sonatrach well costing

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Development Phase

September October 2005abalt solutions limited - 2005

INTRODUCTION TO HYDROCARBON EXPLOITATION

Introduction to Hydrocarbon Exploitation

2005 Abalt Solutions Limited. All rights reserved

Development Phase

Well Costing

DrillingTechnology-WellCosting


Well Economics

Maximizing revenue by:

Increase in probability of finding

hydrocarbons.

Controlling costs of Drilling and

Production. Planning and Design of wells to produce

at optimum flow rates with respect tosafety and reliability.


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Development Phase





Drilling Contracts

Day Rate Incentive

Bonus per foot

Significant component of contractors revenue.

Well drilled according to drilling programme.

Contractor can advice on type of bit (not decide onit)

Faster the drilling, more effective

Requires high level of Supervision and adherenceto Operators Policies.

Operator has control of drilling Provides material and equipment to drill the well

except rig.



Drilling Contracts

Footage Contract

Rate per foot to pre determined depth, after

which day rate format.

Contractor supplies bits.

Operator can take control anytime and revert to

day rate. Contract specifies conditions for good well

integrity.

Suitable where downhole risks such as lostcirculation are low.


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Development Phase





Drilling Cost Categories

Fixed Costs: Wellheads, bits, site preparationetc.

Unit Costs: Bulk Barite , cement etc.

Day Rate Costs: rig hire, rental tools etc.

Some companies use Tangible and Intangible

Costs

Tangible costs are Unit and fixed costs.

In Tangible costs are day rates.



Drilling Cost Categories

To Minimize Drilling costs-

Specify fit for purpose materials for well

Minimize NPT

Optimization of drilling times with respect tosafety and reliability

Competitive prices on materials Minimize overheads.


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Development Phase





Day Rate Costs- Land Rigs

1500Mud Logging services

5000Electric Logging

1200Mud engineering services

2500Cementing services

50,000Rig(2000 HP)

25,000Rig(1000 HP)

Cost/day($)

The Costs above are a rough guide and depend upon market

conditions and locations.



The Authorisation for expenditure is the budget for a welland prepared and signed by a senior manager from theOperator.

It contains

Project Description

Summary of expenditure

Partners shares

Well breakdown costs

AFE


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Development Phase





Drilling Time estimate

Drilling time on hole, circulation, wiper trips ,tripping , side tracking , directional work and

hole opening.

Flat times spent on running and cementingcasing, make up BOP and wellheads.

Testing and completion times

Formation evaluation time

Rig up and down

Non Productive time (NPT)



Well Costs

Rig Costs

Tangibles

Services


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Development Phase





Well Costs

Rig Costs Cost of hiring drilling rig and associated equipments.

Depends upon rig rate per day ($/day)

Rig rate depends upon :

Type of rig

Market conditions

Length of contract

Days on well

Mobilization and Demobilization of rig

Supervision Other charges



Well Costs

Tangible Costs Refer to products used on the well.

Casing Tubing Completion equipment Wellhead accessories Bits Core heads Cement products Mud products Solid control consumables Fuel Other supply materials


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Development Phase





Non Productive Time

Any time that has been spent for routine orabnormal operations which are carried out as a

result of failure.

It is important to realize that each step should

follow preceding step without delay.

Each step should take least possible time with

good practise.



Non Productive Time

Classification of NPT

Repair Time

Rectification time

Client time


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Development Phase





Non Productive Time

Repair Time

Time spent on repairs on the rig and

related equipment during which drillingoperations is shut down.

Any operation that might be carried out

to place the well in safe conditions beforeattempting repair and on completionreturning the well to former status.

Waiting on spare parts, weather orpersonnel before normal drilling

operations are carried out.



Non Productive Time

Rectification time

Time spent in overcoming downhole

problems that delay operations.

Some of the operations are :

Freeing stuck pipeFishing lost cones

Squeeze cement

Well kill operation


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Development Phase





Non Productive Time

Client Time

Time spent on operations requested byclient that was not included in the drilling

program earlier.

These are not NPT, but indirectly linkedand might affect the AFE.

Operations are

Plugging back

Extra coring

Extra logging

sonatrach well costing

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