Drilling Technology and Costs: Chapter 6

CHAPTER6
DrillingTechnology and Costs

6.1 ScopeandApproach _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _63
6.2 ReviewofGeothermalDrillingTechnology _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _64
6.2.1 6.2.2 6.3.1 6.3.2 6.3.3 6.4.1 6.4.2 6.5.1 6.5.2 6.5.3 6.5.4 6.6.1 6.6.2 Earlygeothermal/EGSdrillingdevelopment ___________________64
CurrentEGSdrillingtechnology__________________________65
Generaltrendsinoilandgaswellcompletioncosts ______________69
MITDepthDependent(MITDD)drillingcostindex _______________612
Updatedgeothermalwellcosts _________________________617
HistoryoftheWellcostLitemodel ________________________618
WellcostLitemodeldescription _________________________619
Basecasegeothermalwells___________________________619
Comparisonwithgeothermalwells _______________________622
Comparisonwithoilandgaswells _______________________622 Modelinputparametersensitivitiesanddrillingcostbreakdown_______623
CurrentoilandgasdrillingtechnologiesadaptabletoEGS __________627
Revolutionarydrillingtechnologies _______________________628
6.3 HistoricalWellCostData _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _68
6.4 PredictingGeothermalWellCostswiththeWellcostLiteModel _ _ _ _ _ _618
6.5 DrillingCostModelValidation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _619
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6.6 EmergingDrillingTechnologies _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _627
6.7 Conclusions _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _629

References _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _631
Appendices _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _633
A.6.1 WellCostData ______________________________________633

A.6.2 WellcostLiteModel ____________________________________637
A.6.2.1BackgroundandbriefhistoryofthedevelopmentofWellcostLite ______637
A.6.2.2WellcostLiteHowdoesthecostmodelwork? ________________637
A.6.3 ModelResultsforSpecificAreasandDepths ______________________649
A.6.4 ModelResultsforReworkedWells ___________________________651
A.6.4.1Rigondrilling/deepening460m(1,500ft)/rigstillonthewell ________651
A.6.4.2Rigondrilling/sidetrackedlateral/asaplannedpartofthewelldesign ___651
A.6.4.3Reworks/righastobemobilized/addalateralfor
productionmaintenance/aworkover ______________________651
A.6.4.4Redrillsto enhance production/aworkover/rigto be mobilized _______651
Chapter6 DrillingTechnologyandCosts
6.1ScopeandApproach
Exploration, production, and injection well drilling are major cost components of any geothermal project (Petty et al., 1992; Pierce and Livesay, 1994; Pierce and Livesay, 1993a; Pierce and Livesay, 1993b).Evenforhighgraderesources,theycanaccountfor30%ofthetotalcapitalinvestment;and withlowgraderesources,thepercentageincreasesto60%ormoreofthetotal.Economicforecasting of thermal energy recovery by Enhanced Geothermal System (EGS) technologies requires reliable estimatesofwelldrillingandcompletioncosts.Forthisassessment,acostmodelflexibleenough to accommodate variations in welldesign parameters such as depth, production diameter, drilling angle,etc.isneededtoestimatedrillingcostsofEGSwellsfordepthsupto10,000m(32,800ft). Althoughexistinggeothermalwellcostdataprovideguidanceusefulinpredictingthesecosts,there areinsufficientnumbersofgeothermalwellrecords,ofanykind,tosupplythekindofparametric variationneededforaccurateanalysis.Currently,therearefewerthan100geothermalwellsdrilled per year in the United States, few or none of which are deep enough to be of interest. Very few geothermalwellsintheUnitedStatesaredeeperthan2,750m(9,000ft),makingpredictionsofdeep EGS wellsespeciallydifficult.Althoughtherearecleardifferencesbetweendrillinggeothermaland oil and gas wells, many insights can be gained by examining technology and cost trends from the extensiveoilandgaswelldrillingexperience. Thousandsofoil/gaswellsaredrilledeachyearintheUnitedStates,anddataonthewellcostsare readilyavailable(AmericanPetroleumInstitute,JAS,19762004).Becausetheprocessofdrillingoil andgaswellsisverysimilartodrillinggeothermalwells,itcanbeassumedthattrendsintheoiland gasindustryalsowillapplytogeothermalwells.Additionally, thesimilaritybetweenoilandgaswells andgeothermalwellsmakesitpossibletodevelopadrillingcostindexthatcanbeusedtonormalize thesparsedataongeothermalwellcostsfromthepastthreedecadestocurrentcurrencyvalues,sothat thewellscanbecomparedonacommondollarbasis.Oilandgastrendscanthenbecombinedwith existinggeothermalwellcoststomakeroughestimatesofEGSdrillingcostsasafunctionofdepth. Oilandgaswellcompletioncostswerestudiedtodeterminegeneraltrendsindrillingcosts.These trendswereusedtoanalyzeandupdatehistoricalgeothermalwellcosts.Thehistoricaldatawereused to validate a drilling cost model called Wellcost Lite, developed by Bill Livesay and coworkers. The model estimates the cost of a well of a specific depth, casing design, diameter, and geological environment.Aseriesofbasecasegeothermalwelldesignswasgeneratedusingthemodel,andcosts forthesewellswerecomparedtocostsforbothexistinggeothermalwellsandoilandgaswellsover a rangeofdepths.Knowledgeofthespecificcomponentsofdrillingcostswasalsousedtodetermine howemergingandrevolutionarytechnologieswouldimpactgeothermaldrillingcostsinthefuture.
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6.2ReviewofGeothermalDrillingTechnology
6.2.1 Earlygeothermal/EGSdrillingdevelopment ThetechnologyofU.S.geothermaldrillingevolvedfromitsbeginningintheearly1970swithaflurry of activityinTheGeysersfieldavapordominatedsteamfieldinNorthernCalifornia.Although internationalgeothermaldevelopmentbeganbeforethe1960sinplacessuchasItalyatLardarello, NewZealand,andIceland,thedevelopmentofTheGeysersfieldinnorthernCaliforniawasthefirst big U.S project. Problems encountered during drilling at The Geysers, such as fractured hard and abrasive formations, extreme lost circulation, and the higher temperatures were overcome by adaptation and innovation of existing oil and gas technology to the demanding downhole environmentingeothermalwells.ThedrillingatTheGeysersresultedinthereconfigurationofrigs speciallyoutfittedfordrillinginthatenvironment. These early geothermal wells at The Geysers were perceived to lie in a category somewhere between deep,hot,waterwellsandshallowoil/gaswells.Later,otherU.S.geothermaldrillingactivitiesstarted in the hydrothermal environments of Imperial Valley in California, the Coso field in East Central California, and Dixie Valley in Northern Nevada. Imperial Valley has a layercake arrangement of formations,verysimilartoasedimentaryoilandgasfield.Here,geothermalfluidsareproducedinthe boundariesofanareathathassubsidedduetotheactionofamajorfault(SanAndreas).TheSaltonSea reservoirisintheImperialValleyabout25milesfromElCentro,California.Someextremelyproductive wellshavebeendrilledandareproducingtodayatthissite,includingVonderahe1,whichisthemost productivewellinthecontinentalUnitedStates.Anextensionofthesametypeofresourcecrossesover intoNorthernMexiconearCierroPrieto.Approximately300MWe aregeneratedfromtheSaltonSea reservoirandmorethan720MWe fromCieroPrieto.NorthernNevadahasnumerouspowerproducing fields.DixieValleyisarelativelydeepfield(>3,000mor9,000ft)nearafaultline. InparallelwiththeseU.S.efforts,geothermaldevelopmentsinthePhilippinesandIndonesiaspurred onthesupplyandserviceindustries.Therewascontinualfeedbackfromtheseoverseasoperations, because,inmanycases,thesamecompanieswereinvolvednotablyUnocalGeothermal,Phillips Petroleum(nowpartofConocoPhillips),Chevron,andothers. Similar to conventional geothermal drilling technology, drilling in Enhanced Geothermal Systems (EGS) in which adequate rock permeability and/or sufficient naturally occurring fluid for heat extractionarelackingandmustbeengineeredoriginatedinthe1970swiththeLosAlamosledhot dry rock (HDR) project at Fenton Hill. Drilling efforts in EGS continued with the British effort at Rosemanowes in the 1980s, and the Japanese developments at Hijiori and Ogachi in the 1990s. ResearchanddevelopmentinEGScontinuestodaywithanEGSEuropeanUnionprojectatSoultz, France, and an Australian venture at Cooper Basin (see Chapter 4 for details of these and other projects).FirstgenerationEGSexperimentsarealsoongoingatDesertPeakinNevadaandCosoin southernCalifornia,whichisconsideredtobeayoungvolcanicfield.Experienceatthesesiteshas significantly improved EGS drilling technology. For example, rigs used to drill shallow geothermal wellsrarelyincludeatopdrive,whichhasproventobebeneficial.However,thereisstillmuchthat canbeimprovedintermsofreducingEGSdrillingcosts. AsaresultoffieldexperienceatconventionalhydrothermalandEGSsites,drillingtechnologyhas maturedduringthepast30years.Toalargedegree,geothermaldrillingtechnologyhasbeenadapted
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fromoil,gas,mining,andwaterwelldrillingpracticesandgenerallyhasincorporatedengineering expertise, uses, equipment, and materials common to these other forms of drilling. Nonetheless, some modification of traditional materials and methods was necessary, particularly with regard to mudsandmudcoolers,bitdesign,andbitselection.Initially,therewereproblemswithrapidbitwear, especiallyintheheelrow(orgauge)ofthebit,corrosionofthedrillpipeduringtheairdrillingeffort, and general corrosion problems with well heads and valves. Major problems with wear of the bit bearingandcuttingstructurehavebeenalmostcompletelyovercomewithtougherandmorerobust, tungstencarbiderollerconejournalbearingbits.Rapidwearofthecuttingstructure,especiallythe heelrow,hasbeenovercomebythedevelopmentofmorewearresistanttungstencarbidecutters,and theoccasionaluseofpolycrystallinesurfacedinsertstoimprovewearresistance.Alternativedesigns wereneededforgeothermalapplications,suchasforcasingandcementingtoaccommodatethermal expansion and to provide corrosion protection. Drilling engineers and rigsite drilling supervisors used their experience and background to develop these methods to safely drill and complete the geothermalwellsinTheGeysers,ImperialValley,thePhilippines,Indonesia,NorthernNevada,and otherhydrothermalresourceareas. 6.2.2 CurrentEGSdrillingtechnology The current state of the art in geothermal drilling is essentially that of oil and gas drilling, incorporatingengineeringsolutionstoproblemsthatareassociatedwithgeothermalenvironments, i.e.,temperatureeffectsoninstrumentation,thermalexpansionofcasingstrings,drillinghardness, andlostcirculation.TheDOEhassupportedarangeofR&DactivitiesinthisareaatSandiaNational Laboratories and elsewhere. Advances in overcoming the problems encountered in drilling in geothermalenvironmentshavebeenmadeonseveralfronts:
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Hightemperature instrumentation and seals. Geothermal wells expose drilling fluid and downhole equipmenttohighertemperaturesthanarecommoninoilandgasdrilling.However, ashydrocarbon reservesaredepleted,theoilandgasindustryiscontinuallybeingforcedtodrilltogreaterdepths, exposingequipmenttotemperaturescomparablewiththoseingeothermalwells.Hightemperature problemsaremostfrequentlyassociatedwiththeinstrumentationusedtomeasureandcontrolthe drilling direction and with logging equipment. Until recently, electronics have had temperature limitationsofabout150C(300F).Heatshieldedinstruments,whichhavebeeninusesuccessfully foranumberofyears,areusedtoprotectdownholeinstrumentationforaperiodoftime.However, evenwhenheatshieldsareused,internaltemperatureswillcontinuetoincreaseuntilthethreshold for operation of the electronic components is breached. Batteries are affected in a similar manner whenusedinelectronicinstruments.Recentsuccesswithbarehightemperatureelectronicshas beenverypromising,butmoreimprovementsareneeded.
