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610 where only two fitted parameters, a and b1, are needed. Thus, a plot of log10(well cost) vs. depth results Chapter 6 Drilling Technology and Costs (63) one might be able to describe the wellcost data as a function of depth using only a few parameters. As Figure 6.1 shows, the average costs of completed oil and gas wells for the depth intervals from 1,250 feet (380 m) to 19,999 feet (6,100 m) can be described as an exponential function of depth, that is: in a straight line: Although there is no fundamental economic reason for an exponential dependence, the “Oil and Gas Average” trend line in Figure 6.1 shows that a twoparameter exponential function adequately describes year 2004 JAS average completed well costs as a function of depth for the depth intervals considered. The correlation coefficient (R2) value for the year 2004 JAS data, when fit to Eq. (64), was 0.968. This indicates a high degree of correlation between the log of the completed well costs and depth. Similar plots for each year of JAS report data from the years 19762003 also show high levels of correlation between the log10 of well costs and depth, with all years having an R2 value of 0.984 or higher. An insufficient number of ultradeep wells, with depths of 20,000+ ft (6,100+ m), were drilled in 2004 to give an accurate average. Instead, a number of ultradeep well costs from 19942002 were corrected to year 2004 U.S. $ using MITDD index values (see Section 6.3.2) for the 17,50019,999 feet (5,300 6,100 m) depth interval and plotted in Figure 6.1. Most of the data points represent individual well costs that happened to be the only reported well drilled in the 20,000+ feet (6,100 m) depth interval in a region during a given year, while others are an average of several (two or three) ultradeep wells. Extrapolation of the average JAS line beyond 20,000 feet (6,100 m), indicated by the dashed line in Figure 6.1, is generally above the scatter of costs for these individual ultradeep wells. The ultradeep well data demonstrate how much well costs can vary depending on factors other than the depth of the well. It is easy to assume that all the depth intervals would contain similar scatter in the completed well costs. Another possible reason for scatter in the drilling cost data is that drilling cost records are often missing important details, or the reported drilling costs are inaccurate. The available cost data are usually provided in the form of an authorization for expenditures (AFE), which gives the estimated and actual expenditures for wells drilled by a company. For example, it is not uncommon for a company to cover some of the personnel and services required in the drilling of the well in the overhead labor pool, or for materials purchased for several wells to be listed as expenses on the AFE of only one of the wells. The lack of records and concern for completeness is an incentive to have a logical method to develop a model of detailed well drillingcost expectations. Such a wellcost model attempts to account for all costs that would relate to the individual well, estimated in a manner similar to a small company’s accounting. (64)PDF Image | Drilling Technology and Costs
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