The Drilling Industry - Praise, Criticism and Challenge

MURRAY JR., WILLIAM J., RAILROAD COMMISSION OF TEXAS AUSTIN, TEX. MEMBER AIME The drilling industry, particularly the independent, competitive contracting segment which accounts for the great majority of the footage drilled, has had an amazing record during recent years in cutting footage charges for drilling. This has been accomplished in the face of rising wages and increased equipment and supply costs.The reduced charges have been of real benefit to the public which ultimately pays the costs. It has helped the industry to remain more competitive with foreign oil, thus reducing the severe impairment of national security occasioned by increasing dependence upon foreign supply. It has helped the industry by arresting somewhat the alarming decline in exploration for new potential reserves in entirely new geological traps and provinces.Further, the drilling industry is due praise for its emphasis on safety, for its efforts to combat blowout hazards in spite of increasing depth pressures encountered. It is to be praised for recruiting and training competent drilling personnel and in may other areas. Daily it is overcoming obstacles that were considered technically and economically impossible of solution 10 years ago. Commission Rule 54 Further praise is due to the drilling industry for its help in drafting and in its acceptance of the new, rather strict inclination surveying requirements which the Railroad Commission placed upon all wells drilled in Texas with its new Rule 54. To prevent and detect that small fraction of 1 per cent of the wells which otherwise might be illegally slanted, a burden has been placed on the entire drilling and producing industry. But there has been a gratifying small amount of complaint over this regulatory burden, and cooperation from industry has been commendable.The Texas Railroad Commission realizes that it is never possible to drill a perfectly vertical hole, and that in some areas where crooked-hole problems are severe a rather large tolerance is necessary if drilling is not to be economically prohibitive.Just as The American Association of Oilwell Drilling Contractors and other segments of the drilling industry rendered a great service in drafting Rule 54, we invite them to propose necessary modifications in specific problem fields so that we will have maximum protection against violation but minimum unnecessary costs occasioned by regulation. Criticisms of Drilling Industry The drilling industry also is subject to criticism in the area of reduced footage charges for contract drilling. Such reduced charges constitute a real contribution when they are based upon improved technology, greater efficiency and elimination of unnecessary expense. But to the extent that they are based on elimination of necessary expense in drilling operations, they are "penny-wise and pound- foolish"; ultimately, they may be rendering a disservice to the petroleum industry and to national security.It has been alleged by several leaders of the drilling industry, who should be in a position to know, that the low footage price is not permitting drilling contractors to maintain their equipment in good and safe condition and to replace worn-out or obsolete equipment. Also it is said that the technological improvements, which have aided in making reduced charges possible, are based upon research and experimentation in earlier years when the drilling industry had a reasonable profit margin and could afford to plan for the future. Today many leaders point out that profits are practically nonexistent, that there are no funds or incentive to carry on the research upon which future technological progress can be based. This situation, if true, should not be allowed to continue, because it is short-sighted and potentially harmful. Challenge of the Future Can the drilling industry meet the challenge of the 60's? Can it snap out of its lethargy and despondency, tighten its belt and eliminate all unnecessary costs and pass these savings on to the consuming public? At the same time, will it have the judgment to insist on enough income to replace and modernize equipment, keep wages sufficiently competitive with other industries to retain and recruit the high-caliber labor necessary for efficient and safe drilling and engage in research programs to overcome the increasing technological difficulties occasioned by greater depth and pressure and more difficult location. whether submerged or mountainous? This is the key to our future.The petroleum engineering profession must heed a similar challenge. The decline in petroleum engineering enrollment throughout the nation has been truly alarming. This indicates that students of high school and junior high school age, as well as the faculty and parents who advise them, feel that there is no future in the petroleum industry. We must all become concerned with this problem if it is to be solved. The nation will desperately need a strong domestic petroleum industry, if it is to survive the challenges of the future. The domestic petroleum industry must have an increasing number of competent, well-trained petroleum engineers and a modern research-minded drilling industry. We are the ones who must solve these problems-or let our industry degenerate, to the detriment of the public and our national defense. P. 231^