Brock Yordy:

Good morning. Welcome to episode 144 of The Driller Newscast, your weekly update on all things that are innovating, impacting, and inspiring the drilling and construction industry. I'm your host, Brock Yordy, and this week I'm so excited we're continuing with Soren Soe and we're going to jump into all of the fundamentals and the advantages and where we should utilize this tool and coiled tubing rigs, and I'm so excited, but before we jump into this, let's do a check-in.

How's your team, how's your safety going on? How has this first several weeks of the new year been? I need you to start considering, with all of the different flus and resurgence of some COVID and other things, we need to be thinking about our health, but most importantly, there's a lot of turmoil going on and we need to be thinking about that mental health and how that could possibly be distracting our teams, from finances to people's jobs elsewhere or how we are interacting with the rest of the world.

So, teams, it's very important right now for you to jump in and have that discussion of, "Do you like what you're doing right now? Is there anything I can help you with? Do you feel safe?" Let's work better together.

Let's jump into this great conversation with Soren Soe. 

Shifting gears, you started out designing rigs that were conventional rotary, conventional pull down and pullback, and you shifted to coiled tubing. Our industry, we have had coiled tubing rigs come in from the oil field that were used for fracking and for other pieces. We have geothermal companies here right now touting different coiled tubing packages and tooling, and I don't want to compare, but 90% of our industry is conventional rotary machines. And can you give us the breakdown of how we're doing it differently because it is like trying to drill with a noodle versus a stick and I think we get very stubborn-headed to go, "Wait, that doesn't make sense to us."

Soren:

Yes, a handful of drill rigs. There's about — I mean, this is a rough number — There's just over 2,000 coiled tubing rigs on the planet in total, right? And the majority of those, let's call it all of them, pretty much work in oil and gas, and it's only 6 to 8% that are actually used for drilling. A lot of them are used for work over as you said, and they're big. They're really big rigs and big monsters, so to speak, from a geothermal point of view. And so, there's a limited amount of meters actually drilled in open ground, but I guess there's some significant differences between a conventional drill rig using drill rods and a coiled tubing rig. I guess the first or the visible difference is your drill string is one continuous length of steel that you coil up or basically roll out into your borehole continuously, right? And there's a number of challenges and some opportunities and advantages. The challenges are that you — it is the same thing with a paperclip — you bend and stretch a piece of metal and it breaks. So it's something you can do as kind of a definite number of times, but you can definitely consider it like your garden hose or your rollup. So it is a very quick way of pulling something up or down.

It's been around for a lot of years. It's been used for drilling for a lot of years, so it is not a new technology. It's been used predominantly in oil and gas, as we talked about, but now it is moving into different industries and that also means it needs a different cost structure than has been existing in oil and gas, right? The dollar per foot, if you look at it like that, is very different in oil and gas and geothermal and potentially mining as well. So there's a number of challenges doing it. Some of the work that I got involved in with that was improving that, and we can talk a bit more about that, but the differences are also your drill string is not rotating, so you don't have a rotation unit at the surface. You have an injector, as we call it, which are a set of grippers that are pulling and pushing your drill string in and out of the ground as you drill. And at the bottom of your drill string, you have a bottom-hole assembly or a BHA. You have various tools to cut the ground, depending on what ground you are in. And, to simplify it, there's a couple of different versions, whether you are cutting soft ground or hard ground. I know that's a simple way of expressing it, but you can divide it into that.

What pans out to be the differences in the actual drilling is, once you start drilling, you are continuously drilling. You don't stop and start to add a drill rod or take it off. So once you have your circulation going, it's a continuous process. It also means that, most of the time, to actually do the drilling process, there's one person needed. You don't need an offsider every 20 feet or 40 feet to change your drill rod. It is continuous and that has, of course, an impact on productivity because, I mean, drilling a 500-foot geothermal borehole, you would have, say, 25 rods. You need to put 25 rods together going in, and you need to put 25 rods apart pulling out. So that's 50 connections you have to make every time you drill a 500-foot hole. And let's say you have a good day, you do three of them a day. That's 150 rod connections you are doing unless you have to stop somewhere in between and change a drill bit. Then you have to sort of reverse it a bit more. In coiled tubing, you just do that. You set your feed system depending on how you're drilling and it just looks after itself.

