Lost circulation is a situation when drilling fluid losses downhole because formation(s) is fractured. There are three levels of lost circulation which are seepage loss, partial loss and total loss.
Seepage loss is a situation when the mud volume loses into formation at very minimal and this will have no or little effect for a drilling operation.
Partial loss is a situation when some volume of drilling fluid loses into the well and you get some drilling mud volume back on surface. Not only do you lose the fluid volume, but you may have ballooning issue to deal. However, this type of fluid loss will not lead to well control situation because the total hydrostatic pressure does not decrease.
Total loss is the worst situation because there is no mud returning back to surface and the mud level will drop to any level down hole. Losing a lot of fluid into the well will directly affect hydrostatic pressure at the bottom. If you cannot keep the hole full, it might be a time when the hydrostatic pressure is less than the reservoir pressure. Eventually, a well control situation will be happened.
Additional information – What Cause Lost Circulation in Drilling Leading to a Well Control Situation
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