Professional Documents
Culture Documents
JAMES A. CRAIG
TABLE OF CONTENTS
Drilling Cost Prediction
Cost Specification
Authorization for Expenditure (AFE)
Drilling Optimization
Drilling Optimization Techniques
Drilling
Cost Equation
Breakeven Calculations
Decision Making
Location
= cost, $
a, b = constants depending on well location
D = depth, ft
=
D
ln C ln a
b
b
COST SPECIFICATION
Fixed Costs
preparation
Casing, cement, tubing and packers
Daily Costs
Unit Costs
This is the price of a unit of a commodity such
as the price per tonne of barite or bentonite.
This can be optimized in the tendering process,
which is Drilling Manager responsibility.
Good site supervision can ensure that
consumption is not excessive.
AFE Components
Preparation
Drilling and abandonment
Testing
Completion
Preparation
This part of the AFE covers the costs incurred
to the point at which the rig is brought on to
location.
For onshore wells this would include site
building and well engineering as the main cost.
For offshore wells, the main costs are site
surveying and well engineering.
Testing
It is only the testing cost charged by the testing
company
It must also include all the ongoing daily costs
associated with the rig such as:
rig day rate
fuel oil
site personnel
office personnel
office overheads
Completion
It is not only the cost of completion equipment and
services but also the costs of:
rig day rate
fuel oil
extra casing string if run
perforation
site personnel
office personnel
office overheads
drilling contractors
electric logging companies
cementing companies
casing companies
tool rental companies
mud loggers
mud companies
bit companies
wellhead companies
coring companies
It
lump sum, or
A percentage of well costs.
DRILLING OPTIMIZATION
Drilling optimization is minimizing the cost of
reaching the wells objective while maintaining
safety standards.
This minimum drilling cost is also the optimum
drilling cost.
cost equation
Breakeven calculations
Cost-effective decision making
Cdrill
Cbit + Ctools + Cmud + ( Crig + Csupport + Ctool rental )(Ttrip + Tbit + Tlost )
=
Tbit ROPavg
Cdrill
Ctool rental
Breakeven Calculations
Decision Making
It is difficult to exactly calculate the
consequences of each decision to be made
Some degree of uncertainty concerning the
consequences are made.
Decision of this type must be made on a
statistical basis:
EV
= C1 P1 + C2 P2
P1 + P2 =
1
EV
= expected value, $
C1 = cost of first event, $
P1 = probability of first event, fraction
C2 = cost of second event, $
P2 = probability of second event, fraction
Cbit = $3,000
ROPavg = 35 ft/hr
Cmud = $5,000
Crig = $800/hr
Ctool rental = $100/hr Csupport = $200/hr
Cdrill
Cbit + Ctools + Cmud + ( Crig + Csupport + Ctool rental )(Ttrip + Tbit + Tlost )
=
Tbit ROPavg
Cdrill =
Cdrill = $45.43/ft
1,
029
S
active
Cmud
1,
029
0.06
Cmud
= 6, 000 15 0.9006
Cmud = $81, 051
Ecost
Cmud
= equipment cost, $
=
Cmud 57,894 + E cost
Breakeven
Example 3 EV calculation
We
required
Rig rate ( Interval time + Waiting time ) + [ RCJB rental + Rental time ]
= $204, 200
RCJB on standby
( Rig rate Interval time ) + ( RCJB rental + Interval time )
=
Not
required
RCJB not
rented
Required
RCJB
rented
C = $200,000
P = 75%
EV = 200,000 x 0.75
EV = $150,000
C = $204,200
P = 25%
EV = 204,200 x 0.25
EV = $51,050
C = $200,750
P = 100%
EV = 200,750 x 1.00
EV = $200,750
RCJB on standby
Total
EV = $200,750