Professional Documents
Culture Documents
Submission 57 - Attachment 1
Table of Contents
Introduction ........................................................................................................................................................... 4
Well design 6
Directional drilling 10
Well Integrity........................................................................................................................................................ 12
Well operations 13
Well abandonment 13
Regulatory Framework 15
Commonwealth Government 15
Queensland ................................................................................................................................................. 16
Victoria ........................................................................................................................................................ 17
Tasmania ..................................................................................................................................................... 17
References ........................................................................................................................................................... 18
Introduction
In 60 years of exploration and production, Santos has drilled over 3,000 oil and gas wells,
and currently produces from approximately 1,500 wells. Santos drilled its first successful well
(Gigealpa-2) in the Cooper Basin, South Australia in December 1963.
In the oil and gas industry, well drilling is the process used to drill a hole in the ground for the
purpose of determing the presence of or extracting hydrocarbons. Proper well construction
and integrity are critical to ensure the safety of our workers, the community and the
environment. Well designs are prepared by engineers, and are based on the Santos Drilling
and Completions Management System (DCMS) and industry standards.
The DCMS is the company-wide management system and set of standards which reflects
our many years of drilling experience and defines the requirements and controls for safely
drilling wells in all jurisdictions where Santos operates. The requirements include
organisational structure, planning activities, responsibilities, practices, procedures,
processes and resources.
These standards are based on the American Petroleum Institute (API), NORSOK and
International Organization for Standardization (ISO) standards for well construction, well
integrity and abandonment of a well. API, NORSOK and ISO standards are designed to
assist industry professionals safely design and construct oil and gas wells, improve the
efficiency and cost-effectiveness of their operations, comply with legislative and regulatory
requirements, safeguard health, and protect the environment.
Tight gas
Tight gas is not dissimilar to conventional oil or gas, in terms of geologic setting, except that
the reservoir rock has a lower permeability, meaning that it is more difficult for the gas to
flow from the reservoir than is the case for conventional, higher permeability sandstone. To
produce the gas economically, hydraulic fracture stimulation is required. Tight gas has been
produced in Australia in the Cooper Basin for decades through the use of hydraulic
fracturing. Refer to the hydraulic fracture stimulation technical fact sheet for additional
information on this topic.
Well Construction
Well design
Oil and gas wells are designed and constructed to safely access and produce hydrocarbons;
whilst appropriately managing the risk to people, the environment and property.
Key objectives when designing a new well include:
Prevention of any interconnection between petroleum reservoirs and water aquifers.
Ensuring formation fluids are contained within the well and there is no leakage.
No substances are introduced that may cause environmental harm.
In order to achieve the above objectives, a thorough understanding of both the surface
location and sub-surface formations is required. To achieve this understanding, studies are
conducted, including:
Surface topography review including proximity to infrastructure to determine an
appropriate surface location for the well.
Local hydrogeology studies to identify locations of all groundwater aquifers to ensure
isolation and protection of groundwater resources.
Geological studies to identify depth and composition of the rock formations and
proximity to sub-surface faults or unconformities.
As more wells are drilled in an oil or gas field, the understanding of the geology increases
and the well design may be optimised accordingly.
The lease will be constructed to allow for the following activities and infrastructure:
Permanent wellhead facilities.
Sufficient space for manoeuvrability of the drilling rig and associated equipment.
Office building.
Turkeys nest for freshwater storage.
Sump for collection of drilling mud and cuttings.
Temporary camps.
The size and layout of the lease will vary depending on a number of factors such as the
number of wells to be drilled, the size and type of drilling rig and the surrounding
environment. Typical lease size is in the order of 100 x 100 metres to 150 x 150 metres.
Wells that require additional space on the site for storage (e.g. water storage tanks or ponds
for stimulation/completion/hydraulic fracturing activities) or laydown may exceed this. The
cleared area required for drilling is typically significantly reduced in size once the well is
operating and the site is converted to a production lease. The production lease still needs to
be of a size sufficient for future work-over rig operations.