Temperatureeffectsondownholedrillingtoolsandmudshavebeenlargelyovercomebyrefinement ofsealsandthermalexpansionprocesses.Fluidtemperaturesinexcessof190C(370F)maydamage components such as seals and elastomeric insulators. Bitbearing seals, cable insulations, surface wellcontrol equipment, and sealing elements are some of the items that must be designed and manufacturedwiththesetemperaturesinmind.Elastomericsealsareverycommoninthetoolsand fixturesthatareexposedtothedownholetemperatures.
Logging. The use of well logs is an important diagnostic tool that is not yet fully developed in the geothermal industry. For oil and gas drilling, electric logging provides a great deal of information
abouttheformation,evenbeforefieldtesting.Logsthatidentifykeyformationcharacteristicsother thantemperature,flow,andfracturesarenotwidelyusedforgeothermalresources.Loggingtrucks equipped with hightemperature cables are now more common, but not without additional costs. Geothermalloggingunitsrequirewirelinesthatcanwithstandmuchhighertemperaturesthanthose encounteredineverydayoilandgasapplications.Thishasencouragedthegrowthofsmallerlogging companiesthatarededicatedtogeothermalapplicationsinCaliforniaandNevada.
Thermalexpansionofcasing. Thermalexpansioncancausebucklingofthecasingandcasingcollapse, whichcanbecostly.Also,thermalcontractionduetocoolingininjectionwells,orthermalcyclingin general, can also lead to damage and eventual tensile failure of casing. It is customary in U.S. geothermal drilling to provide a complete cement sheath from the shoe to surface on all casing strings.Thisprovidessupportandstabilitytothecasingduringthermalexpansionasthewellheats up during production and shields against corrosion on the outside of the casing. In contrast, thermalexpansionismuchlessofanissueinoilandgascompletions.Oilandgascasingsandliners areoftenonlytaggedatthebottomwith150to300m(500to1,000ft)ofcementtoisolatezones, anddonotrequireacompletesheathfromshoetothesurface.Theoilandgaslinerlapsarealso squeezecementedforisolationpurposes.Thermalexpansionandcontractionofcasingandlinersis an issue that has been adequately addressed for wells with production temperatures below 260C (500F).Fullsheathcementingandsurfaceexpansionspoolscanbeemployedinthistemperature rangewithconfidence.Aboveoperatingtemperaturesof260C(500F),greatercaremustbetaken toaccommodatethermalexpansionorcontractioneffects. Drillingfluids/mudcoolers. Surfacemudcoolersarecommonlyusedtoreducethetemperatureof the drilling fluid before it is pumped back down the hole. Regulations usually require that mud coolersbeusedwheneverthereturntemperatureexceeds75C(170F),becausethehightemperature ofthemudisaburnhazardtorigpersonnel.Thedrillingfluidtemperatureatthebottomofthewell willalwaysbehigherthanthetemperatureofthefluidreturningtothesurfacethroughtheannulus, because it is partly cooled on its way upward by the fluid in the drill pipe. High drilling fluid temperaturesinthewellcancausedrillingdelaysafterabitchange.Stagingbackintothewellmay be requiredtopreventbringingtothesurfacefluidthatmaybeaboveitsboilingtemperatureunder atmosphericconditions. Drillbitsandincreasedrateofpenetration. Whilemanyoilandgaswellsareinsedimentarycolumn formations, geothermal operations tend to be in harder, more fractured crystalline or granitic formations,thusrenderingdrillingmoredifficult.Inadditiontobeingharder,geothermalformations arepronetobeingmorefracturedandabrasiveduetothepresenceoffracturedquartzcrystals.Many EGSresourcesareinformationsthatareigneous,influencedbyvolcanicactivity,orthathavebeen altered by high temperatures and/or hot fluids. Drilling in these formations is generally more difficult.However,notallgeothermalformationsareslowtodrill.Manyaredrilledrelativelyeasily overall,withisolatedpocketsofhard,crystallinerock.Intheseconditions,drillbitselectioniscritical.
Bitsusedingeothermalenvironmentsareoftenidenticaltothoseusedinoilandgasenvironments, exceptthattheyaremorelikelytocomefromtheharderendofthespecificationclassrange.Theoil andgasindustrytendstosetthemarketpriceofdrillbits.Hardtungstencarbidebasedrollercone bits, the most commonly used type for geothermal applications, comprise less than 10% of this market.Hardformationbitsfromtheoilandgasindustrygenerallydonotprovidesufficientcutting
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structure hardness or heel row (the outer row of cutters on a rock bit) protection for geothermal drillingapplications.Thehard,abrasiverocksencounteredingeothermaldrillingcausesseverewear on the heel row and the rest of the cutting structure. This sometimes results in problems with maintenance of the hole diameter and protection of the bearing seals. In some instances, mining insert bits have been used (especially in air drilling applications) because they were often manufacturedwithharderandtougherinsertmaterial. Problems with drilling through hard formations has been greatly improved by new bearings, improved design of the heel row, better carbides, and polycrystalline diamond coatings. Bit manufacturing companies have made good progress in improving the performance of hard formationdrillbitsthroughresearchonthemetallurgyoftungstencarbideusedintheinsertbitsand throughinnovativedesignofthebitgeometry.Journalbearingrollerconebitsarealsoprovingtobe quiteeffective.However,cuttingstructurewearratesinfractured,abrasiveformationscanstillbea problem, and bitlife in deep geothermal drilling is still limited to less than 50 hours in many applications. When crystalline rocks (such as granite) are encountered, the rate of advance can be quiteslow,andimpregnateddiamondbitsmayberequired. Polycrystallinediamondcompact(PDC)bitshavehadamajorimpactonoilandgasdrillingsince theirintroductioninthelate1970s,butdidnothaveasimilareffectongeothermaldrilling.Although PDCbitsanddownholemudmotors,whencombined,havemadetremendousprogressindrilling sedimentaryformations,PDCbasedsmallelementdragbitsarenotusedinhardfracturedrock.
Lostcirculation. Lostcirculationisadrillingproblemthatariseswhenthecirculationofthedrilling fluidisinterruptedanditdoesnotreturntothesurface.Thereturnflowintheannulusisladenwith cuttingscleanedfromthewell.Thesuddenlossoffluidreturncausesthecuttingstobesuspended in the annulus and/or to fall back down the well, clogging the drill pipe. With a total loss of fluid return,thedrillingfluidmustbemixedandpumpedfastenoughtosustainflowandkeepthebit clean,whichcanbeanexpensiveprocess.Lostcirculationexistsinoilandgasdrilling,mining,and inwaterwelldrillingaswell,butismuchmoreprevalentingeothermalwelldrilling.
Lostcirculationcanbequitesevereinthetop300to500m(1,000to1,600ft)offormationswhere subhydrostaticconditionsexist,leadingtostandingfluidlevelssubstantiallybelowthesurface.Top sectionsareoftenweatheredanddisturbedandmayallowleakageintotheformation.Lostcirculation ingeothermalprojectstendstobenearthesurface,whilelostcirculationgenerallyoccursatgreater depthsinoilandgasdrilling,whichcanhaveagreaterimpactonoveralldrillingcosts. Fluid flow from the hole into the loss zone may also remove cement, preventing completion of a sheatharoundthecasingfromtheshoetothesurface,orfromtheshoetothelinerhanger. Problems with lost circulation during drilling have been reduced somewhat by the greater use of aerateddrillingfluidsorairdrilling.Airdrillingisanothertechnologythathasbeenadaptedfromthe oil/gasandminingindustries.Geothermalreservoirsarequiteoftenunderpressuredandproneto lostcirculation,whichcanmakeforverydifficultcasingandcementingprocedures.Airoraerated drilling fluids reduce the effective density of the fluid column and therefore may permit drilling withoutlossofcirculation.Aerateddrillingfluidsaremostcommon,buttherearevariouswaysin which air is introduced to affect density reduction. One form of air drilling, utilizing dualtube
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reversecirculationdrilling(andtremmietubecementing),isbeingtestedasasolutiontoseverelost circulationinthetopholeintervalofsomewells.Thedualtubeprocessprovidesapathforfluidsto flowdowntheouterannulusandairtobeinjectedintheannulusbetweeninnertubeandtheouter tube.Thecombinedeffectistoairliftthecuttingsandfluidsinsidetheinnertube.Theuseoftremmie tubestoplacecementattheshoeofashallow(ornotsoshallow)casingshoeisborrowedfromwater well and mining drilling technology. This technique is helpful in cementing tophole zones, where severelostcirculationhasoccurred. Another solution to cementing problems in the presence of lost circulation is to drill beyond, or bypass,thelosszoneandtocementusingatechniquethatcanpreventexcessiveloss.Lightweight cement, foamed cement, reverse circulation cement, and lightweight/foamed cement are developments that enable this approach to be taken. However, only lightweight cement has found widespread use. Selection of an appropriate cement is critical, because a failed cement job is extremelydifficulttofix.
