Closed-loop drilling fluids systems shrink industry footprint.
By Julie Anderson
Perhaps it’s time to change the conversation, at least for a bit.
There’s no denying the volatility, uncertainty, and gravity of declining oil prices, especially when it results in job loss. With that said, how about taking a look at the landscape in search of something positive, a project or technology or system that speaks to progression, not recession? We took a look around, and what we didn’t see led to this story, perhaps reinforcing the adage, “less is more.”
Shrinking Footprint
Most everyone has seen the big earthen pits that are usually dug and constructed at a drilling site, noted Jeff Dennis, owner and managing partner at CR 90 Manufacturing in Midland, http://www.cr90.com/.
At a typical oil and gas drilling site, drilling fluids are circulated through the wellbore, and then the fluids and drill cuttings are deposited in a reserve pit dug near the wellbore, as described by GN Solids Control. In other words, this pit is used to hold discarded drilling fluids and waste.
In fact, Ken Goldsmith, president and owner of Mudsmith Ltd. in Midland, http://www.mudsmith.com/, remembers back 35 years ago when nearly 100 percent of the Permian Basin’s drilling rigs used these earthen pits, many without plastic linings.
Sam Ledbetter, an experienced drilling fluids engineer, refers to them as “cuttings pits” dug on location to hold drill cuttings.
Mud pits, reserve pits, earthen pits, cuttings pits—regardless of the name, we’re seeing fewer across our landscape, and here’s why: the closed-loop drilling system. While the technology itself is not new, the practice is catching on as improved systems continue to come online.
“Closed-Loop” Defined
Generally speaking, in a closed-loop drilling fluids system, the earthen reserve pit is replaced with a series of storage tanks, which separate liquids and solids, according to GN Solids Control, http://oilfield.gnsolidscontrol.com/closed-loop-drilling-fluids-system/. Solids-control equipment (shale shaker, mud cleaner, decanter centrifuge) and collection equipment (vacuum trucks, roll-off boxes,) minimize the amount of drilling waste and cuttings that require disposal and maximize the amount of drilling fluid recycled and reused in the drilling process. The wastes created are typically transferred off-site for disposal at injection wells or oilfield waste disposal facilities.
Part of the closed-loop drilling process is trying to recover as much of the drilling fluid as possible off of the drill cuttings, Ledbetter detailed. This can be as simple as “shaking or spinning” the cuttings before they are sent to disposal, or as complicated as recovering the drilling fluid off the cuttings and then separating the liquid from the solids in the drilling fluid.
Companies that supply closed-loop systems are constantly evaluating and integrating technology to make closed-loop systems function better, explained Dennis, who has been building these systems for the past several years.
“For instance, variable speed drives are used to operate centrifuges, pumps, and augers to ensure they turn at just the right speed to get the job done,” Dennis continued.
“I first saw a closed-loop drilling system nearly 25 years ago,” Ledbetter recalled. “It has become the norm for drilling operations due to environmental concerns of leaving drill cuttings on location and cost savings of recovering as much of the drilling fluid from the cuttings as possible.”
Closed-loop drilling systems are also referred to as “closed-mud” or “pit-less” systems.
Pit-less in the Permian
“In the Permian Basin, most wells are commonly drilled with a fluid-circulating system, although some wells are drilled with an air-circulating system,” Goldsmith said. Properly designed drilling fluids are circulated through the drill bit and up the annulus between the drill pipe and the open-hole wall, carrying drilled cuttings to the surface to be properly disposed of.
“Since our region is predominantly flat, barren, desert land, open-pit drilling fluids-circulating systems have been permissible and the least expensive method of separating, storing, and disposing of drilled cuttings and used drilling fluids, i.e. drilling fluids waste,” Goldsmith explained. “So long as the drilling fluids system is water-based, biodegradable, and environmentally friendly, open-pit systems have been acceptable in our region.
“When a small location footprint, and/or a less-than-environmentally friendly drilling-fluid system is utilized, a closed-loop solids-control system is utilized,” Goldsmith continued. While open-pit systems utilize high volumes of drilling fluids and depend on retention time to allow solids to fall out in the settling pits, closed-loop systems utilize lesser volumes of drilling fluids, and mechanical solids-removal methods are employed.