During the lease construction additional drilling related activities are completed. A small hole
is excavated and lined with steel or concrete. This cellar provides a work space during well
construction for the workers and drilling equipment and allows for containment of the drilling
fluid which is returned to surface whilst drilling the surface hole. The cellar is approximately 2
metres by 2 metres and 1.5 metres deep. Then a large (typically 14 30 inches in diameter)
pipe called conductor is installed 10 20 metres into the ground. The objective of the
conductor is to seal off any unconsolidated, near-surface formations or water sands.
Figure 2
The first hole section drilled is called the surface hole. This hole section is drilled across any
regional water aquifers that could be used for domestic and agricultural purposes and into a
geological rock layer that has sufficient strength to withstand gas or oil reservoir pressure.
Once the hole section is drilled to the required depth, the drill pipe and BHA are pulled out of
the well and steel pipe known as casing
is run into the well. The joints of casing
are approximately 12 metres in length
and have a threaded connection (Figure
3) on each end. The industry standard
for oil and gas casing is provided by the
American Petroleum Institute (API) in
Specification 5CT. API 5CT specifies
various casing properties such as
length, wall thickness,mechanical
properties of the steel such as tensile
and yield strength, and is the most
commonly used standard when
selecting casing for oil and gas well
construction. Figure 3
Once the casing has been run in the well to the pre-determined depth, it is cemented in
place by a process where the
cement slurry is pumped down the
inside of the casing. When
sufficient cement slurry has been
pumped to fill the volume between
the casing and the exposed rock,
the cement is displaced down the
casing with drilling fluid (Figure
4). At the end of the cementing
process, the inside of the casing
contains drilling fluid, and the
space between the outside of the
casing and the exposed rock is
filled with cement, typically to
surface for surface casing. This
means the well is isolated from
any aquifers by the casing and a
layer of cement. The surface
casing is then pressure tested to
ensure there are no leaks. The
testing exceeds any pressure
likely to be experienced during the
life of the well.
After waiting for the cement to
start setting, the bottom of the well
is drilled out with a smaller
diameter drill bit and drilling
continues. Depending on the well
design, several progressively
smaller diameter casing, referred
to as intermediate casing, may
need to be installed as above
based on factors such as
formation stability or pressure. As
opposed to the surface casing, the
layer of cement around the
intermediate casing may not go all
the way to surface. The top of
cement is instead located to
isolate any hydrocarbon or water formations and to isolate the bottom of the casing in order
to drill ahead safely.
At surface, the wellhead system is installed on top of the casing and enables them to be
isolated. As each new casing is installed, a new section of the wellhead system is added to
accommodate the additional casing. As drilling operations continue, the wellhead allows the
pressure between different stings of casing to be monitored to ensure there are no leaks, or
a build up of pressure. The type of wellhead system used, which includes the material
selection, is based on the maximum pressure and types of fluids it will be exposed to over its
life.
After the target depth is reached and the target formations have been evaluated, a decision
is made whether to complete, suspend or abandon the well.
If the well is abandoned, cement plugs are pumped into the hole across designated
formations in order to ensure they are isolated from each other and the site is remediated
back to its original condition.
If the well is to be completed as a production well, production casing is usually run and
cemented in place. At this point, all subsurface formations are isolated from each other by
layers of cement and steel casing, preventing cross flow of fluids (Figure 5). The well is
then shut-in and the rig is moved off location.
Figure 5
Following release of the drilling rig, additional activities are required in order to bring the well
into production. This is dependent on the completions program and may include operations
such as hydraulic fracture stimulation (refer to the hydraulic fracture stimulation technical
sheet for additional information). Additional equipment is also installed on the wellhead to
support any further steel tubing run in the well and to control the flow of fluids from the
reservoir.
Directional drilling
Directional drilling practices enable the
trajectory of the well to be controlled
during drilling. The ability to control
trajectory gives engineers many
options when it comes to designing a
new well. Two of the key options
include horizontal/high angle wells
(Figure 6) and pad drilling, both of
which are discussed below. Although
directional drilling provides added
versatility when drilling a new well, it
can also result in an increase in project
cost and complexity.