Directionaldrilling. Directionallydrilledwellsreachoutindifferentdirectionsandpermitproduction frommultiplezonesthatcoveragreaterportionoftheresourceandintersectmorefracturesthrough a singlecasing.AnEGSpowerplanttypicallyrequiresmorethanoneproductionwell.Intermsofthe plantdesign,andtoreducetheoverallplantfootprint,itispreferabletohavethewellheadscloseto eachother.Directionaldrillingpermitsthiswhileallowingproductionwellbottomspacingsof3,000ft. (900m)ormore.Selectivebottomholelocationofproductionandinjectionwellswillbecriticalto EGSdevelopmentashighlightedinChapters4and5.

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The tools and technology of directional drilling were developed by the oil and gas industry and adaptedforgeothermaluse.Sincethe1960s,theabilitytodirectionallydrilltoatargethasimproved immenselybutstillcontainssomeinherentlimitationsandrisksforgeothermalapplications.Inthe 1970s, directional equipment was not wellsuited to the hightemperature downhole environment. Hightemperatures,especiallyduringairdrilling,causedproblemswithdirectionalsteeringtoolsand mud motors, both of which were new to oil and gas directional drilling. However, multilateral completionsusingdirectionaldrillingarenowcommonpracticeforbothoilandgasandgeothermal applications.Thedevelopmentofapositivedisplacementdownholemotor,combinedwitharealtime steering tool, allowed targets to be reached with more confidence and less risk and cost than ever before. Technology for reentering the individual laterals for stimulation, repair, and workovers is now in place. Directional tools, steering tools, and measurementwhiledrilling tools have been improved for use at higher temperatures and are in everyday use in geothermal drilling; however, therearestillsomelimitationsontemperatures.
6.3HistoricalWellCostData
Inordertomakecomparisonsbetweengeothermalwellcostsandoilandgaswellcosts,adrillingcost index is needed to update the costs of drilling hydrothermal and EGS or HDR wells from their originalcompletiondatestocurrentvalues.Thereareinsufficientgeothermalwellcostdatatocreate anindexbasedongeothermalwellsalone.Theoilandgaswelldrillingindustry, however,isalarge andwellestablishedindustrywiththousandsofwellsdrilledeachyear.Becausethedrillingprocess isessentiallythesameforoil,gas,andgeothermalwells,theJointAssociationSurvey(JAS)database provides a good basis for comparison and extrapolation. Therefore, data from the JAS (API, 1976
2004)wereusedtocreateadrillingindex,andthisindexwasusedtonormalizegeothermalwellcosts to year 2004 U.S. $. Oil and gas well costs were analyzed based on data from the 2004 JAS for completedonshoreU.S.oilandgaswells.Anew,moreaccuratedrillingcostindex,calledtheMIT Depth Dependent (MITDD) drilling index, which takes into consideration both the depth of a completed well and the year it was drilled, was developed using the JAS database (19762004) (Augustineetal.,2006).TheMITDDindexwasusedtonormalizepredictedandactualcompleted well costs for both HDR or EGS and hydrothermal systems from various sources to year 2004 U.S.$,andthencompareandcontrastthesecostswithoilandgaswellcosts. 6.3.1 Generaltrendsinoilandgaswellcompletioncosts Tabulated data of average costs for drilling oil and gas wells in the United States from the Joint Association Survey (JAS) on Drilling Costs (19762004) illustrate how drilling costs increase nonlinearly with depth. Completed well data in the JAS report are broken down by well type, well location,andthedepthintervaltowhichthewellwasdrilled.Thewellsconsideredinthisstudywere limitedtoonshoreoilandgaswellsdrilledintheUnitedStates.TheJASdoesnotpublishindividual wellcostsduetotheproprietarynatureofthedata.Thewellcostdataarepresentedinaggregate,and averagevaluesfromthesedataareusedtoshowtrends.Ideally,acorrelationtodeterminehowwell costsvarywithdepthwoulduseindividualwellcostdata.Becausethisisnotpossible,averagevalues from each depth interval were used. However, each depth interval was comprised of data from between hundreds and thousands of completed wells. Assuming the well costs are normally distributed,theresultingaveragesshouldreflectanaccuratevalueofthetypicalwelldepthandcost forwellsfromagivenintervaltobeusedinthecorrelation. InplottingtheJASdata,theaveragecostperwellofoilandgaswellsforagivenyearwascalculated bydividingthetotalcostofallonshoreoilandgaswellsintheUnitedStatesbythetotalnumberof oil and gas wells drilled for each depth interval listed in the JAS report. These average costs are tabulatedinTableA.6.1(intheAppendices)andshowninFigure6.1astheJASOilandGasAverage pointsandtrendline.Wellsinthe01,249ft(0380m)and20,000+ft(6100+m)depthintervals werenotincluded,becausewellsunder1,250ft(380m)aretooshallowtobeofimportanceinthis study, andnotenoughwellsover20,000ft (6,100m)aredrilledinayeartogiveanaccurateaverage costperwell. A cursory analysis quickly shows that well costs are not a linear function of depth. A high order polynomial,suchas:
(61)
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where isthecompletedwellcost, isthedepthofthewell,andci arefittedparameters,canbe usedtoexpresswellcostsasafunctionofdepth.However, itisnotobviouswhatorderpolynomial wouldbestfitthedata,andanydecentfitwillrequireatleastfourparameters,ifnotmore.By noting thatanexponentialfunctioncanbeexpandedasaninfiniteseriesofpolynomialterms:

(62)
onemightbeabletodescribethewellcostdataasafunctionofdepthusingonlyafewparameters.As Figure6.1shows,theaveragecostsofcompletedoilandgaswellsforthedepthintervalsfrom1,250 feet(380m)to19,999feet(6,100m)canbedescribedasanexponentialfunctionofdepth,thatis:

(63)
whereonlytwofittedparameters,a andb1, areneeded.Thus,aplotoflog10(wellcost)vs.depthresults inastraightline:

(64)
Although there is no fundamental economic reason for an exponential dependence, the Oil and GasAveragetrendlineinFigure6.1showsthatatwoparameterexponentialfunctionadequately describesyear2004JASaveragecompletedwellcostsasafunctionofdepthforthedepthintervals considered.Thecorrelationcoefficient(R2) valuefortheyear2004JASdata,whenfittoEq.(64), was0.968.Thisindicatesahighdegreeofcorrelationbetweenthelogofthecompletedwellcosts anddepth.SimilarplotsforeachyearofJASreportdatafromtheyears19762003alsoshowhigh levelsofcorrelationbetweenthelog10 ofwellcostsanddepth,withallyearshavinganR2 valueof 0.984orhigher. Aninsufficientnumberofultradeepwells,withdepthsof20,000+ft(6,100+m),weredrilledin2004 to giveanaccurateaverage.Instead,anumberofultradeepwellcostsfrom19942002werecorrected toyear2004U.S.$usingMITDDindexvalues(seeSection6.3.2)forthe17,50019,999feet(5,300 6,100m)depthintervalandplottedinFigure6.1.Mostofthedatapointsrepresentindividualwellcosts that happened to be the only reported well drilled in the 20,000+ feet (6,100 m) depth interval in a region during a given year, while others are an average of several (two or three) ultradeep wells. Extrapolation of the average JAS line beyond 20,000 feet (6,100 m), indicated by the dashed line in Figure6.1,isgenerallyabovethescatterofcostsfortheseindividualultradeepwells.Theultradeepwell datademonstratehowmuchwellcostscanvarydependingonfactorsotherthanthedepthofthewell. Itiseasytoassumethatallthedepthintervalswouldcontainsimilarscatterinthecompletedwellcosts. Anotherpossiblereasonforscatterinthedrillingcostdataisthatdrillingcostrecordsareoftenmissing important details, or the reported drilling costs are inaccurate. The available cost data are usually providedintheformofanauthorizationforexpenditures(AFE),whichgivestheestimatedandactual expendituresforwellsdrilledbyacompany.Forexample,itisnotuncommonforacompanytocover someofthepersonnelandservicesrequiredinthedrillingofthewellintheoverheadlaborpool,orfor materialspurchasedforseveralwellstobelistedasexpensesontheAFEofonlyoneofthewells.The lack of records and concern for completeness is an incentive to have a logical method to develop a modelofdetailedwelldrillingcostexpectations.Suchawellcostmodelattemptstoaccountforall costs thatwouldrelatetotheindividualwell,estimatedinamannersimilartoasmallcompanysaccounting.
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Geothermal Well Model Predictions
Completed Well Costs (Millions of Year 2004 US$)
30
10
Oil and Gas Average

0.3 (ft) 30000 10000
5000 0.1 0 2000
10000
15000 4000
20000 6000
25000 8000
JAS Oil and Gas Aver JAS Ultra Deep Oil a The Geysers Actual Imperial Valley Actua Other Hydrothermal Hydrothermal Predic HDR/EGS Actual HDR/EGS Predicted Soultz/Cooper Basin Wellcost Lite Model Wellcost Lite Bas 611 Wellcost Lite Spe
Depth (meters)
JAS Oil and Gas Average JAS Ultra Deep Oil and Gas The Geysers Actual Imperial Valley Actual Other Hydrothermal Actual Hydrothermal Predicted
1. 2. JAS=JointAssociationSurveyonDrillingCosts. WellcostsupdatedtoUS$(yr.2004)usingindexmadefrom3yearmoving averageforeachdepthintervallistedinJAS(19762004)foronshore,completed USoilandgaswells.A17%inflationratewasassumedforyearspre1976.
HDR/EGS Actual HDR/EGS Predicted Soultz/Cooper Basin Wellcost Lite Model Wellcost Lite Base Case Wellcost Lite Specific Wells
3. Ultradeepwelldatapointsfordepthsgreaterthan6kmareeitherindividual wellsoraveragesfromasmallnumberofwellslistedinJAS(19942000). 4. OtherHydrothermalActualdataincludesomenonUSwells(Source:Mansure2004).
Figure 6.1Completedgeothermalandoilandgaswellcostsasafunctionofdepthinyear2004U.S.$, includingestimatedcostsfromWellcostLitemodel.