The technology is not new, Goldsmith said; after all, offshore rigs have always utilized closed systems. However, Goldsmith cites three “primary drivers” that have brought closed loop systems into play in the Permian:
- Politics: At one point in an area of the Permian Basin, it was determined that open pit systems had a negative environmental impact on the land, and regulatory rulings were put into place that made it difficult, if not impossible, for operators to utilize open-pit drilling systems,” Goldsmith stated. The alternative was to utilize closed-loop solids-control systems and haul all drilled cuttings and drilling fluids waste to designated disposal systems.
- Horizontal Drilling: Horizontal drilling in our region has led to an evolution away from inexpensive, environmentally friendly water-based mud systems to more expensive, diesel oil-based mud systems, which are not able to be disposed of in open pits when the drilling phase is completed.
- Cost: While open-pit drilling is still considered the least expensive method of solids-control and drilling fluids waste disposal for vertical drilling in the Permian, closed-loop systems can and do provide a cost-effective alternative for keeping drilling fluid volumes low and containing wastes with the least possible environmental impact.
Cost of Closed-Loop
“The initial cost of utilizing a typical closed-loop system is the equipping of drilling rigs with steel working pits, or sufficient tankage to contain the entire drilling fluids system with no assistance from open earthen pits,” Goldsmith said. Additional costs include equipping the rigs with sufficient mechanical solids removal equipment, such as high volume shale shakers, centrifuges, cuttings dryers, etc. Though occasionally owned by the drilling contractor, this equipment is more commonly rented from service companies that specialize in the management and operation of closed-loop solids-control systems.
Costs vary depending on what equipment is being supplied, Dennis suggested, but in today’s market utilizing a closed loop drilling system runs about $2,500 per day.
Initial costs would vary depending on the process being used, Ledbetter said, but the daily cost would be somewhere between $2,500-$4,000 per day depending on the complexity of the system being used in the closed-loop drilling process.
Benefits of Closed-Loop Systems
“A closed loop drilling system provides a cost-effective and efficient means for extracting solids from drilling fluid,” Dennis said. There are many benefits in using a closed loop system as opposed to a traditional reserve pit, he continued, but, “probably the biggest cost benefit is the reduction of a driller’s liability.” Once the drilling is completed, all of the used drilling fluid is hauled off and properly disposed of.
A closed-loop system can also save water, Dennis said. It’s been estimated that a closed loop drilling system will only use 20 percent of the water that would be required to drill a well with a reserve pit system.
“The location footprint is also much smaller with a closed-loop system,” Dennis said. “This is great when drilling is being performed in close quarters such as residential areas.”
“Aside from reducing the environmental impact of disposing of drilling fluids waste on each drilling location, properly designed and managed closed systems lead to enhanced solids removal, easier and less costly management of drilling fluids properties, earlier detection of gas kicks or water flows, and reduced costs of drill site preparation,” Goldsmith said.
Ledbetter cited the main benefit as environmental.
“You eliminate a cuttings pit on location and send the drilled cuttings and used mud to a regulated disposal site,” he said. “You also reduce the amount of waste being sent to the landfill using a closed-loop drilling system. With that said, there are also cost savings that go along with the environmental benefits.”
Operators reduce the cost of the drilling fluid by recapturing as much of the fluid as possible and reusing it on location, Ledbetter offered.
“If you are using oil-based mud, this can be a substantial savings even at today’s oil prices,” he said. There’s also the reduction in the cost of waste disposal by recycling as much of the drilling fluid or the liquid as possible. This reduces the amount of bulking material needed to dry the cuttings prior to sending them to a landfill.
“The less material sent to the landfill, the greater the savings,” Ledbetter emphasized.
One of the side benefits is that using the closed-loop system forces the mud engineer and drilling engineer to do better tracking of the volumes of drilling fluid being used and the amount of waste being generated on location, Ledbetter added.
“Better tracking means keeping a closer eye on costs,” he said.
When it comes to the cost/benefit analysis, the Railroad Commission of Texas offered the following scenario:
Closed-Loop Drilling Fluid System
Problem: A small independent operator was concerned about the volume of drilling waste in conventional reserve pits at his drilling locations. Waste management costs were a concern, as well as the costs associated with impact on adjacent land due to pit failures. The operator was concerned about the potential for surface water or groundwater contamination and the associated potential liabilities.
