Tip definition


What is Spud?

Drilling is the process of starting to drill a well in the oil and gas industry. Initially a larger bit is used to clean a hole in the surface, which is then lined with liner and cement to protect the groundwater. After the surface hole is completed, the main bit is inserted, which performs the task of drilling to full depth, and this process can also be called “drilling.”

Spud explained

Spuding in is a very complex task involving sophisticated machinery and techniques. It often costs hundreds of thousands of dollars to drill even a simple well. The most difficult wells can cost millions of dollars. The most expensive wells are often found offshore, where high-end drilling rigs can cost more than $ 500,000 a day at peak times.

Key takeaways

  • Spud refers to the early stages of drilling when rock, soil, and other sedimentary materials are removed with a drill bit.
  • First, a larger bit is used to form the hole, and then a second bit is placed to make the main hole.
  • When the main bit is added to the process, the task is known as “pierce” and occurs on the “pierce date”.
  • With offshore oil rigs, the drilling date is when the rig begins working on the seabed.
  • “Drill to completion” is the time between the date of drilling and completion of the well.

Initially, when a new oil well is to be drilled, a larger bit is used than will be used to reach the final depth. This first drill cleans dirt, rocks, and other debris and creates a hole in the surface that is then lined with concrete, forming a barrier to prevent any contaminants from seeping into groundwater.

Once the initial hole is completed, the main drill is placed. The day the main bit begins to drill into the ground, a process called drilling, is called the “drill date.” For offshore oil rigs, the drilling date occurs when the rig begins to work on the seabed, not when it first breaks through the water.

Special Considerations

Many investors find value in drilling dates, as this helps determine how effective a particular drilling operation has become. This can help differentiate one company from another by providing a point of analysis when determining how to invest funds.

Comparing the date of drilling with the date that full depth is reached, also known as drilling to TD, can help to compare the operations of one drilling company to another, as well as improvements in the performance of a company since completion from one well to the next. In addition, the phrase “drilling to completion” refers to the time that elapses between the date of drilling and the completion of the well, and the phrase “drilling to sale” or “launching the drilling to the platform” implies the time from drilling to the point where the well comes into operation. .

The time required to go from tip to TD, tip to completion, and tip to sell can be included as cycle times. The shorter the cycle time, the faster the particular well was drilled, completed, or able to produce, respectively.

Finally, the speed at which oil can be extracted directly affects the price of oil, which is generally sold by the barrel on the open market. Increasing efficiency generally reduces costs, allowing the same amounts of crude to be available in less time.

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Mark Holland

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