6.3.2 MITDepthDependent(MITDD)drillingcostindex Tomakecomparisonsbetweengeothermalwellcostsandoilandgaswellcosts,adrillingcostindex is needed to update the costs of drilling hydrothermal and HDR/EGS wells from their original completion dates to current values. The MIT Depth Dependent (MITDD) drilling cost index (Augustineetal.,2006)wasusedtonormalizegeothermalwellcostsfromthepast30yearstoyear 2004U.S.$.TheaveragecostperwellateachdepthintervalintheJASreports(19762004)wasused to create the drilling index, because the drilling process is essentially the same for oil, gas, and geothermal wells. A 17% inflation rate was assumed for pre1976 index points. Only onshore, completedoilandgaswellsintheUnitedStateswereconsidered,becauseallhydrothermalandHDR wellstodatehavebeendrilledonshore.Athreeyearmovingaveragewasusedtosmoothoutshort term fluctuations in price. The index was referenced to 1977, which is the first year for which a movingaveragecouldbecalculatedusingdatareportedbyJASfromthepreviousandfollowingyears. Previous indices condense all information from the various depth intervals into a single index numberforeachyear.Thisbiasestheindicestowardthecostofshallowerwells,whicharenormally drilled in much larger numbers each year, and also makes them prone to error in years where a disproportionatenumberofeitherdeeporshallowwellsaredrilled.TheMITDDdrillingindexwas chosen because it avoids these pitfalls by incorporating both depth and year information into the index.Althoughthismethodrequiresslightlymoreinformationandmorework,itresultsinsuperior estimatesofnormalizeddrillingcosts. TheMITDepthDependentdrillingcostindexistabulatedinTableA.6.2andshowninFigure6.2, which clearly illustrates how widely the drilling indices vary among the different depth intervals. Before1986,thedrillingcostindexrosemorequicklyfordeeperwellsthanshallowerwells.By 1982, theindexforthedeepestwellsisalmostdoubletheindexforshallowwells.After1986,theindexfor shallowwellsbegantorisemorequicklythantheindexfordeeperwells.By2004,theindexforwells inthe1,2502,499ft(380760m)rangeis25%50%greaterthanallotherintervals.Althoughithas the same general trend as the MITDD index, the composite index (MIT Composite) made by calculatingtheaveragecostperwellperyearasinpreviousindicesdoesnotcapturethesesubtleties. Instead, it incorrectly over or underpredicts wellcost updates, depending on the year and depth interval.Forexample,usingthepreviousmethod,theindexwouldincorrectlyoverpredictthecostof a deepwelldrilledin1982bymorethan20%whennormalizedtoyear2004U.S.$.TheMITDD indicesareupto35%lowerforwellsover4km(13,000ft)deepin2004thanthepreviousindex.The oftendrasticdifferencebetweenindexvaluesoftheMITCompositeindexbasedonaveragecosts andthenewMITDDindexshowninFigure6.2fromtwogivenyearsdemonstratesthesuperiority ofthenewMITDDindexasameansformoreaccuratelyupdatingwellcosts.
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Figure6.2MITDDdrillingcostindexmadeusingaveragecostperwellforeachdepthintervalfromJoint AssociationSurveyonDrillingCosts(19762004),withdatasmoothedusingathreeyearmovingaverage (1977=100foralldepthintervals).Note:1ft=0.3048m.
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Although the drilling cost index correlates how drilling costs vary with depth and time, it does not provideanyinsightsintotherootcausesforthesevariations.Aneffortwasmadetodeterminewhat factorsinfluencethedrillingcostindexandtoexplainthesometimeserraticchangesthatoccurredin theindex.Thelargespikesinthedrillingindexappearingin1982canbeexplainedbyreviewingthe priceofcrudeoilimportstotheUnitedStatesandwellheadnaturalgaspricescomparedtothedrilling costindex,asshowninFigures6.3and6.4.TheMITCompositedrillingindexwasusedforsimplicity. Figures6.3and6.4showastrongcorrelationbetweencrudeoilpricesanddrillingcosts.Thiscorrelation islikelyduetotheeffectofcrudeoilpricesontheaveragenumberofrotarydrillingrigsinoperationin the United States and worldwide each year, shown in Figure 6.5. Therefore, the drilling cost index maximumin1982wasinresponsetothedrasticincreaseinthepriceofcrudeoil,whichresultedin increasedoilandgasexplorationanddrillingactivity,andadecreaseindrillingrigavailability.Bysimple supplyanddemandarguments,thisledtoanincreaseinthecostsofrigrentalanddrillingequipment. Theincreaseindrillingcostsinrecentyears,especiallyforshallowwells,isalsoduetodecreasesinrig availability.ThiseffectisnotapparentinFigure6.5,however,becauseveryfewnewdrillingrigshave beenbuiltsincethemid1980s.Instead,rigavailabilityisdependent,inpart,ontheabilitytosalvage partsfromolderrigstokeepworkingrigsoperational.Asthesupplyofsalvageablepartshasdecreased, drillingrigrentalrateshaveincreased.Becausemostnewrigsareconstructedforintermediateordeep wells,shallowwellcostshaveincreasedthemost.ThislineofreasoningissupportedbyBloomfieldand Laney(2005),whousedsimilarargumentstorelaterigavailabilitytodrillingcosts.Rigavailability,along with the nonlinearity of well costs with depth, can account for most of the differences between the previousMITindexandthenewdepthdependentindices.
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MIT Composite Drilling Cost Index Crude Oil Prices Natural Gas Price, Wellhead
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Figure 6.3Crudeoilandnaturalgasprices,unadjustedforinflation(Energy InformationAdministration, 2005)comparedto MITComposite DrillingIndex.

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Figure 6.4Crudeoilandnaturalgasprices,adjustedforinflation(EnergyInformationAdministration, 2005)comparedto MITComposite DrillingIndex.
Crude Oil Price ($/barrel) & Natural Gas Price ($/Ten Thousand Ft 3)
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Figure 6.5Averageoperatingrotarydrillingrigcountbyyear,19752004(BakerHughes,2005).
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The effect of inflation on drilling costs was also considered. Figure 6.6 shows the gross domestic product(GDP)deflatorindex(U.S.OfficeofManagementandBudget,2006),whichisoftenusedto adjustcostsfromyeartoyearduetoinflation,comparedtotheMITDDdrillingcostindex.Figure6.6 showsthatinflationhasbeensteadilyincreasing,erodingthepurchasingpowerofthedollar. Forthe majorityofdepthintervals,thedrillingcostindexhasonlyrecentlyincreasedabovethehighsof1982, despite the significant decrease in average purchasing power. Because the MITDD index does not account for inflation, this means the actual cost of drilling in terms of present U.S. dollars had actuallydecreasedinthepasttwodecadesuntilrecently.ThispointisillustratedinFigure6.7,which showsthedrillingindexadjustedforinflation,sothatalldrillingcostsareinyear2004U.S.$.For mostdepthintervalsshowninFigure6.7,theactualcostofdrillinginyear2004U.S.$hasdropped significantlysince1981.Onlyshallowerwells(1,2502,499feet)(380760m)donotfollowthistrend, possibly due to rig availability issues discussed above. This decrease is likely due to technological advancesindrillingwellssuchasbetterdrillbits,morerobustbearings,andexpandabletubulars aswellasoverallincreasedexperienceindrillingwells.
600 MITDD Drilling Cost Index Depth Intervals (Feet) Unadjusted for Inflation 1250-2499 2500-3749 1977 = 100 3750-4999 5000-7499
7500-9999 12500-14999 17500-19999 10000-12499 15000-17499
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Figure6.6MITDDdrillingcostindexcomparedtoGDPdeflatorindexfor19772004(U.S.Officeof ManagementandBudget,2006).Note:1ft=0.3048m.
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250 Depth Intervals (Feet)

1250-2499 3750-4999 7500-9999 12500-14999 17500-19999 2500-3749 5000-7499 10000-12499 15000-17499
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Figure6.7MITDDdrillingcostindexmadeusingnewmethod,adjustedforinflationtoyear2004U.S.$. AdjustmentforinflationmadeusingGDPDeflatorindex(1977=100).Note:1ft=0.3048m.