If you need to change a drill bit, as I mentioned, you just coil your tubing up and you can do that. It's a matter of minutes pulling out from 500 feet. So if you need to change a drill bit, it's less than five minutes — pulling out and change your drill bit, and in less than five minutes going in is another — which really affects the productivity. And people might think, "Oh, if you're pulling out at 80 or 100 feet a minute out of a borehole, you'll suck it in." But one of the things you can do with a coiled tube is you continue your circulation as you pull in and pull out. So you're actually not destabilizing the borehole as much as you do with conventional drilling. Every time you add a drill rod or take it off, you pulsate your borehole a little bit because you start and stop your circulation, which gives you these fluctuations.

You don't do that with the coiled tubing, for starters. So your borehole stability, just per definition, is way better, and we see the proof of that while drilling. So you can, in a lot of cases, if not all cases, get away with way less casing. Because you pulsate your borehole, typically you have to put a lot of casing in just to keep your borehole stable. We get away in coiled tubing drilling with very little casing, if any, which are some of the differences in that. The productivity side of it and the safety, not having to handle all the drill rods, are significant differences.

You can say when it comes to some of the indirect benefits you see from drilling is, because you are spending more time on bottom, your productivity is up. 30% is not uncommon when it comes to drill in pure productivity improvements. And then you have, too, quite significant savings on your consumables. On the benchmark tests that are out there and have been for a year, you're saving on fuel, you're saving on water if you're drilling with a water base, the drilling mud. So there's significant savings if you compare the two drilling methods. 

Some of the challenges that exist with coiled tubing compared to conventional drilling is, as you mentioned, the drill string is generally a smaller diameter than what you would have from drill rods and looking at it as a piece of spaghetti or shoelace in the borehole is not far off. So, per definition, it is a low weight on bit drilling method, so you don't want to push a coiled tubing drill string the way you could push a conventional drill rig, which means that drilling methods are slightly adjusted to that way of drilling. And if you adjust the two ways, if we want to put it in simple terms, if you want to compare it to Mud Rotary for instance, we are drilling with a few stabilizers potentially, put a downhole motor, and then you have the type of bit you potentially would choose for a conventional drill rig, and you have your fluid system going. You might have to, and you can easily push, it's not that you can't push on a coiled tube and drill string, but the limitations will be reached before. If you're drilling heart of formation, like rock, granite, everything like that, you want to drill with a percussive tool. I mean, you use less energy per meter to drill using a percussive tool, and you would probably shift to air drilling if you were on a drill site and start your compressor and do all of that with the challenges you have if you're in fluid and water. But on a tubing drilling rig, you can drill with a fluid hammer that has also been around since the Conco tubing, since the late '90s. Drilling with a fluid hammer has some advantages over air hammers. First of all, you don't compress air, so the energy consumption to run a fluid system is way less. You're not compressing air 40 times. It's a hydraulic way of drilling, and so it's very efficient and you drill with higher pressure, so suddenly your pressure jumps from 1,500 PSI to 4,000 PSI. So your drill string becomes a hydraulic system. Even if you have a failure or something goes wrong, it's still water coming up. So it's not like air; it's fairly safe, even if you have compressed fluid coming up somewhere. So you can see some of the differences, and drilling with the fluid hammer, you can drill very hard formations with very low weight on the bit if you need to.

That's some of the differences. So we see increased borehole stability, less — way less — manual handling by anyone because you can't, actually, and you can have a very compact design. Your drill rig and your fluid system and your drill string is all contained in the volume you would see of a drill rig. You need a system to process your fluid. You want to clean your fluid as you go. So you would have a fluid system doing that, but you can park that away from the rig if you need to put it into constrained spaces. So yeah, you have a very compact system where you have to really try hard to a large extent, one person operated — you need more than one person on site, but the actual drilling is one-person operated.

Brock Yordy:

So we have no weight on bit. We're using high rotation to be able to penetrate the hole, but like you said, a shoe lace or a noodle, it has memory and elasticity to it. Does it become rigid as we put it into a vertical point? As it's in tension, is it more rigid than it is when it's in the coiled tube? I think that's a big piece that the industry is like, "How does this work?"

Soren:

Yes, how that works: it is actually a high-tensile piece of steel, and the sizes that are used in geothermal are 2 3/8 or 2 7/8, so that's the size of your drill rod. So, it's a 2 3/8 or 2 7/8, and you can have 2 5/8. That's the range in what we would call the shallow geothermal size. You can have smaller. 

