Release Date: May 16, 2006

WASHINGTON, DC - A U.S. Department of Energy-funded technology that establishes a "downhole Internet" for drilling oil and natural gas wells is now available for commercial use.

The technology turns ordinary drill pipe into a highway for transmitting drilling and geological formation data at blazing speed from the bottom of a well to the surface and vice-versa. The potential benefits of the new technology include decreased drilling costs, improved safety, and reduced environmental impacts of drilling.

Grant Prideco's announcement of the commercial launch of its IntelliServ Network and related Intellipipe™ capped 5 years of research sponsored by DOE and managed by DOE's National Energy Technology Laboratory.

Oil & Gas Journal, the petroleum industry's leading trade publication, recently reported on BP America Inc.'s successful deployment of the technology to collect real-time measurement-while-drilling data from its wells in Oklahoma 's Arkoma Basin .

For decades, drillers have dreamed of a technology that would allow them to gather a wide range of downhole data-pressure, temperature, well position, formation characteristics, etc.-in as close to real time as possible in order to navigate wells efficiently, thoroughly assess downhole conditions, and accurately characterize the geologic and hydrologic environment being drilled. The ideal technology would acquire and process data quickly for drillers to "look ahead" of the drillbit.

Until now, no method of hard-wiring pipe with electrical wire connections to transmit these data has proven reliable. The couplings that connect the jointed drill pipe were a barrier; manipulating the drill pipe downhole usually broke the electrical connection.

DOE-funded technology provided a partial answer 30 years ago, with the invention of mud-pulse telemetry, which sends data as pressure pulses through the drilling mud that is circulated to clean drilling cuttings out of the wellbore. But the pace of this data transmission method-3-10 bits per second-makes it impossible to transmit large volumes of data up the wellbore in real time.

Intellipipe™ accelerates that transmission rate exponentially (57,000 bits per second), and Intelliserv network upgrade would boost that to a staggering one million bits per second. Not only can a driller receive crucial downhole information quickly with Intellipipe™, he can immediately "tell" a drilling tool what to do thousands of feet below the surface.

This real-time capability reduces economic and safety risk in drilling wells while it minimizes the number of wells needed to produce oil or gas from a reservoir. The technology also cuts down on the number of unplanned "trips" downhole to resolve drilling problems, reducing non-productive time and well costs.

Here's how the technology works: Intellipipe™ features high-speed, high-strength data cable embedded in the inside wall of the drill pipe. These cables carry data to small induction coils that are installed in protective grooves machined into the drillpipe connections, or couplers. When two sections of Intellipipe™ are joined, the induction coils are placed close together, and a low-energy data signal can transmit passively between them without a dedicated power source-from one pipe section to another, along a string of tens of thousands of feet of drill pipe. There is no physical connection to break.

The system has proven remarkably reliable in extensive U.S. and Canadian field trials. Since 2004, Intelliserv drill strings of 14,000 feet in Oklahoma and 10,000 feet in Alberta have drilled 18 wells, accumulating more than 6,000 hours of operation while drilling 180,000 feet.

Sophisticated downhole tools for measuring well parameters and reservoir characteristics were also deployed in these field trials, demonstrating the Intelliserv network's ability to transmit high-volume data continuously from a wide variety of tools. The high-speed network also serves as an enabling technology for even more sophisticated diagnostic tools not yet on the market.

By deploying a real-time downhole data transmission network, drillers can process more well and formation data at the surface rather than downhole, which in the long term potentially will permit them to use more rugged and much less expensive downhole sensors. The upshot is a dramatic cost reduction for oil and gas companies tackling today's increasingly difficult and harsh drilling environments.

Novatek Engineering, Provo , UT , developed the Intellipipe™ technology under a DOE-funded project. Grant Prideco, Houston , TX , subsequently formed a joint venture with Novatek to market the revolutionary drill pipe; Grant Prideco is sole owner of the Intelliserv Network.

Mike McShane, Grant Prideco chairman, CEO, and president, said, "We feel this technology, when coupled with compatible tools and software applications, can materially reduce drilling risks, improve well placement, and ultimately reduce the cost-per-barrel [of finding and producing oil and equivalent gas] for our customers."

McShane added that the IntelliServ operation is now open for commercial business and that contract talks are already underway with several major oil and gas operators.

The first commercial deployment of the Intellipipe™/Intelliserv technology is expected to occur in the North Sea , with an application that could reach about 5 miles-a new record for extended-reach drilling from a floating facility.