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6.3.3 Updatedgeothermalwellcosts TheMITDDdrillingcostindexwasusedtoupdatecompletedwellcoststoyear2004U.S.$fora numberofactualandpredictedEGS/HDRandhydrothermalwells. TableA.6.3(seeappendix)listsandupdatesthecostsofgeothermalwellsoriginallylistedinTester andHerzog(1990),aswellasgeothermalwellscompletedmorerecently.Actualandpredictedcosts forcompletedEGSandhydrothermalwellswereplottedandcomparedtocompletedJASoilandgas wellsfortheyear2004inFigure6.1.Actualandpredictedgeothermalwellcostsvs.depthareclearly nonlinear.Noattempthasbeenmadetoaddatrendlinetothisdata,duetotheinadequatenumber ofdatapoints. Similartooilandgaswells,geothermalwellcostsappeartoincreasenonlinearlywithdepth(Figure 6.1).However,EGSandhydrothermalwellcostsareconsiderablyhigherthanoilandgaswellcosts oftentwotofivetimesgreaterthanoilandgaswellsofcomparabledepth.Itshouldbenotedthat severalofthedeepergeothermalwellsapproachtheJASOilandGasAverage.Thegeothermalwell costsshowalotofscatterinthedata,muchliketheindividualultradeepJASwells,butappeartobe generally in good agreement, despite being drilled at various times during the past 30 years. This indicatesthattheMITDDindexproperlynormalizedthewellcosts. Typically, oilandgaswellsarecompletedusinga63/4or61/4bit,linedorcasedwith41/2or5 casingthatisalmostalwayscementedinplace,thenshotperforated.Geothermalwellsareusually completedwith103/4or81/2bitsand95/8or7casingorliner, whichisgenerallyslottedor perforated,notcemented.Theuppercasingstringsingeothermalwellsareusuallycementedallthe waytothesurfacetopreventunduecasinggrowthduringheatupofthewell,orshrinkageduring coolingfrominjection.Oilwells,ontheotherhand,onlyhavethecasingcementedatthebottomand are allowed to move freely at the surface through slips. The higher costs for larger completion diametersandcementvolumesmayexplainwhy,inFigure6.1,wellcostsformanyofthegeothermal wellsconsideredespeciallyatdepthsbelow5,000mare25timeshigherthantypicaloilandgas wellcosts. Largediameterproductioncasingsareneededtoaccommodatethegreaterproductionfluidflowrates thatcharacterizegeothermalsystems.Theselargercasingsleadtolargerrigsizes,bits,wellhead,and bottomholeassemblyequipment,andgreatervolumesofcement,muds,etc.Thisresultsinawell cost that is higher than a similardepth oil or gas well where the completed hole diameter will be muchsmaller. Forexample,thefinalcasingina4,000moilandgaswellmightbedrilledwitha 6 3/4bitandfittedwith5casing;while,inageothermalwell,a105/8bitrunmightbeusedinto thebottomholeproductionregion,passingthrougha113/4productioncasingdiameterinadrilled 143/4wellbore. Thistrendofhighercostsforgeothermalwellsvs.oilandgaswellsatcomparabledepthsmaynot holdforwellsbeyond5,000mindepth.Inoilandgasdrilling,oneofthelargestvariablesrelatedto cost is well control. Pressures in oil and gas drilling situations are controlled by three methods: drillingfluiddensity,wellheadpressurecontrolequipment,andwelldesign.Thewelldesignchange that is most significant when comparing geothermal costs to oil and gas costs is that extra casing stringsareaddedtoshutoffhighpressurezonesinoilandgaswells.Whileoverpressureiscommon in oil and gas drilling, geothermal wells are most commonly hydrostatic or underpressured. The
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primarywellcontrolissueistemperature.Ifthepressureinthewellisreducedsuddenlyandvery hightemperaturesarepresent,thewaterintheholewillboil,acceleratingthefluidaboveitupward. Thesaturationpressure,alongwithsignificantwaterhammer,canbeseenatthewellhead.Thus,the mostcommonmethodforcontrollingpressureingeothermalwellsisbycoolingthroughcirculation. Theneedforextracasingstringsinoilwells,asdepthandtheriskofoverpressureincreases,may causethecrossoverbetweenJASoilandgaswellaveragecostsandpredictedgeothermalwellcosts seeninFigure6.1at6,000m.Becausenoknowngeothermalwellshavebeendrilledtothisdepth, a costcomparisonofactualwellscannotbemade. Thecompletedwellcostdata(JAS)showthatanexponentialfitadequatelydescribescompletedoil andgaswellcostsasafunctionofdepthovertheintervalsconsideredusingonlytwoparameters.The correlationinFigure6.1providesagoodbasisforestimatingdrillingcosts,basedonthedepthofa completedwellalone.However,asthescatterintheultradeepwellcostdatashows,therearemany factorsaffectingwellcoststhatmustbetakenintoconsiderationtoaccuratelyestimatethecostofa particularwell.ThecorrelationshowninFigure6.1hasbeenvalidatedusingallavailableEGSdrilling costdataand,assuch,servesasastartingpointorbasecaseforoureconomicanalysis.Oncemore specificdesigndetailsaboutawellareknown,amoreaccurateestimatecanbemade.Inanycase, sensitivityanalyseswereusedtoexploretheeffectofvariationsindrillingcostsfromthisbasecase onthelevelizedcostofenergy(seeSection9.10.5).
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6.4PredictingGeothermalWellCostswith theWellcostLiteModel
Thereisinsufficientdetailedcosthistoryofgeothermalwelldrillingtodevelopastatisticallybased cost estimate for predicting well costs where parametric variations are needed. Without enough statisticalinformation,itisverydifficulttoaccountforchangesintheproductionintervalbitdiameter andthediameter, weight,andgradeofthetubularsusedinthewell,aswellasthedepthsinagiven geologicalsetting.AlthoughthecorrelationfromtheJASdataanddrillingcostindexdiscussedabove allowonetomakeageneralestimateofdrillingcostsbasedondepth,theydonotexplainwhatdrives drilling costs or allows one to make an accurate estimate of drilling costs once more information aboutadrillingsiteisknown.Todothis,adetailedmodelofdrillingcostsisnecessary.Suchamodel, calledtheWellcostLitemodel,wasdevelopedbyB.J.Livesayandcoworkers(Mansureetal.,2005)to estimate well costs based on a wide array of factors. This model was used to determine the most importantdrivingfactorsbehinddrillingcostsforgeothermalwells. 6.4.1 HistoryoftheWellcostLitemodel The development of a wellcost prediction model began at Sandia in 1979 with the first wellcost analysisbeingdonebyhand.ThisresultedintheCarsonLivesayLinnSAND812202report(Carson, 1983).Theeightgenericwellsexaminedinthemodelrepresentedgeothermalareasofinterestatthe time.Thehandcalculatedmodelswereusedtodeterminewellcostsfortheeightgeothermaldrilling areas.Thiseffortdevelopedanearlyobjectivelookatthemajorcostcategoriesofwellconstruction. TheinitialeffortwasfollowedbyaseriesofeffortsinsupportofDOEwellcostanalysisandcostof powersupplycurves.About1990,acomputerbasedprogramknownasIMGEO(Petty,Entingh,and Livesay, 1988; Entingh and McLarty, 1991), which contained a wellcost predictive model, was
developedforDOEandwasusedtoevaluateresearchanddevelopmentneeds.TheIMGEOmodel included cost components for geological studies, exploration, development drilling, gathering systems, power facilities, and poweronline. IMGEO led to the development of the Wellcost1996 model.AsapartoftheAdvancedDrillingStudy(Pierceetal.,1996),amorecomprehensivecosting modelwasdeveloped,whichcouldbeusedtoevaluateadvanceddrillingconcepts.Thatmodelhas beensimplifiedtothecurrentWellcostLitemodel. 6.4.2 WellcostLitemodeldescription WellcostLiteisasequentialeventanddirectcostbasedmodel.Thismeansthattimeandcostsare computedsequentiallyforalleventsthatoccurinthedrillingofthewell.Thewelldrillingsequence isdividedintointervals,whichareusuallydefinedbythecasingintervals,butcanbeusedwherea significantchangeinformationdrillinghardnessoccurs.Currentmodelsarefor4,5,and6intervals moreintervalscanbeaddedasrequired. Themodelcalculatesthecostofdrillingbycasingintervals.ThemodelisEXCELspreadsheetbased andallowstheinputofacasingdesignprogram,rateofpenetration,bitlife,andtroublemapforeach casinginterval.Themodelcalculatesthetimetodrilleachintervalincludingrotatingtime,triptime, mud,andrelatedcostsandendofintervalcostssuchascasingandcementingandwellevaluation. Thecostformaterialsandthetimerequiredtocompleteeachintervaliscalculated.Thetimeisthen multiplied by the hourly cost for all rig timerelated cost elements such as tool rental, blowout preventers (BOP), supervision, etc. Each interval is then summed to obtain a total cost. The cost componentsofthewellarepresentedinadescriptivebreakdownandonthetypicalauthorizationfor expenditures(AFE)formusedbymanycompaniestoestimatedrillingcosts.
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6.5DrillingCost ModelValidation
6.5.1 Basecasegeothermalwells Thecostofdrillinggeothermalwells,includingenhancedgeothermalwellsandhotdryrockwells exclusiveofwellstimulationcosts,wasmodeledforsimilargeologicconditionsandwiththesame completion diameter for depths between 1,500 and 10,000 m. The geology was assumed to be an interval of sedimentary overburden on top of hard, abrasive granitic rock with a bottomhole temperature of 200C. The rates of penetration and bit life for each well correspond to drilling through typical poorly lithified basin fill sediments to a depth of 1,000 m above the completion interval,belowwhichgraniticbasementconditionsareassumed.Thecompletionintervalvariesfrom 250 m for a 1,500 m well to 1,000 m for wells 5,000 m and deeper. The casing programs used assumed hydrostatic conditions typical for geothermal environments. All the well plans for determiningbasecostswithdepthassumeacompletionintervaldrilledwitha105/8bit.Thewells arenotoptimizedforproductionandarelargelytroublefree.Forthebasecasewellsateachdepth, theassumedcontingencyis10%,whichincludesnoncatastrophiccostsfortroublesduringdrilling. ThewellcoststhataredevelopedfortheEGSconsiderationareforbothinjectorsandproducers.The upperportionofthecasedproductionholemayneedtoaccommodatesomeformofartificialliftor pumping.Thiswouldmeanthattheproductioncasingwouldberunasalinerbackuptothepoint atwhichthelargerdiameterisneeded.Currenttechnologyforshaft drivepumpslimitsthesetting depthstoabout600m(2,000ft).Ifelectricsubmersiblepumpsaretobesetdeeperinthehole,the requireddiameterwillhavetobeaccommodatedbycompletingthewellwithliners,leavinggreater
clearance deeper into the hole. The pump cavity can be developed to the necessary depth. The estimatesareforaninjectionwellthathasaproductioncasingfromthetopoftheinjectionzoneto thesurface. EGS well depths beyond 4,000 m (13,100 ft) may require casing weights and grades that are not widelyavailabletoprovidetherequiredcollapseandtensileratings.Thelargerdiametersneededfor highvolume injection and production are also not standard in the oil and gas industry this will causefurthercostincreases.Boththreadedandweldedconnectionsbetweencasinglengthswillbe usedforEGSapplicationsand,dependingonwaterchemistry,specialcorrosionresistantmaterials maybeneeded. An appropriately sized drilling rig is selected for each depth using the mast capacity and rig horsepowerasameasureoftheneededsize.Arigrentalrate,asestimatedinthethirdquarterof 2004, is used in determining the daily operating expense. It is assumed that all wellcontrol equipment is rented for use in the appropriate interval. Freight charges are charged against mobilizationanddemobilizationoftheblowoutpreventerequipment. Theratesofpenetration(ROP)selectedinthebasecasearethoseofmediumhardnesssedimentary formationstotheproductioncasingsettingdepth.AnexpectedreductioninROPisusedthroughthe productioninterval.Forotherlithologycolumns,itisonlynecessarytoselectandinsertthepriceand performance expectations to derive the well cost. These bitperformance values are slightly conservative.
