Drill Bit Economics

 

Drill bit economics consists of drilling curves, cost-per-interval and breakeven analysis; all of which

possess significant differences.

 

There are two types of drilling curves:

1. Depth vs. Time

2. Depth vs. Costs

 

Drilling costs are comprised of three different components:

 

Time

Rotating Time

Drilling / on bottom time

Non-drilling

Reaming / back reaming

Non-Rotating Time

Connections

Tripping

Circulating

Running Casing

Logging

Maintenance / Repair

Fishing

Bit Cost

Downhole Tool / BHA Costs

Standby Charges

In-Hole Costs

Up-Front Charges

Indirect Costs

Borehole Quality

Trajectory

Shape

Open-Hole Risk

Borehole Integrity

Formation Damage

Pressure Risk

Wireline and Cement Unit Rentals

 

 

Basic Cost-Per-Interval

CI =   RR x (HR + TT) + (DT x HR) + BC

                                    INT

 

CI   = Cost-Per-Interval (Currency)

RR  =  Rig Rate (Hourly)

HR  = Drilling Time (Hours)

TT   = Trip Time (Hours)

BC   = Bit Cost (Currency)

INT = Interval Drilled (feet or meters)

 

 

 

Historical Versus Projected Cost-Per-Interval

Historical

Uses information from an actual well or wells

Cost-Per-Interval is actual

Projected

Used for selection and comparison

Calculated based on planned or target well

Calculated based on projected hours and interval drilled

 

Breakeven Analysis

Breakeven analysis demonstrates rate of penetration or interval required to meet or exceed offset

cost-per-interval.

 

Assumed Footage

ROPBE = RR / CLO – [((R(TT)) + BC) / INT]

 

Assumed Penetration Rate

INTBE = [RR (TT) + BC] / [CLO – (RR / ROP)

 

 

ROPBE    = Breakeven Penetration Rate

INTBE       = Breakeven Interval

CLO        = Offset Cost-Per-Interval (Currency)

RR          = Rig Rate (Hours)

TT           = Trip Time (Hours)

BC          = Bit Cost (Currency)

ROP       = Assumed Rate of Penetration

INT         = Assumed Interval Drilled