What is a Dry Hole?
Every oil or gas well is drilled for the purpose of producing hydrocarbons (oil, natural gas or both). A dry hole is a term used to refer to any well that does not contain oil or natural gas in quantities sufficient enough to pay for the cost of drilling the well in the first place, or justify any further investment in developing the well.
Sometimes, it may not even contain any hydrocarbons at all; the rock thought to contain oil or gas may simply be filled with salt water. This kind of well is usually plugged immediately after drilling since it is not profitable for further investment.
Why Do We Have Dry Holes?
There are several reasons why a well may be dry:
- Absence of a reservoir rock at the drilled depth. It is possible that if we drill deeper or change direction, we may encounter the reservoir rock just around the corner.
- Absence of a trap in the reservoir. It is also possible to drill straight into the reservoir and find out that the trap or caprock did not properly seal the reservoir. When this happens, the oil or natural gas will continually escape through this space in the trap leading to a reservoir containing hydrocarbons of non-commercial quantity.
- Failure to recognize the reservoir. Funny as it sounds, it is possible to have drilled past the reservoir without realizing it. This is especially true when drilling with an oil-based drilling mud. Usually when we get close to the target depth we do not use this type of drilling mud to avoid a situation where we cannot distinguish between oil from the drilled formation and the oil that is a part of the drilling mud. However, certain drilling problems may require the use of an oil-based drilling mud; this is where it is possible to miss the reservoir and continue drilling deeper into a dry hole.
What is the Difference between a Dry hole and a Duster?
There is really no difference. A duster is another way of referring to a dry hole. Just like having to choose between using the words “happy” or “joyful,” it’s really up to you.
When Do We Say the Well is a Dry Hole?
There are times when the well drills into a rock containing salt water with no oil or gas whatsoever. This is the perfect description of a dry hole in the literal sense. However, there are other times when the well contains some amount of oil and/or gas, but not in commercial quantities. In this case, whether the well is termed a dry hole or not is only a matter of economics.
The question is: will this well pay the bills? If the answer is a “No,” then we pronounce it a dry hole and plug the well.
To make this decision we may have to factor in how much was spent drilling the well, what the estimated price of oil or gas will be throughout the life of the well should we decide to produce from this well, the cost of transporting, storing and processing the oil or gas and a host of other factors. (To learn more about what goes into these decisions, read Steps to a Successful Field Appraisal.) The decision whether the well is pronounced a dry hole or not is a function of economics.
Do Oil and Gas Companies Pay the Landowner Even When They Drill Dry Holes in a Land?
Yes. Cool, right? They not only pay when they strike oil or gas, they pay something called a “dry hole clause” when they have not yet found oil or natural gas on the land within the agreed period of time. Consider it as the rent the oil and/or gas company pays to the landowner asking for more time to continue searching for oil or gas on the land.
What Do We Do After We Drill Dry Holes?
We move on, but learn from them. Sometimes there could be a large reservoir of oil and/or natural gas just around the corner. (For an examination of “just around the corner,” see Well Spacing - Challenges and Opportunities.) And even if we do not find any oil or gas on this piece of land, we can at least make use of the data obtained from this well to reduce the chances of drilling into a dry hole in the future. Besides, this data can be shared with research institutions and other companies to better understand reservoir rocks and the drilling process.
Remember, no oil has ever been found without drilling in the first place.