlet is automatically closed by a plastic disc to prevent air entering, and the closed-system drillpipe can now be filled in around one third the time of conventional methods. Once the drill pipe is full, the plastic disc comes free, discharging fluid from the gooseneck as a tell-tale. The mud pump is switched off, and with no pressure or air present, the Itsful fill-up tool can be readily removed by hand from the drillstring, without fluid spurting, and hoisted back to its storage area.
“The Itsfu offers real savings of time as it minimises spillages and cleaning up,” said Cliff Berry, Sales and Marketing Manager at Centek Limited. “Also because it screws into the drill pipe at the rotary table rather than by disconnecting the top-drive, the next pipe stand can be made ready while drill string filling is in progress.”
The Itsfu is drill-team friendly and as simple to install as a circulating sub. In addition, as the top drive is not involved in filling, there is no danger of damaging the top drive saver sub threads and the top drive is also available if needed in the open hole.
The Itsfu is available to drilling teams now and can be rented on a daily basis.
- Cairn draws a blank at second Arctic well (guardian.co.uk)
- Cairn Energy setback in Greenland (bbc.co.uk)
- Cairn Energy stays optimistic with Arctic drilling (cbc.ca)
The MUDCUBE is a system for effectively treatment of drilling fluids. A special designed vacuum system pulls the fluid through the screen and degasses the same fluid.
The cuttings will be processed on the rotating screen and will have very little fluid attached when leaving the screen. No mechanical force is given to the screen and change of screen is no longer a time consuming, costly and ineffective process.
By Katie Mazerov, contributing editor
In response to heightened industry and regulatory standards, service companies are continuing to introduce innovative technologies to improve the safety and environmental responsibility of solids control and cuttings handling.
Part of Baroid’s FullCircle® cuttings reinjection process, the two-stage hammermill grinds waste and cuttings to a slurry before they are injected into the formation for disposal. FullCircle The cuttings injection service helps eliminate costs and risks of cuttings handling and disposal.
“Solids control and waste management technologies assist the operator in achieving regulatory standards and provide effective mud conditioning for drilling operations,” said Ana Djuric, global environmental advisor for Halliburton’s Baroid business line. “Solids control is regulated for health, safety and environmental (HSE) standards, but the efficiency and throughput of solids control equipment are not directly regulated,” Ms Djuric said. “Indirectly speaking, disposal limits in a given area are what drive solids control efficiency.”
The primary purpose of solids control is drilling fluid conditioning, or removing as much of the unwanted solids as possible from the drilling fluid, she explained. “But the secondary purpose is to achieve regulatory disposal limits through effective waste management such as cuttings dryers and cuttings treatment equipment,” she said. Equipment selection is determined by several variables, including hole volume, available space on the rig and subsequent discharge in the area.
Halliburton’s Honey Comb Base (HCB™) tanks are used for bulk transfer of waste. In an offshore operation, waste is conveyed pneumatically by the SupaVac™ SV400 cuttings collection and pumping system through hoses from the HCB tanks on a rig to tanks or collection pits on a boat to be transferred onshore.
“Solids control equipment assists in environmental compliance by helping the operator remove unwanted solids, rock cuttings and particulate materials from the drilling fluid during operations,” Ms Djuric continued. The wastes can then be treated with secondary recovery or treatment equipment to extract additional fluids from the solids for reuse in drilling operations.
Among the latest advances are Halliburton’s Honey Comb Base (HCB) tanks, which improve the efficiency of handling cuttings for disposal. “By storing cuttings in pneumatic bulk tanks, as opposed to traditional skips, crane lifts are virtually eliminated in regards to cuttings handling,” explained Greg Abbott, manager, Solids Control Systems for Halliburton. “At the same time, bulk tank storage significantly reduces the chances of spilling oil-contaminated drill cuttings while transporting them from the drilling locations to disposal locations.”
Better thermal systems and methods of bulk handling also have been developed. “In many ways, it’s the chemistry that is the environmental driver rather than the mechanical processes associated with solids control and waste management,” Ms Djuric noted.
Achieving optimal environmental standards is complicated by the myriad regulations that vary by country, state or province and even county. Offshore regulations are more standardized than onshore, but agencies such as STRONGER in the United States are working to provide a more harmonized approach to drilling waste regulations and practices. “In offshore regions where regulations are lacking, North Sea or Gulf of Mexico standards commonly apply,” Ms Djuric said. Offshore, the primary environmental concern is to protect aquatic species from the generally monitored parameters of hydrocarbons, chemical toxicity, degradation and, in some areas, bioaccumulation.
“On land, Louisiana 29B or Alberta’s Directive 50 are commonly used as a reference point. But harmonization is very difficult to achieve on land due to the wide diversity of ecosystems,” Ms Djuric explained. Depending on the location, onshore environmental compliance can range from protection of vegetation, agriculture and soil quality, to safeguarding water quality and associated aquatic species, or drinking water conservation. Metals, salts, including chlorides, hydrocarbons and chemical toxicity are the parameters typically monitored.
