The drilling bit cutting through the earth is a little crude. The drill bit is connected to the drill pipe which runs all the way back to the surface of the water to the drill ship. As the bit is rotated in the well bore (the hole that is cut into the ground), high pressure drilling fluids called “mud” is pumped down the center of the drill pipe and out. The drilling fluid has a red colour in the drawing below. As drill gets lower the drilling fluid carries chipped rock pieces (yellow) out of the hole to prevent them from building up on the bottom of the well. Drilling fluid, or “mud” beside clearing out rock bits from around the bit has other important function. It keeps the bit cool as it turn through layer after layer of hard rock formations. Furthermore, it keeps the bit and the drill pipe lubricated to help keep it from getting stuck in the ground. The mud helps prevent the well from caving in or taking a kick.
Source: http://www.treesfullofmoney.com/?p=1610
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