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The 1,500 m (4,900 ft), 2,500 m (8,200 ft), and 3,000 m (9,800 ft) wellcost estimates from the modelcomparefavorablywithactualgeothermaldrillingcostsforthosedepths.Thedeeperwellsat depthsof4,000m(13,100ft),5,000m(16,400ft),and6,000m(19,700ft)havebeencomparedto costsfromtheJASoilandgaswelldatabase.Thelengthofopenholeforthe7,500mand10,000mdeep wellswasassumedlimitedtobetween2,100m(6,900ft)and2,600km(8,500ft). Allwellsshouldhaveatleastoneintervalwithsignificantdirectionalactivitytopermitaccesstovaried targetsdownhole.Thisdirectionalintervalwouldbeeitherintheproductioncasingintervalorthe interval just above. The amount and type of directional well design can be accommodated in the model.Thewellcostestimatesareinitiallybasedondrillinghardness,similartothoseusedinthe BasinandRangegeothermalregion.ItisassumedthattheEGSproductionzoneiscrystalline.The wellshouldpenetrateintothedesiredtemperaturefarenoughsothatanyupwardfracturingdoesnot enterintoalowertemperatureformation.Also,eachwellisassumedtopenetratesomespecificdepth into the granitic formation. In the deeper wells, a production interval of 1,000 m (3,300 ft) is assumed.ItisreducedfortheshallowerwellsandisnotedintheWellcostLiteoutputrecord Well costs were estimated for depths ranging from 1,500 m to 10,000 m. The resulting curves indicatedrillingcoststhatgrownonlinearlywithdepth.Theestimatedcostsforeachofthesewells aregiveninTable6.1.
Table6.1EGSwelldrillingcostestimatesfromtheWellcostLitemodel(in2004U.S.$) Shallow No.of Casing Strings 4 4 4 MidRange No.of Cost, Casing million$ Strings 4 5.2 4 5 7.0 8.3 Deep No.of Casing Strings 5 6 6 6
Depth,m (ft) 1,500 (4,900) 2,500 (8,200) 3,000 (9,800)
Cost, million$ 2.3 3.4 4.0
Depth,m (ft) 4,000 (13,100) 5,000 (16,400) 5,000 (16,400)
Depth,m (ft) 6,000 (19,700) 6,000 (19,700) 7,500 (24,600) 10,000 (32,800)
Cost, million$ 9.7 12.3 14.4 20.0
ShallowEGSwells. Fortheshallowwells(1,500m,2,500m,and3,000m),thewellcostpredictions are supported by actual geothermal drilling costs from the Western U.S. states. Due to the confidential nature of these actual costs, the level of validation with the model is far from precise, becauseonlythedepthandcostwereprovided.Nospecificformationcharacteristicsorwell/casing designinformationwasusedinthismodelingeffort,butitwasassumedthatbitperformanceinthe modelwassimilartocurrentgeothermalwellexperience. MidrangeEGSwells. Forthemidrangeofdepths,4,000mand5,000m,thecostestimateshavebeen madebyextendingthesamewelldesignanddrillingapproachesusedintheshallowgroup.
The5,000mwellisfirstmodeledasa4casingintervalmodel(surfacecasing,intermediateliner, productioncasingintotheheat,productionzonelinedwithperforatedliner).Another5kmdeepwell has5casingintervals(surfacecasing,intermediateliner,intermediateliner2,productioncasinginto the heat, production zone lined with perforated liner). The cost impact of the additional liner is significant.Forthesamediameterintheproductionzone,allcasingsandlinersabovethatzoneare notablylargerindiameter.
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DeepEGSwells. The6,000mwellisthefirstinanumberofmodeledwelldesignswithverylarge uppercasingsectionsandhighercost.The6,000mwelluses5and6casingintervalcostmodelsto betteraccommodatethegreatercasingdiametersneededandreducethelengthoftheintervals.The changeresultsinanincreaseincost,duetotheadditionalcasingandcementingchargesaswellas theotherendofintervalactivitiesthatoccur.Thecostofa6casing,6,000m(19,700ft)geothermal wellcomparessatisfactorilywithalimitednumberofoilandgaswellsfromtheJASdatabase.The estimatedcostofthe6,000kmEGSwellis$12.28millionvs.anaverageJASoilandgaswellcostof $18million.

Fortheverydeepwells,7,500mand10,000m(24,600ftand32,800ft),bothmodeledassuming6 casing intervals, the developed estimates reflect the extreme size of the surface casing when the amountofopenholeislimitedto2,130to2,440m(7,000to8,000ft).Thewelldesignswerebased on oil and gas experience at these depths. Wellcost models have been developed for numerous
geothermalfieldsandotherspecificexamples.Theyareinreasonableagreementwithcurrentwell drillingpractice.Forexample,costsforwellsatTheGeysersandinNorthernNevadaandtheImperial Valleyareingoodagreementwiththecostmodelsdevelopedinthisstudy. 6.5.2 Comparisonwithgeothermalwells Predicted EGS well costs (from the Wellcost Lite model) are shown in Figure 6.1, alongside JAS oil/gas well costs and historical geothermal wellcost data. For depths of up to about 4,000 m, predicted well costs exceed the oil and gas average but agree with the higher geothermal wellcost data.Beyonddepthsof6,000m,predictionsdropbelowtheoilandgasaveragebutagreewithcosts for ultradeep oil and gas wells within uncertainty, given the considerable scatter of the data. The Wellcost Lite predictions accurately capture a trend of nonlinearly increasing costs with depth, exhibitedbyhistoricalwellcosts. Figure6.8showspredictedcostsforhypotheticalwellsatcompletiondepthsbetween1,500mand 10,000 m. Cost predictions for three actual existing wells are also shown, for which real ratesof penetrationandcasingconfigurationswereusedintheanalysis.ThesewellscorrespondtoRH15at Rosemanowes,GPK4 atSoultz,andHabanero2atCooperBasin.Itshouldbenotedthatconventional U.S.cementingmethodswereassumed,whichdoesnotreflecttheactualprocedureusedatGPK4. Twocostpredictionsweremadeforthisparticularwell:one(showninFigure6.8)basedonactual recorded bit run averages, and a second (not shown) that took the best available technology into consideration.Useofthebestavailabletechnologyresultedinexpectedsavingsof17.6%compared to a predicted cost of $6.7 million when the recorded bit run averages were used to calculate the estimated well cost. Figure 6.8 also includes the actual troublefree costs from GPK4 and Habanero2,whichagreewiththemodelresultswithinuncertainty.Forexample,thepredictedcost ofU.S.$5.87millionforHabanero2isquiteclosetothereportedactualwellcostofU.S.$6.3million (AUS$8.7million).BothestimatedandactualcostsshowninFigure6.8aretabulatedinTableA.6.3. TheagreementbetweentheWellcostLitepredictionsandthehistoricalrecordsdemonstratethatthe modelisausefultoolforpredictingactualdrillingcostswithreasonableconfidence. 6.5.3 Comparisonwithoilandgaswells Comparisons between cost estimates of the basecase geothermal wells to oil and gas wellcost averagesareinconclusiveandarenotexpectedtoyieldvaluableinformation.Oilandgaswellcosts overthevariousdepthintervalsrangefromlessexpensivetomoreexpensivethanthegeothermalwell costsdevelopedfromWellcostLite.However,anexamplewellcostestimatewasdevelopedfora2,500 m (8,200ft)oilandgaswellwithcasingdiametersthataremorerepresentativeofthoseusedinoil andgasdrilling(thecomparisonisshowninTable6.2).ThesecostsarewithinthescatteroftheJAS costinformationforCalifornia.A2,500mwellisadeepgeothermalwellbutashallowWestTexas oilorgaswell.Thiscomparisonshowstheeffectofwelldiameterondrillingcostsanddemonstrates whygeothermalwellsatshallowdepthstendtobeconsiderablymoreexpensivethanoilandgaswells ofcomparabledepth.
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Figure6.8EGSwellcostpredictionsfromtheWellcostLitemodelandhistoricalgeothermalwellcosts,at variousdepths. Table6.2WellcostcomparisonofEGSwithoilandgas.Costsshownareforcompleted through/perforatedinplace casing. Welltype EGS Oil/Gasaverage Depth 2,500m(8,200ft) 2,500m(8,200ft) Productioncasingsize Finalbitdiameter Cost/daysofdrilling 113/4 85/8 51/2 105/8 63/4 63/4 $3,400m/43 $1,800m/29 $1,400m/21
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Oil/GasSlimHole 2,500m(8,200ft)
6.5.4 Modelinputparametersensitivitiesanddrillingcostbreakdown The Wellcost Lite model was used to perform a parametric study to investigate the sensitivities of modelinputssuchascasingconfiguration,rateofpenetration,andbitlife.Welldrillingcostsforoil, gas, and geothermal wells are subdivided into five elements: (i) prespud costs, (ii) casing and cementingcosts,(iii)drillingrotatingcosts,(iv)drillingnonrotatingcosts,and(v)troublecosts.Pre spud costs include movein and moveout costs, site preparation, and well design. Casing and cementingcostsincludethoseformaterialsandthoseforrunningcasingandcementingitinplace. Drillingrotatingcostsareincurredwhenthebitisrotating,includingallcostsrelatedtotherateof penetration,suchasbitsandmudcosts.Drillingnonrotatingcostsarethosecostsincurredwhenthe bit is not rotating, and include tripping, well control, waiting, directional control, supervision, and wellevaluation.Unforeseentroublecostsincludestuckpipe,twistoffs,fishing,lostcirculation,hole stabilityproblems,wellcontrolproblems,casingandcementingproblems,anddirectionalproblems.
ThecontributionofeachmajordrillingcostcomponentisshowninFigure6.9overarangeofdepths. Rotatingdrillingcostsandcasing/cementingcostsdominatewellcostsatalldepths.Drillingrotating, drillingnonrotating,andprespudexpensesshowlineargrowthwithdepth.Casing/cementingcosts andtroublecostsincreaseconsiderablyatadepthofabout6,000m,coincidingwiththepointwhere a change from three to four casing strings is required. All of these trends are consistent with the generallyhigherrisksandmoreuncertaincoststhataccompanyultradeepdrilling. Allcostsareheavilyaffectedbythegeologyofthesite,thedepthofthewell,andtoalesserdegree, the well diameter. Casing and cementing costs also depend on the fluid pressures encountered duringdrilling.Welldepthandgeologyaretheprimaryfactorsthatinfluencedrillingnonrotating costs,becausetheyaffectbitlifeandthereforetrippingtime.Prespudcostsarerelatedtotherig size, which is a function of the well diameter, the length of the longest casing string, and the completedwelldepth.
Geology/RateofPenetration. Rateofpenetration (ROP), which is controlled by geology and bit selection,governsrotatingdrillingcosts.EGSwellswilltypicallybedrilledinhard,abrasive,high temperature formations that reduce ROP and bit life. This also affects drilling nonrotating costs, becauselowerbitlifecreatesanincreasedneedfortrips.However, mostEGSsiteswillhaveatleast somesoftersedimentaryrockoverlyingacrystallinebasementformation.Inthepast15to20years, dramatic improvements in bit design have led to much faster ratesofpenetration in hard, high temperatureenvironments.
