Mutual Expectations of Clients and contractor selection in directional drilling contracts

Client’s expectations of the directional drilling contractors are usually stipulated in contracts between them; therefore, one can include technical expectations in the task description and text of contract of a directional drilling operation. In the task description of the project, the predicted number of wells to perform directional drilling is determined. Furthermore, the client is provided with the details and technical specifications of each well, based on a predicted plan so that the operation proceeds based on that. The duty of the client is to provide initial plan design as well starting point, azimuth, angle, geology forecast program, and also providing information about the approximate wells to determine events during the drilling, like pipe sticking, loss, and well blowout. If well routes and schedules need to be changed or modified, the client and the contractor make the necessary changes or modifications during numerous meetings and coordination. In general, the expectations of clients from the contractors are as follows: The number of teams required for conducting directional drilling operations on different wells must be known. Presenting the equipment specifications in relevant workshops in Iran and abroad is important. The client must have visited the equipment in addition to monitoring of drilling operations before and during project implementation.

“Client’s expectations of the directional drilling contractors are usually stipulated in contracts between them; therefore, one can include technical expectations in the task description and text of contract of a directional drilling operation”

Presenting equipment and tools with new technology by the contractor are considered by the client. The contractor’s use of sufficient skilled work force, who has already been working in the oil and gas fields, is necessary and its documentation should be provided. The expectations are requested from the contractor before the start of the project and the client will have full supervision during the project on how it is done. Furthermore, the financial proposal is determined by tables of the rates of equipment and groups in operation or standby mode from the beginning of the project and is paid during the project based on those. A directional drilling operation may be required from 4 to 17 inches holes, based on the client’s request from the contractor; therefore, the contractor must provide all components and tools in different sizes and sufficient numbers and show them to the client so that the drilling operation continues on time and without any delays. Selection of directional drilling contractor To make a proper and fair selection of directional drilling contractors, the following stages are followed step by step. In the first stage, general items are requested from the participants, which includes providing a resume of activities, financial resources, tasks, and projects they have done in the past few years, or recommendations “the must have visited the equipment in addition to monitoring of drilling operation before and during project implementation.”

letters they have received from their previous clients. This is a preliminary assessment. In other words, the client provides the companies in a tender with an overview of the projects and goals. In turn, the contractor companies send their initial information for the client. Finally, an initial assessment is made and merely contractor companies far from the requirements who do not have technical expertise and the ability to finance are eliminated. In the second stage, the project’s task description and the client’s needs are provided for the contractor. At this stage, it is expected that the contractors provide thorough technical information and resume, mentioning the essential tools and equipment for the client, which are examined by the client’s experts. In this stage, some other companies are eliminated. It should be noted that generally, based on the rules, contractor companies reaching next stage must be at least three companies (rules might be different in the client companies). The notable thing in this stage is clear scoring system based on tables. Earning at least 60 points out of 100 points in most companies is necessary to go to the next stage. In this stage, before giving technical scores, question and answer sessions will be held with contractors and possible uncertainties and expectations are raised and given answers. As mentioned in the second stage, in the third stage, after minimum required companies go to next stage, it is time for prices and opening of the tender envelopes and contractors present their bids to the client. Tender commissions and the client’s technical representatives convene to open the envelopes. Based on the tables in the tender documents, financial proposals for each well and the whole project for the time of the contract are determined. Now, this question is raised that whether the financial proposal of companies that obtained the minimum and maximum required technical points is observed in this stage. The client extracts the leveled price based on the formula below.

L: Leveled final price

C: Bids in envelopes

i: Impact factor

t: Technical points Project

If we consider the price of the recommendations contained in the as a number, then the impact factor of technical points could be different numbers depending on the decision taken in the tender Commission and technical departments. Finally, a leveled price is extracted and the winner of the tender is the company with the least leveled price. In each project, the impact factor can change depending on the type of the project. It should be noted that if a company has proposed a very low price, for example in a directional drilling project, which is very technical and technological, this factor could be different. It is possible that only one company is not the winner of the tender and the project is given to two or three companies.

Author: Babak Krimi Dehkordi