Figure 6
Horizontal/high angle wells
One reason for controlling wellbore trajectory is to drill horizontal or high angle wells through
the target reservoir. By increasing the contact area between the wellbore and the reservoir,
the hydrocarbon flow rate and volume recovered per well can be increased. This can result
in a reduction in the number of wells required to efficiently drain a reservoir compared to if
vertical wells are used, reducing the area of impacted land.
Pad wells
Another reason for controlling wellbore trajectory is to enable multiple wells to be drilled from
a single pad location. In pad drilling, all of the wells are grouped closely together at surface.
Below the surface however, the wellbores can step out large distances and cover a greater
area. Although the size of the pad required for multiple wells is larger than required for a
single well, the number of pads required is reduced and therefore the total area required is
less. This substantially reduces the environmental footprint of activities and increases the
efficiency of well construction. A multiple well pad also reduces the number of drilling rig
moves, which reduces the requirement for access road construction and use, as well as
emissions.
Water management
On average up to 1 ML of water is used for each well drilled. Depending on availability and
applicable regulations, water used during drilling and hydraulic fracturing is either taken
from:
produced water from adjacent oil and gas production facilities. or
local water bores which will draw the water from shallow or deep aquifers in full
consultation with the land owner or occupier.
Well Integrity
As defined by the NORSOK standard D-010 (The NORSOK standards are developed by the
Norwegian petroleum industry for oil and gas industry developments and operations.), well
integrity is the application of technical, operational and organisational solutions to reduce
risk of uncontrolled release of formation fluids throughout the life cycle of a well. Well design
and construction seek to achieve integrity similar to that provided by the impermeable rock
formations that lie between the oil or gas bearing formations and the groundwater which
have effectively isolated the groundwater over millions of years.
Well integrity is essential for two reasons:
1. To isolate the internal conduit of the well from the surface and sub-surface
environment. This prevents the migration of fluids between sub-surface layers and is
critical for protecting groundwater, and the surface and sub-surface environment.
2. To isolate and contain the wells produced fluid (i.e. the hydrocarbons) within the
production casing of the well.
Well operations
Regular monitoring takes place throughout the life cycle of all wells to ensure that all
operations are within established parameters and in accordance with the relevant well
design and regulatory requirements.
Santos uses an Asset Integrity Management System (AIMS) to ensure that the management
of operated wells complies with Santos standards and government regulations and to
identify any potential well construction or operational issues. AIMS requires regular
monitoring of cased, suspended, or producing wells to ensure the effectiveness of well
barriers. This surveillance includes visual checks for any leaks at surface and monitoring of
annulus pressure. Annulus pressure is the pressure between the different layers of casing. If
sustained annulus pressure is identified, this is a signal that a well barrier such as the casing
or cement has failed and is no longer effective.
In the event that regular surveillance identifies a breach of a well barrier, an appropriate
remedial response can be developed and executed in a time frame in line with any
associated risks.
Well abandonment
When a well reaches the end of its productive life, it is abandoned and the surface location
rehabilitated in accordance with company policies, procedures and all regulatory
requirements. For an onshore location, this includes removing all above ground
infrastructure including the wellhead, backfilling the cellar, replacing top soil and reprofiling
the area (if required). The end goal of any well abandonment program is that there should be
minimal evidence that oil and gas operations have taken place. Well abandonment is closely
managed at Santos through a number of internal and external processes to ensure that
Santos meets its standards and policies. In addition, all well abandonment programs must
be approved by the relevant regulatory authority.
In order to abandon a well, cement plugs are pumped into the well to isolate all hydrocarbon
and water containing formations. The combination of cement and steel ensures geological
layers are hydraulically isolated.
The placement and verification of the integrity of the cement plugs during abandonment is a
critical step that is highly regulated in order to ensure that the remaining hydrocarbons
cannot leak into overlying formations and cause contamination. After placement, various
methods of verification, including mechanical and hydraulic tests, are used to ensure the
plugs were placed at the correct location and are providing an acceptable hydraulic seal.