Solution: The operator was drilling relatively shallow wells in normally pressured strata. Because the drilling plan was relatively simple, the operator investigated the feasibility of using a closed-loop drilling fluid system for these wells. The use of a closed-loop system eliminated the need for a conventional reserve pit. The operator negotiated with drilling contractors to obtain a turnkey contract, which required the drilling company to use a closed-loop system and take responsibility for recycling the drilling fluid waste.
Benefits: The turnkey contract was incrementally more expensive. However, because of reduced drill site construction and closure costs, reduced waste management costs, and reduced surface damage payments, the operator realized a savings of about $10,000 per well. Also, the operator reduced the potential for environmental impact and associated potential liability concerns.
A Lesson in Gravity and a Paradigm Shift
Some 35 years ago, it occurred to Goldsmith that those who designed drilling rigs were focused on the drilling rig versus the drilling fluid.
“Their primary objective was to build efficient drilling rigs, and the drilling fluids, or mud system, was a secondary objective,” Goldsmith concluded. “Even the very best mud systems I’ve seen on drilling rigs fall short in many areas. Mixing and maintaining mud is what makes roughnecking rough!”
Goldsmith launched his career in drilling fluids back in 1980 with Baroid Drilling Fluids in Snyder and opened his Midland Mudsmith office in 1999. Since that time, he has seen the industry evolve from rigs that utilized nearly 100 percent earthen pits, many not even plastic lined, with primitive or no mechanical solids removal devices, to modern day rigs with multimillion dollar closed-loop steel pits outfitted with sophisticated mechanical solids-removal equipment.
“Eventually, we at Mudsmith evolved from horizontal, rectangular, open-topped pits, to vertical, round, cone-bottomed, closed-top tanks,” Goldsmith said. These tanks take advantage of an optimized use of gravity.
Mud is simply a mixture of solids and liquids, and gravity insists that solids fall downward. Thus, vertical, round, cone-bottomed tanks are more efficient.
Nevertheless, almost all drilling contractors have invested in horizontal mud systems, so the paradigm shift to vertical tanks is a process. Meanwhile, using vertical tanks as supplemental mixing equipment at the rig has caught on, “and we can pretty much rent them as fast as we can build them,” Goldsmith said.
“Since Mudsmith’s tanks are symmetrical, they can be manifolded together in a series, and with the addition of a few solids-control tanks, a complete horizontal rig pit system can be replaced with what Mudsmith calls a Pit-less Pad-Drilling Fluids System,” Goldsmith said.
With so many rigs stacking, operators typically send oil-based mud back to their vendors, although mud vendors all have limited storage.
“Imagine you have 10 [or more] horizontal rigs stacked, and each rig needs to send back some 2,000 bbls of oil mud to be stored,” Goldsmith offered. “It doesn’t take long for storage to become a big concern and a big cost for either the mud vendor or the operator. This problem has created an opportunity for our vertical, round, cone-bottomed mud storage tanks equipped with circulating pumps.”
“A new paradigm was required to arrive at a cost-effective solution,” Goldsmith said. The old paradigm is as follows: closed-loop systems require a retrofit of most rigs; however, the Pit-less Pad-Drilling System does not require a retrofit as everything required is provided by one source.
One-hundred percent of all solids contained in upright settling tanks can be removed by trucks with no contamination to the land or groundwater. Benefits include:
- Eliminates soil/groundwater contamination
- Reduces time and construction costs
- Reduces clean-up, or remediation costs
- Much smaller location footprint
- No cuts into pipelines
- Saves birds, wildlife, and livestock
- Reduces water consumption
- Reduces waste of mud products
- Improves relationship with surface owners
“The key is the vertical tanks,” Goldsmith concluded. While typical earthen reserve pits and steel working pits are horizontal and open-topped, this system harnesses enhanced use of gravity by stacking drilling fluid volumes up vertically.
Julie Anderson, based in Odessa, is editor of County Progress Magazine, and is well known to many readers of PBOG as the former editor of this magazine.