One of the things that you can probably characterize the coiled tubing rigs I've been involved in is addressing that steel. All of the other, so far, companies in the industry, like the oil and gas companies, they would have the coiled tubing on the back of the rig or on another rig. And the thing about bending and stretching the paperclips on all the conventional drill rigs, going in the hole and out of the hole, you would have that movement, let's say, six events, right? Because you're going over your gooseneck, as we call it — the thing that guides it into the injector — and then you're stretched between the gooseneck. So, you have six events. The first coiled tubing rig I was involved in the mid-2000s was the first one where we put the reel on top of the borehole. So, you reduce those six bending events to two. So, probably, the rigs you see out there with the tubing on the mast directly above the borehole, I probably have been involved in some of them. We have compared to a standard steel tubing used in oil and gas and a conventional setup, and there's a number of things that define the life of the coiled tubing.

We have seen coiled tubing rigs from the standards that have a fatigue life of, you can say, 40 trips in and out of the hole before you actually have a failure of the steel. The rig we are having here, the number is 600. But it's about making it cost efficient in a different industry because 40 would not work in geothermal. If you drill 40 holes, you have to change your coiled tubing and throw it out or whatever. We have 600, and there are models that are operating in the minerals industry where the fatigue life is even higher, but it does harden over time. But you would have around 600 trips in the hole.

Brock Yordy:

So tripping in and out is the most impactful. So right now in the States, the projects that have been used to drill with a coiled tubing rig for geothermal have all gone much deeper than what we had been used to in the industry pushing or advocating for holes that are a thousand to 1,500 feet. And that's because you could drill 1,500-foot holes 40 times, or you could drill 600-foot holes 40 times, but you're getting into that fatigue with what's happening. And so the more time you're in one hole and the deeper you can go, the more footage you can get out of one single coil.

Soren:

That's right. That's exactly right. I mean, I guess I'll not pretend to be a specialist on the economics of geothermal because there's loop sizes and pumping efficiencies and all of that that goes into the depth. What I can say is that the deeper you go with coiled tubing, the more efficient it gets, so to speak, and the easier it is to address if you want to change your bit or something like that, that's where it really proved. But the rig we have for geothermal has tried to address the need for holes in the range from 500 to 850 feet, but there's nothing limited in going even deeper. I mean, some of the equipment we have developed for the minerals industry is way deeper in using coiled tubing. So the depth is not the challenge, but the benefits are using less casing, better borehole stability, all of those, less injuries, faster drilling, all of that comes, you can say, as benefits from coiled tubing drilling.

What we have done, because we worked with a number of the drillers in the U.S. to optimize this technology for their specific needs, some of the stuff we have addressed is that and trying to... Not all drilling operations go to plan. You pull out of the hole and the last, you try to put your gear lube in and there's whatever, 5, 10 feet of the bottom of the hole that has collapsed, and you have to go back in and drill it out to get your lube in, and we can install the lube with the rig remaining over the hole. So the minutes it takes to get your gear lube in the ground, you don't have to move the rig. And if you need to pull your gear lube out and go back in and read the last 10 feet for whatever reason, it's a very easy operation. It takes minutes to go back into the hole, clean it out and come out again to give that another try. So that's been some of the things we've tried to address. 

Also, differences between conventional drill rigs and coiled tubing is that the tooling can be fairly long. The downhole motors and whatever tools you have, we don't have to disconnect them between the holes. So if you have many boreholes, as you sometimes do, 20 feet apart or whatever, you basically don't disconnect anything. Once you're done with one hole, you move on to the next and continue your operation. So doing coiled tubing rigs for different industries definitely had different needs because I mean drilling a 6,000 foot coiled tubing hole in one location, moving between holes is not as important as if you do a series of 400-foot holes.

Brock Yordy:

So you're monitoring the lifecycle of your coil. How hard is it to change a coil?

Soren:

I won't say it is not like a quick connector, but it is something that can be done in the field, which is what we've done with our rig. You don't have to take the rig offsite, you need a crane to lift the coil because the coil is heavy. It's, for starters, equipped with a thousand feet of drill string just to have, if you need to cut something off, you can, but you would have sufficient for that. But you can disconnect the reel, leave it on the bed of the body of the rig, and you have to have a crane in to disconnect it from the rig, lift the old coil up, and then you can put in a fresh coil, put that into the injector and ready to go. The more times you do it, the quicker you get. So it can be done. You don't have to take it to a factory or something like that. I mean, everything is easier if you're in a factory, but you can do it in the field if you have to.

Brock Yordy:

So what have been the barriers of seeing more drilling companies accept coiled tubing? 