Well Safety
Santos manages well safety in accordance with a series of safety management standards to
ensure safe operations.
The company-wide Environment, Health and Safety Management System (EHSMS)
provides a structured framework for effective environmental, health and safety practices and
performance across all of Santos' activities and operations. The system, based on the
AS/NZS ISO 14001 and AS/NZS 4801 standards, has been designed to ensure a consistent
approach company-wide and incorporates industry best practice.
Santos identifies and mitigates safety and environmental risks through ongoing monitoring
and maintenance of equipment and wells.
Santos carefully assesses and thoroughly understands the condition of each well. Risk
factors are understood and are appropriately managed through comprehensive planning and
testing regimes, including pressure and integrity testing.
Production variables at wellhead facilities such as pressure, temperature and flow rate are
monitored. Deviations outside normal operations result in a physical inspection of the well. In
the unlikely event of a loss of containment of hydrocarbons from wellhead facilities and
equipment, the well is shut in to repair the leak.
Santos has emergency response and well control plans in place at every site for all aspects
of operations, including well management. These detailed plans outline actions, roles and
responsibilities for emergency response to help ensure the safety of people and the
protection of the environment and property.
APPENDIX Regulatory
Regulatory Framework
State and territory governments are mainly responsible for the legislative framework,
licensing and decision making processes governing petroleum exploration and production
activities.
Responsibility for Australia's offshore areas, beyond three nautical miles from the territorial
sea baseline (referred to as coastal waters), rests with the Commonwealth Government.
Onshore and as far as three nautical miles seaward of the coastline, petroleum operations
are the responsibility of the individual state and territory governments. The Commonwealth
Government shares joint regulatory authority with the relevant state or territory in the
adjacent areas of Commonwealth waters.
Commonwealth Government
The National Offshore Petroleum Safety and Environmental Management Authority
(NOPSEMA) is charged with regulating health and safety, well integrity and environmental
management for all offshore petroleum facilities and activities in Commonwealth waters and
in coastal waters where state and territory functions have been conferred. The main
petroleum legislation for offshore operations is the Offshore Petroleum and Greenhouse Gas
Storage Act 2006 (OPGGS Act) and its regulations.
The Environment Protection and Biodiversity Protection Act (EPBC Act) is the main piece of
Commonwealth Government environmental legislation. It provides a legal framework to
protect and manage impacts upon matters of national environmental significance which
include water resources in relation to coal seam gas and large coal mining development.
Under the EPBC Act, matters of national environmental significance include listed
threatened species and communities, listed migratory species, wetlands of international
importance, nuclear actions, Commonwealth marine areas, World Heritage properties and
National Heritage places.
The Commonwealth Government established the Independent Expert Scientific Committee
on Coal Seam Gas and Large Coal Mining Development (IESC) as a statutory body under
the EPBC Act. The IESC provides advice to Commonwealth and state government
regulators on water-related impacts of coal seam gas and large coal mining development
proposals. These arrangements are supported by a National Partnership Agreement on Coal
Seam Gas and Large Coal Mining Development, a joint initiative of the Commonwealth
Government and participating states (New South Wales, Victoria, Queensland and South
Australia) (IESC).
In 2013, the Council of Australian Governments (COAG) Standing Council on Energy and
Resources published a national harmonised regulatory framework for coal seam gas to
address concerns based on four key areas: water management and monitoring; well integrity
and aquifer protection; hydraulic fracturing; and, chemical use (SCER).
The exception is Tasmania which regulates gas through the Mineral Resources
Development Act 1995. This Act defines petroleum and coal seam gas separately:
petroleum means naturally occurring hydrocarbon or mixture of hydrocarbons,
whether in a gaseous, liquid or solid state; or mixture of one or more such
hydrocarbons and gas but does not include coal seam gas
coal seam gas means the gas known as coal bed methane and includes any
naturally occurring hydrocarbon, or mixture of hydrocarbons, that is within a deposit
of coal or oil shale.