Thermo–mechanical cuttings cleaner is used to process oil-contaminated drilling waste. Oil and water are separated from the cuttings by mechanical and thermal treatment. Recovered oil can be re-used to fuel the machine, enabling a more sustainable process.
Even as more technologies emerge into the marketplace, managing and navigating through the regulatory environment is becoming a significant issue. “The biggest challenge will be educating regulatory bodies around the world as more technologies come into the market that allow for reuse and recycling of drilling fluids and drill cuttings,” Mr Abbott said.
In some areas, for example, wastewater must be treated and disposed of as waste even after it has been purified. “We have technologies in place for water treatment that can treat water to drinking standards, but that technology cannot be used in certain areas because a particular region’s definition of ‘beneficial reuse’ is not fully established, or because the definition of ‘waste’ is so inflexible that recycling or reuse of waste is not permitted,” Ms Djuric noted.
HCB and SupaVac are Halliburton’s trademarks, and FullCircle is Halliburton’s registered trademark.
- High Performance Drilling Fluid (bensaif.com)
Thursday, 22 April 2010 09:32
In October 1984, the management of Magcobar (now M-I SWACO) and Nanhai West Oil Co. (now China Oilfield Services Ltd.) joined forces to create a drilling fluids joint venture, China Nanhai Magcobar Mud Corp. Ltd. (MCC), with the aim of delivering world class drilling fluid services to the emerging offshore drilling industry in China. Since that time, MCC has grown to become the most successful international fluids company in China, and one of the longest serving commercial joint ventures in China.
Since the first well was drilled with TOTAL in 1984 in the Beibu Gulf, the company has participated in over 1,000 wells in China in the past 25 years, including world-class extended reach wells, record high temperature wells, the deepest wells drilled in China, and is now dominating the emerging deepwater market in the South China Sea.
MCC has established offices, supply bases and laboratories throughout China and successfully deployed some of the leading fluid technologies from M-I SWACO. The UltraDril* water-base system and the FloPro* NT reservoir drill-in fluid have been excellent performers in the reactive shale and complex reservoirs of Bohai Bay, while the Rheliant* flat rheology synthetic-base drilling fluid is becoming the system of choice for deepwater operators in South China. The UltraDril system has now been used on more than 170 wells in China with the Rheliant system being used on more than 90% of the deepwater wells drilled to date in China. The Versaclean* drilling fluid system has been extremely successful for MCC, helping drill record extended reach wells. In recent times, MCC has established a foothold in the highly competitive onshore market with the MegaDril* one-drum solution.
MCC has worked throughout China, from the far west of Tarim Basin, to the northern extremes of Daqing oilfield, to the oldest and most prolific Shengli oilfield in the east, and down to the deepwater frontier in the South China Sea. Clients have included all the major national oil companies in China—the China National Petroleum Corporation (CNPC), China Petroleum and Chemical Corporation (SINOPEC) and China National Offshore Oil Company (CNOOC)—as well as a vast array of IOCs. Current IOC clients include ConocoPhillips, Anadarko, Husky Energy, EOG Resources, Devon, amongst others.
“To become as successful as MCC has, the company has relied heavily on an outstanding team of field engineers and professionals that has continued to grow and evolve over the years,” China Country Manager David Power said. “MCC has continually invested in training and development of our field engineers since first sending engineers to mud school in Houston in 1985. Over the years MCC has trained over 130 Chinese nationals. The professionalism of the MCC team is highlighted by the current 1,700 plus days without a LTI. We currently employ more than 60 national mud engineers, and most have attended M-I SWACO mud schools in Bangkok and Houston. The MCC team is now more than 93% Chinese nationals.”
M-I SWACO recently celebrated the 25 years of continual service to the Chinese petroleum industry with gala banquets in Beijing and Shekou. Top executives from both companies, including Li Yong, COSL President; Zhang Xing Yun, COSL General Manager and Magcobar Board Chairman; David Paterson, M-I SWACO SVP Eastern Hemisphere; Max Richey, M-I SWACO SVP; and Sandy Park, Magcobar Director and M-I SWACO VP Asia Pacific, were joined by various clients and friends of MCC to celebrate this tremendous achievement.
M-I SWACO and COSL management continue to see a very bright future for MCC as China’s petroleum industry continues to surge ahead. Today more and more IOCs are competing for acreage in China and the Chinese government continues to support development of China’s domestic hydrocarbon resources, in particular the deepwater fields of South China. The team at MCC looks forward to many exciting times and rewarding challenges in the coming years.
- New Terminal JV in China for Odfjell SE (mb50.wordpress.com)