Soren:

Trying something different, trying to understand it differently. You had a very interesting podcast early in December where the discussion was that every driller was the best driller, and I thought it was a very interesting reflection on how drillers think, and it needs some courage to try to do something differently. And there are many, you can say different industries have different drilling characteristics. I would say different. You can have a diamond drill in one end, which is one set of skill sets. You can have a water well driller, you can have hammer drills. There's all these different skill sets and there are probably some industries that are easier to adapt to tubing drilling, and that's probably also why, as you mentioned, there's a good handful of companies that are seeing the benefits of tubing drilling for geothermal. So it is getting adapted to it, but I think you need the first movers and our first clients, they want to make a difference.

They see the benefit, they want to have that, you can say productivity improves in terms of rod automation all in one. They want to have the productivity on all the aspects and want a better completion read rate in their system. So they're determined that this is the right thing for them. We have tried to do it around their workflow, so it should be fairly easy, but I understand it. When each of us does something else, we tend to pick up the phone we had before we bought the same car, we do the same thing too, you need a significant number of first movers to demonstrate that this is it, right?

Brock Yordy:

Early adoption's hard because I know some drillers and rig manufacturers that go, "Listen, we like being on the leading edge but not the bleeding edge." And so as you decide to put it all out there, it's everywhere. It's successful. You got one more step, one more piece of the person that wants to adopt. But at the same time, there was a project in Ohio where coiled tubing was the wrong application or the operation or how they laid it out. It just was not the most efficient way to complete those holes.

Soren:

I mean, there's a tool for every drill rig you need for people who need it to work. I think some of the barriers are also organizational, I would say. I think there's different decision-making processes in smaller companies and bigger companies. And I worked in bigger companies as well, also holding senior positions. So I also know what the decision matrix is in a bigger company, and one of them is risks. And if a senior manager has to put his neck out to say, "Yeah, we are ready to give this a go," and everybody will criticize him, and if it's not the right thing, it's his fault. We see a bit of more risk willingness in maybe smaller, agile companies where it's in their control. The people who invest in it, they take it in their hands. 

It becomes their success and they would adapt their workflow to make it happen. But there are, I mean, there's also geothermal drilling companies out there that base their business on coiled tube drilling. There's a few that only do achievement drilling for geothermal because there's a number of things you can add onto it. I haven't talked about any of that, but you can put a lot of extra things on it if you need to. And as you said, if you want to drill deeper, the advantage just keeps growing. But if we manage to get a few more systems out there successfully, I'm sure that's going to show the way we see it in minerals here in Australia where it's been a slow uptake, but it's starting now. Yeah.

Brock Yordy:

Yeah. I do see it a lot more in minerals than what we had. And from a compact ability standpoint, we talk about tool handling, but just in moving tools, having a thousand-foot roll seems a heck of a lot better than having 50 20-foot sticks.

Soren:

Yeah, it is all on the rig. You would not know the difference whether you are putting your rig up, whether you have a thousand feet of drill string on it or not. The rig doesn't behave differently. You need to put your mast up and your jack legs down and there you go. Yeah. And between drill sites, you also don't have to take your coil off. It fits if you load it on. The model we have is crawler-mounted because it needs to be put into very constrained spaces sometimes, as you are aware, but you put it on a low loader and it fits within the profile of road transport. You don't have to take the downhole motor off when you're transporting between different drill sites, not between holes, but between drill sites. You have to take a downhole motor off, but that's just what you do.

Brock Yordy:

How long is the BHA and the motor?

Soren:

It depends a bit on what you are drilling with, but around 20 feet plus or minus? Yeah.

Brock Yordy:

How do you start the hole?

Soren:

You can start it with a downhole motor. So you just start drilling with a rig, so you basically eject your mast and you start drilling like you would do with a drill rod. I mean, you still have a drill bit rotating in the end. You have to determine at some point in time whether you want to put in casing, top casing, or not. There are versions available. If you are in an area where you need top casing consistently, you can have a rotation unit on it as well. So you can use it as a conventional rig as well if you need to do that. In some of the geothermal projects that we have seen, if you need top casing, a lot of the time you have another drill rig coming up. It's putting all the top casing in if you have hundreds of holes, but you just start the hole like any other drill rig. But if you do have a rotation, you're around it, you're back to conventional things. You have to have some drill rods, you have to have your casing, all of that.

Brock Yordy:

Sure. With the time we have left, you are in Australia, you have a team and you're building rigs yourself. How did you get there? How did you determine this is the rig? Talk about your company.