Thedegreetowhichtheformationgeologyaffectstotaldrillingcostswasinvestigatedbyusingthe model to make wellcost predictions under four different assumed geologic settings. Rateof penetration(ROP)andbitlifeinputvaluestothemodelwereadjustedtosimulatedifferentdrilling environments, which ranged from very fast/nonabrasive to very hard/abrasive. The medium ROP representssedimentarybasinconditions(e.g.,atDixieValley),whereastheverylowROPwouldbe morerepresentativeofcrystallineformationssuchasthosefoundatRosemanowes.Inallcases,the bestavailablebittechnologywasassumed.A4,000mdeepwellwasmodeledtostudytheimpactof increasing ROP on total well cost. An 83% increase in ROP from very low to medium values resultedina20%costsavings.
624
$9,000 $8,000
Cost per Well (Thousands of US$)
$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 0
Pre-spud Expenses Casing and Cementing Drilling-Rotating Drilling-Non-rotating Trouble
2000
4000
6000 Depth (meters)
8000
10000
12000
Figure6.9BreakdownofdrillingcostelementsasafunctionofdepthfromWellcostLitemodelresults.
NumberofCasingStrings. A greaternumberofcasingstringsresultsinhigherpredicteddrillingcosts. It is not just the direct cost of additional strings that has an effect; there are also costs that occur becauseofwelldiameterconstraints.Forexample,tomaintaina95/8completiondiameterwhich mayberequiredtoachieveflowratessuitableforelectricpowerproductionthesurfacecasingina 10,000mdeepEGSwellmusthaveadiameterof42.Theabilitytohandlethislargecasingsize requiresmoreexpensiverigs,tools,pumps,compressors,andwellheadcontrolequipment.
TherelationshipbetweenthenumberofcasingstringsandcompletedwellcostsisshowninFigure 6.10.Increasingthenumberofcasingstringsfromfourtofiveinthe5,000mdeepwellresultsin an18.5%increaseinthetotalpredictedwellcost.Anincreaseinthenumberofcasingstringsfrom fivetosixinthe6,000mdeepwellresultsina24%increaseintotalcost.Asthenumberofcasing stringsincreases,therateatwhichdrillingcostsincreasewithdepthalsoincreases.
625
$16,000
Completed Well Cost (Thousands of US$)
$14,000
4 Casing Strings 5 Casing Strings 6 Casing Strings
$12,000
$10,000
$8,000
$6,000
$4,000 3000
4000
5000
6000 Depth (meters)
7000
8000
Figure6.10ChangeinWellcostLitemodelpredictionsasafunctionofdepthandnumberofcasingintervals.
626
Figure6.11comparesrotatingtimewithtrippingtimefordifferentdepthsofcompletion,usingthe Wellcost Lite model. Both grow almost linearly with depth, assuming ROP and bit life remain constant.However,thesemaynotbeappropriateassumptionsatgreaterdepths.
2,500 Tripping Time Rotating Time 2,000
Time (Hours)
1,500
1,000
500
0 0 2000 4000 6000 Depth (meters) 8000 10000 12000
Figure 6.11ComparisonofrotatingandtrippinghoursasafunctionofwelldepthfromWellcostLitemodel.
6.6EmergingDrillingTechnologies
GiventheimportanceofdrillingcoststotheeconomicviabilityofEGS,particularlyformidtolow graderesourceswherewellsdeeperthan4kmwillberequired,itisimperativethatnewtechnologies aredevelopedtomaximizedrillingcapabilities(Pettyetal.,1988;Pettyetal.,1991;Pettyetal.,1992; Pierce and Livesay, 1994; Pierce and Livesay, 1993a; Pierce and Livesay, 1993b). Two categories of emerging technologies that would be adaptable to EGS are considered: (i) evolutionary oil and gas welldrillingtechnologiesavailablenowthatareadaptabletodrillingEGSwells,and(ii)revolutionary technologiesnotyetavailablecommercially. 6.6.1 CurrentoilandgasdrillingtechnologiesadaptabletoEGS Thereareanumberofapproachesthatcanbetakentoreducethecostsofcasingandcementingdeep EGS wells: expandable tubular casings, lowclearance well casing designs, casing while drilling, multilaterals,andimprovedratesofpenetrationaredevelopmentsthatwilldramaticallyimprovethe economicsofdeepEGSwells.Thefirstthreeconcepts,whichrelatetocasingdesign,arewidelyused intheoilandgasindustryandcaneasilybeadaptedforEGSneeds.Theuseofmultilateralstoreduce the cost of access to the reservoir has also become common practice for hydrothermal and oil/gas operations. Adaptation, analysis, and testing of new technologies are required to reduce deep EGS wellcosts.
Expandabletubularscasing. Casingandcementingcostsarehighfordeepwellsduetothenumberof casing strings and the volume of cement required. A commercially available alternative is to use expandabletubularstolinethewell.Furtherdevelopmentandtestingisstillneededtoensurethe reliability of expandable tubular casing in wells where significant thermal expansion is expected. Effortsareunderwaytoexpandtherangeofavailablecasingsizesandtodevelopeffectivetoolsand specialized equipment for use with expandable tubulars (Benzie et al., 2000; Dupai et al., 2001; Fillipovetal.,1999).
Theexpandabletubingcasingprocessutilizesaproduct,patentedbyShellDevelopment(Lohbeck, 1993),whichallowsinsitu plasticdeformationofthetubularcasing.Theintervalisdrilledusingabit justsmallenoughtopassthroughthedeepestcasingstring.Thereisanunderreamerbehindthe leadbit.Theunderreamerisusedtowidenthebottomofthewellandallowcementingofthecasing, afterrunningandexpanding.Theresultisthattheinnersurfacesofadjacentcasingsareflush(i.e., theinnerdiameterisconstantwithdepth).Thisallowstwopossibleapproachestobetaken:(i)the resultingcasingmaybeusedastheproductionstring;and(ii)alinermayberunandcementedin thewellafterprogressthroughtheproductionintervaliscompleted.Technologyimprovementsare neededifthisapproachistobetakenindeep,largediameterEGSwells.
627
Underreamers. Monobore designs that use expandable tubulars require underreamers. The use of underreamers is common in oil and gas drilling through sediments, and provides cementing clearance for casing strings that would not otherwise be available. However, highquality under reamersforhardrockenvironmentsarenotcommon,withexpansionarmsoftenbeingsubjectto failure. Currently, underreaming in oil and gas operations utilizes bicenter bits and PDCtype cutters. Unfortunately, the success of PDC cutters in geothermal environments has not yet been established.MorerobustunderreamersarerequiredforEGSapplications.
Lowclearancecasingdesign. Analternativeapproachtousingexpandabletubularsistoacceptreduced clearances. A well design using smaller casing and less clearance between casing strings may be appropriate (Barker, 1997). This may also require the use of an underreamer to establish clearance betweenthecasingandtheboreholeforcementing.Althoughclosertolerancesmaycauseproblems withcementingoperations,thiscanusuallyberemediedbytheuseofunderreamersbeforecementing. Drillingwithcasing isanemergingtechnologythathasthepotentialtoreducecost.Thisapproachmay permit longer casing intervals, meaning fewer strings and, therefore, reduced costs (Gill et al., 1995). Research is needed to improve our understanding of cementing practices that apply to the drillingwithcasing technique. As with expandable tubulars, the development of reliable under reamersiskeytotheadvancementofthistechnology. Multilateral completions/stimulating through sidetracks and laterals. Tremendous progress has been made in multilateral drilling and completions during the past 10 years. However, pressurebased stimulation of EGS reservoirs may still prove difficult, unless the most sophisticated (Class 5 and Class 6) completion branch connections are used. The successful development of reliable reentry schemesandinnovativewaystosequentiallystimulateEGSdevelopmentsetsmaybenecessary,ifthe additionalcostofsuchsophisticatedcompletionpracticesistobeavoided. Welldesignvariations. Considerablesavingsarepossibleifthelengthofcasingintervalsisextended. Thiswillreducethenumberofcasingstrings,andtherefore,thediameterofthesurfaceandfirst intermediate casings. The success of this approach depends on the ability to maintain wellbore stabilityofthedrilledintervalandtoinstallagoodcementsheath.Theremaybeisolatedintervals wherethistechniquewillbeappropriate.
6.6.2 Revolutionarydrillingtechnologies Rateofpenetration issues can significantly affect drilling costs in crystalline formations. ROP problemscancausewellcostincreasesbyasmuchas15%to20%abovethoseformoreeasilydrilled BasinandRangeformations. Although we have not formally analyzed the potential cost reductions of revolutionary drilling technologiesasapartofthisassessment,itisclearthattheycouldhaveaprofoundlongtermimpact onmakingthelowergradeEGSresourcecommerciallyaccessible.Newdrillingconceptscouldallow much higher rates of penetration and longer bit lifetimes, thereby reducing rig rental time, and lighter, lowercostrigsthatcouldresultinmarkedlyreduceddrillingcost.Suchtechniquesinclude projectiledrilling,spallationdrilling,laserdrilling,andchemicaldrilling.Projectiledrillingconsists of projecting steel balls at high velocity using pressurized water to fracture and remove the rock surface.Theprojectilesareseparatedandrecoveredfromthedrillingmudandrockchips(Geddes andCurlett,2006).Spallationdrillinguseshightemperatureflamestorapidlyheattherocksurface, causingittofractureorspall.Suchasystemcouldalsobeusedtomeltnonspallablerock(Potter andTester,1998).Laserdrillingusesthesamemechanismtoremoverock,butreliesonpulsesof lasertoheattherocksurface.Chemicaldrillinginvolvestheuseofstrongacidstobreakdownthe rock,andhasthepotentialtobeusedinconjunctionwithconventionaldrillingtechniques(Polizzotti et al., 2003). These drilling techniques are in various stages of development but are not yet commerciallyavailable.However,successfuldevelopmentofanyofthesetechnologiescouldcausea majorchangeindrillingpractices,dramaticallylowerdrillingcostsand,evenmoreimportant,allow deeperdrillingcapabilitiestoberealized.
