An alternative drilling technology known as Particle Impact Drilling (PID) is touted as drilling better and faster through difficult-to-drill rock formations, saving oil and gas companies up to half the cost of conventional drilling methods. And according to regulatory filings, the technology is being tested by a major oil company that has a large presence in Sublette County: Shell Oil.

The PID system, developed by the Houston-based private company Particle Drilling Technologies (PDT), uses round steel particles in drilling fluid to break through hard rock. The particles travel down the drill stem and accelerate through nozzles of fixed-cutter bits, which are typically used for abrasive formations, and strike the earth at high velocities. The particles are then circulated back up to the surface in the drilling fluid where the particles are “captured” for re-injection. Without wearing out, the particles are re-circulated through the fluid every six hours.

Because the system reduces drilling time, the company estimates PID will eliminate 30-50 percent of conventional drilling costs.

PDT entered into a contract with Shell Oil and certain affiliates in December 2008 for the development of drill bits for the PID system, according to PDT quarterly report filings. The contract is slated to run through November of this year, but can be terminated by Shell at any time, the report states.

Particle Drilling would “design, test and manufacture four PID bits ranging in size from 6 inches to 6.5 inches,” states the document. The drill bits would be tested during a trial period at a drilling site chosen by Shell.

That trial site is in Pinedale’s Mesa oil and gas field, said Jim Terry, president and CEO of PDT. Terry denied that their customer in the Mesa was Shell because the terms of the contract are confidential but could not deny that a contract had in fact been signed between the two companies.

“I can’t deny what you already know,” he said of the PDT report filings.

Tom Doll, state oil and gas supervisor for the Wyoming Oil and Gas Conservation Commission, said he was not aware that PID was being used in the state beyond the testing phase. Doll said he wasn’t even sure if the technology would be applicable for Wyoming’s geology.

“We are not aware of any company that may have or may be seeking [WOGCC] approval to test the technology,” Doll said in an email after checking with his engineering staff who would permit such activity.

At the end of December, PDT’s testing began on a well pad in the Mesa, said Terry. They took a crack at two wells but encountered a problem — for the first time ever, the eight-year-old company came upon an oil-based mud during drilling. Until then PDT had only drilled through water-based mud, said Terry. The Mesa’s mud caked the steel particles.

“They didn’t flow like they needed to,” said Terry. They are currently working on remedying that issue and plan to resume the field trial in 30 to 60 days.

PDT’s quarterly report said Shell would pay PDT $200,000 after completion of the technical review, $150,000 for the design and development work before the first field trial and up to an additional $50,000 within 30 business days after the first field trial dependant upon performance indicators.

Within the first two years after the completion and evaluation of this field trial, Shell and PDT can determine if additional field trials are necessary. Up to two additional field trials may be undertaken, states the report. PDT received its $200,000 for the technical review by the end of March 2009, according to the report.

Shell would not comment on their work with PDT other than saying they are looking at a range of technologies that could improve drilling efficiencies.

“Specific information about the various technologies is considered proprietary, so I can’t comment further,” said Darci Sinclair, senior communications advisor for Shell.

In a transcript from a Particle Drilling quarter end earnings call in Dec. 2008, an analyst from Monarch Capital congratulated Terry on having Shell as a customer, saying the company was “probably one of the most technologically advanced oil companies in the world.”

“So congratulations because I do think that says a lot for the technology,” the analyst said and went on to ask if the fact that Shell was a customer of PDT’s is helping them during conversations with other companies.

Terry responded to the comment saying PDT is not disclosing their customer in conversations with other companies, but they were speaking to major and independent oil field service companies.

On Monday, Terry told the Roundup PDT is currently working with Encana in Texas and Gasco Energy in Utah.

For the complete article see the 02-26-2010 issue.

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