Soren:

Yeah. I mean, we have been here in Australia, as I said, for more than 10 years developing these kinds of technologies for the minerals industry. I come from the industry. I am probably the least academic person. I don't consider myself academic, but technically we are also working for the University of South Australia, and that's a different university than many conventional universities. It's a university that has more than 2,500 industry partnerships across the globe and is always looking to grow. It's international partnerships and it is very innovative and it's very much about building stuff that can transform stuff. And the university has been working for the minerals industry. We have developed this equipment, starting at a point, "Will it work in minerals, or how will it work and can we actually make it cost competitive, productive enough in an environment that is totally different from what oil and gas is?"

And I mean, talking about coils is one thing, but there's a number of issues that need to be right to make it efficient. So you can say that research ventures operate for a period, and we've come to a point where those technologies are commercialized. There's commercial builders of the system. There's also commercial operators. So, I've been working in the geothermal industry with conventional drill rigs, and the opportunity for improvements is definitely there in geothermal. There's a lot going on. And I really would like the drillers to have a safer, more productive and easier life. So we've done everything possible to adapt what can be adapted from the geothermal industry into this started. 

And that's everything from the mechanical to electrical and big electronic engineers delivering really all the expertise into this. So we have this center of excellence about coiled tubing and all the aspects of it outside oil and gas right here in Adelaide. And I mean, it's not that it's going really well with the geothermal industry in North America, and they have reached out to see if we could do what we are doing for them now. And that's actually how it started, with a pull from drillers, which is because they see the advantages and the stuff that was on the market was not quite right for them. So how we could make something that would integrate it into geothermal is probably an explanation supported by the university as well. They're very much about supporting startups, so we have support from them. We have a really good manufacturing base here in Adelaide.

It manufactures for defense and mining. So it is high quality, highly efficient manufacturing systems. We've built coiled tubing drill rigs here in Adelaide. So the supply chain is here, the quality is here, the technical expertise is here. So that's how it started. And we would like to do much more in North America. And if it makes more sense in the end to do more over there, we are definitely open to that. But right now the expertise is still here using a lot of U.S. products. 

Brock Yordy:

That's excellent. If people want to reach out to you, what's the best way of contacting you?

Soren:

Oh, they can go to our website — potentially coilrig.com is the website — or they can send us an email. We haven't shown all the details about what our latest product looks like on our website because we still will have the first R operating in the U.S. next year. And then we will, you can say before that, we'll show what the actual product looks like. But yeah, coilrig.com is the way to contact us. Yeah.

Brock Yordy:

Excellent. Thank you for your time today. It's awesome. And since it's Wednesday here and Thursday there, can you tell me the lottery numbers back here in the United States so I can get out there and win.

Soren:

Unfortunately, I can't. I wish it worked like that because if it did, I would just build all the drill rigs and send them for free for the drillers to go nuts. 

Brock Yordy:

Well, thank you. And yes, industry, I got to meet Soren and his wife and partner in Manhattan, and we got talking about drilling and coiled tubing rigs and this industry is insanely small and he's designed and worked on other types of rigs and there's just so much here and he loves to share knowledge and you can see it. Check out their LinkedIn and the team that they have built and reach out. It's got to be the best tool for what we're applying to. And sometimes that will be conventional rotary. And other times we can get into advancing this industry and finding out what would happen if we say why not and drill with a shoestring as it was referred to today. I'm excited to see this rig here in the States and pay attention to what's happening because it's always fun to be on the leading edge and seeing how we can advance this industry. So, thank you for coming on today.

Soren:

Last thing I would say, I mean I've seen the system works. It's not about whether it works or not, it definitely works, right? So I'm sure it has a big future and we are very keen to work with somebody who wants to take this on. And with that said, thanks for having me, Brock.

Brock Yordy:

Thank you, Soren. This was so insightful and we appreciate your time and industry. We have an opportunity right now — from ground-source geothermal heating and cooling to power generation, hot rock — there's lots of innovations happening and those innovations are happening within the United States and they're happening around the world. We need to be looking at all aspects. I want you to think again about the PDC bit that was invented by GE in 1973 and didn't get wide-scale adoption until the early 2000s. And when it did get wide-scale adoption, it didn't start here in the United States. So again, think about what Soren had to offer. Think about all the opportunities and how we do the least amount of impact to the environment and to the public and our neighbors, and we can do better. 

Check out thedriller.com for all the latest. Johnny Oldani is doing a heck of a job there. We're always looking for contributors. I want you to go have a safe, productive week. 

Thanks, everybody.