Queensland
The main regulatory framework in Queensland is the Petroleum Act 1923 and Petroleum
and Gas (Production and Safety) Act 2004 which are supported by policy, legislation, and
codes of practice. The legislation for State waters in Queensland is the Petroleum
(Submerged Lands) Act 1982.
Petroleum Activities in Queensland are licensed under the Environmental Protection Act
1994, which imposes strict operating conditions to reduce or avoid potential environmental
impacts that must be complied with before any activity can begin.
For coal seam gas wells, the well design must meet or exceed requirements specified in The
Code of Practice for constructing and abandoning coal seam gas wells and associated bores
in Queensland.
Western Australia
Petroleum exploration and development is regulated under the Petroleum and Geothermal
Energy Resources Act 1967 and the associated Schedule of Onshore Exploration and
Production Requirements 1991. These are supported by other legislation and regulations
such as the Environmental Protection Act 1986. The following petroleum environment
regulations came into force in August 2012:
These regulations are administered by the Western Australia Department of Mines and
Petroleum (DMP). Full public disclosure is required for products, additives, chemicals and
other substances that may be used in drilling, hydraulic fracturing or other down-well
petroleum related activities. The disclosure is made available on the DMP website.
The legislation for State waters in Western Australia is the Petroleum (Submerged Lands)
Act 1982.
Victoria
Petroleum exploration and development and mining in Victoria are regulated under the
Mineral Resources (Sustainable Development) Act 1990. This is supported by other
legislation such as the Environment Protection Act 1970 and Water Act 1989.
The legislation for State waters in Victoria is the Offshore Petroleum and Greenhouse Gas
Storage Act 2010.
South Australia
Petroleum exploration, development and production in South Australia are regulated under
the Petroleum and Geothermal Energy Act 2000 and the associated Petroleum and
Geothermal Energy Regulations 2000. The South Australian regulations are objective based
rather than prescriptive and seek to ensure effective management of activities through
compliance with performance standards developed cooperatively by industry, the regulator
and the community.
The legislation for State waters in South Australia is the Petroleum (Submerged Lands) Act
1982.
Northern Territory
The exploration and extraction of petroleum is regulated in the Northern Territory under the
Petroleum Act 2013. This is supported by other legislation such as the Water Act 1992 and
Environmental Assessment Act 2013. Water use is not subject to regulation under the Water
Act 1992 when used for extracting petroleum resources. The legislation for State waters in
Northern Territory is the Petroleum (Submerged Lands) Act 1981.
Tasmania
Petroleum exploration and development activities in Tasmania are regulated under the
Mineral Resources Development Act 1995 (MRDA) (including the Mineral exploration code
of practice, and Schedule for onshore exploration for petroleum, shale gas, coal seam gas,
or geothermal substances). This Act and the associated Code and Schedule provide the
regulatory framework for all petroleum and gas exploration and development activities within
the state. This is supported by the Environmental Management and Pollution Control Act
1994, and Land Use Planning and Approvals Act 1993.
The legislation for State waters in Tasmania is the Petroleum (Submerged Lands) Act 1982.
References
Department of Natural Resources and Mines, QLD. October 2013. Code of Practice for
constructing and abandoning coal seam gas wells and associated bores in Queensland.
Edition 2. Available at: https://www.business.qld.gov.au/industry/csg-lng-industry/csg-
industry-best-practice/safety-requirements-codes-practice
Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining
Development (IESC). 2013. Available at: http://www.environment.gov.au/coal-seam-gas-
mining/.
NSW Trade and Investment, Resources & Energy. September 2012. Code of Practice for
Coal Seam Gas Well Integrity. Available at:
http://www.nsw.gov.au/strategicregionallanduse.
Standing Council on Energy and Resources (SCER). 2013. National Harmonised
RegulatoryFramework for Natural Gas from Coal Seams Available at:
http://www.scer.gov.au/workstreams/land-access/coal-seam-gas/.