Probabilistic Drilling Cost Estimating

Abstract

The use of risk analysis has become an integral part of the decision-making process within the Petroleum Industry. Today, petroleum engineers, geoscientists and project managers are using risking tools to evaluate the economic viability of both exploration and development projects. Conoco drilling engineers have combined a drilling cost spread-sheet along with a forecasting and risk analysis program to predict the range of both cost and days necessary to drill a well. The model utilizes risk analysis and incorporates Monte Carlo simulation along with regional cost data to generate drilling cost and time requirements for a well. Using this model, the Conoco drilling engineers effectively evaluate multiple drilling alternatives. Subsequently, more informed risk related recommendations from the drilling engineers aids management in the decision-making process of drilling a prospect or developing a project. This paper describes the spreadsheet and the risk analysis program used to generate the range of costs and days for a given well. In addition, the paper offers an example of the output data generated from the programs with an interpretation for a sample well.