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6.7Conclusions
WellcostLiteisadetailedaccountingcodeforestimatingdrillingcosts,developedbyB.J.Livesayand SandiaNationalLaboratoriesoverthepast20years.WellcostLite,whichhasbeenusedtoevaluate technologyimpactsandprojectEGSwellcosts,wasusedtoestimatecostscoveringarangeofdepths from1,500mto10,000m.Threedepthcategorieshavebeenexaminedinsomedetailinthisstudy: shallow wells (1,5003,000 m depths), midrange wells (4,0005,000 m depths), and deep wells (5,00010,000mdepths). Theshallowsetofwellsatdepthsof1,500m(4,900ft),2,500m(8,200ft),and3,000m(9,800ft) is representative of current hydrothermal well depths. The predicted costs from the Wellcost Lite modelwerecomparedtoactualEGSandhydrothermalshallowwelldrillingcostrecordsthatwere available.Theagreementissatisfactory, althoughactualcostdataarerelativelyscarce,makingadirect comparisonnotentirelyappropriate. Thesamewelldesignconceptsusedfortheshallowsetofwellswasalsoadoptedforthemidrange set,whichcomprisedwellsatdepthsof4,000mand5,000m(13,120ftand16,400ft).Therewere nodetailedgeothermalorEGSwellcostrecordsatthesedepthsavailableforcomparisonwithmodel results. Nonetheless, we believe our predicted wellcost modeling approach is conservative and, as such,producesreasonableestimatesofthecostsofEGSwellsfor4and5kmdrillingdepths. A similarapproachwastakenforthedeepestsetofwellsatdepthsof6,000m,7,500m,and10,000m (19,700 ft, 24,600 ft, and 32,800 ft). These deeper well designs and costs are naturally more speculative than estimates for the shallower wells. There have been only two or three wells drilled closetodepthsof10,000mintheUnitedStates,soaconservativewelldesignwasusedtoreflect higheruncertainty. TheestimatedcostsfortheEGSwellsareshowninTable6.1,whichshowsthatthenumberofcasing stringsisacriticalparameterindeterminingthewellcosts.Welldrillingcostshavebeenestimated for4,5,and6casingwelldesigns.Forexample,Table6.1showsthattwo5,000mdeepwellswere modeled,onewith4casingintervalsandanotherwith5casingintervals.Theformerrequiresfewer casing intervals but increased lengths of individual sections may raise concerns about wellbore stability. This is less of a problem if more casing strings are used, but costs will be affected by an increaseinthediameteroftheuppercasingstrings,thesizeofrigrequired,andanumberofother parameters.The6,000mwellwasmodeledwithboth5and6casingintervals.Costsforthe7,500 m and10,000mwellswereestimatedusing6casingintervals. Figure 6.1 shows the actual costs of geothermal wells, including some for EGS wells. The specific costspredictedbytheWellcostLitemodelareplottedinhollowreddiamonds().Themodeledcosts show reasonable agreement with actual geothermal well costs in the mid to deepdepth ranges, withinexpectedrangesofvariation.Theagreementisnotasgoodforshallowwellcosts.Alsoshown inFigure6.1areaveragecostsforcompletedoilandgaswellsdrilledonshoreintheUnitedStates, whereweseeanexponentialdependenceofcostondepth. Emergingtechnologies,whichhaveyettobedemonstratedingeothermalapplicationsandarestill goingthroughdevelopmentandcommercialization,canbeexpectedtosignificantlyreducethecost
629
ofthesewells,especiallythoseat4,000mdepthsanddeeper.Thetechnologiesincludethosethatare focusedonincreasingoveralldrilleffectivenessandrates,aswellasstabilizingtheholewithcasing, e.g.,expandedtubulars,drillingwhilecasing,enhancedunderreaming,andimproveddrillbitdesign and materials. Revolutionary technologies involving a completely different mechanism of drilling and/orcasingboreholeswerealsoidentified,whichcouldultimatelyhavealargeimpactonlowering drillingcostsandenablingeconomicaccesstolowgradeEGSresources.
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Appendices
A.6.1 WellCostData
TableA.6.1AveragecostsofoilandgasonshorewellsdrilledintheUnitedStatesin2004,fromJASdata forlisteddepthintervals. DrillingInterval(feet) 1,2502,499 2,5003,749 3,7504,999 5,0007,499 7,5009,999 10,00012,499 12,50014,999 15,00017,499 17,50019,999 AverageDepth (meters) 549 965 1,331 1,913 2,636 3,375 4,103 4,842 5,629 AverageDepth (feet) 1,801 3,165 4,367 6,275 8,649 11,074 13,463 15,886 18,468 AverageCost (Year2004U.S.M$) 0.304 0.364 0.416 0.868 1.975 3.412 5.527 7.570 9.414
633
TableA.6.2ValuesofMITDepthDependent(MITDD)drillingcostindexmadeusingaveragecostperwell foreachdepthintervalfromJointAssociationSurveyonDrillingCosts(19762004),withdatasmoothed usingathreeyearmovingaverage.MITCompositedrillingcostindexincludedforcomparison. MITDDDrillingCostIndex DepthInterval(Feet) Year MITComposite DrillingCost Index 1250 2499 381 761 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983
634
2500 3749 762 1142 50.3 58.8 68.8 80.5 94.2 100.0 109.1 126.4 149.3 163.1 165.6 160.7 155.3 155.1 149.1 127.4 129.3 148.0 190.0 199.3 196.6 173.7 169.4 165.8 178.2 191.0 202.7 205.7 200.0 231.4 265.0 268.8 288.9
3750 4999 1143 1523 49.8 58.2 68.1 79.7 93.3 100.0 110.2 127.0 152.4 167.1 169.0 160.0 150.4 144.8 136.3 125.1 127.8 140.3 152.2 157.0 154.0 147.4 149.9 151.2 160.5 170.0 179.2 186.5 186.0 212.8 228.3 314.6 343.2
5000 7499 1524 2285 50.0 58.5 68.4 80.1 93.7 100.0 112.9 132.6 161.3 180.1 181.6 168.5 154.9 150.6 140.5 127.4 124.5 132.1 138.6 138.5 133.9 129.8 135.4 144.2 159.3 170.4 177.9 185.0 185.7 224.8 220.3 346.2 382.8
7500 9999 2286 3047 48.5 56.8 66.4 77.7 91.0 100.0 117.4 139.9 169.7 188.3 190.5 173.6 153.7 148.3 142.3 134.4 136.5 147.6 153.7 145.4 134.9 128.9 131.4 141.0 151.8 163.6 169.8 179.2 182.5 226.6 248.4 328.7 356.5
10000 12500 15000 17500 12499 14999 17499 19999 3048 3809 47.5 55.6 65.0 76.1 89.0 100.0 117.0 136.0 162.3 183.7 185.5 168.6 144.8 139.0 133.1 131.9 133.5 142.6 145.3 140.5 134.9 132.4 134.7 137.4 133.7 136.3 142.8 157.3 165.6 198.4 229.0 312.2 343.7 3810 4571 49.1 57.4 67.2 78.6 92.0 100.0 116.9 138.0 171.7 206.3 216.5 203.6 165.1 149.0 138.8 132.4 129.2 135.8 139.3 127.1 118.2 114.5 123.7 136.2 143.7 157.3 161.3 169.1 167.8 203.9 222.4 300.1 314.0 4572 5333 49.5 58.0 67.8 79.3 92.8 100.0 117.1 140.4 180.6 221.4 236.4 225.5 193.6 176.7 171.4 150.4 146.2 157.2 164.9 153.3 136.3 111.3 110.3 125.2 142.7 165.4 170.8 181.8 189.4 233.7 247.8 334.5 347.2 5334 6096 48.9 57.2 67.0 78.4 91.7 100.0 119.9 154.4 214.8 269.0 279.1 270.2 216.6 181.3 162.6 146.5 153.4 162.9 174.3 162.5 161.5 150.8 142.7 153.9 167.1 180.9 182.3 190.8 189.9 253.2 307.9 489.4 542.7
DepthInterval(Meters)
47.3 55.4 64.8 75.8 88.7 100.0 119.7 141.2 163.3 205.4 232.2 175.3 154.1 156.8 149.7 128.1 141.5 155.3 165.6 173.6 149.6 152.6 164.1 178.6 186.1 198.1 221.7 227.9 227.9 282.8 310.3 489.4 542.7
49.4 57.8 67.6 79.1 92.5 100.0 114.3 132.8 152.1 161.7 165.5 158.9 155.1 151.7 150.8 152.3 162.4 177.3 183.7 190.1 198.3 201.7 202.7 198.6 210.0 226.6 238.8 237.1 231.5 287.8 364.6 328.6 354.8
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
1.Depthintervalindicatesverticalwelldepth. 2.Indexforyearspriorto1976madeassuming17%annualinflationfactor.
TableA.6.3aActualandpredictedgeothermalwelldrillingandcompletioncosts(2004U.S.$).
WellID GT1 GT2 EE1 EE2 EE3 EE3a RH11(low) RH11(high) RH12(low) RH12(high) RH15(low) RH15(high) UK(Shock,1987) Bechtel(1988) Horietal.(1986) Entingh(1987)I Entingh(1987)II Entingh(1987)III HeatMining TheGeysers TheGeysers ImperialValley IMGEOIVFL IMGEOIVBI IMGEOBRFL IMGEOBRBI IMGEOCSFL IMGEOCSBI IMGEOYVFL IMGEOYVBI IMGEOGYDS Depth (meters) 732 2932 3064 4660 4250 4572 2175 2175 2143 2143 2652 2652 6000 3657 3000 3000 3000 3000 3000 1800 3048 1600 1829 2743 2438 914 3048 914 1524 152 3048 Depth (feet) 2402 9619 10052 15289 13944 15000 7136 7136 7031 7031 8701 8701 19685 11998 9843 9843 9843 9843 9843 5906 10000 5249 6001 8999 7999 2999 10000 2999 5000 499 10000 CostWhen Drilled(M$) 0.060 1.900 2.300 7.300 11.500 5.160 1.240 1.984 1.240 1.984 2.250 3.600 8.424 3.359 6.000 6.900 3.800 3.000 3.000 0.486 2.275 0.165 1.123 0.956 1.217 0.556 2.032 0.576 0.906 0.406 1.155 Year Drilled 1972 1974 1975 1980 1981 1988 1981 1981 1981 1981 1985 1985 1985 1987 1985 1984 1984 1984 1984 1976 1989 1976 1986 1986 1986 1986 1986 1986 1986 1986 1986 CostYear 2004(M$) 0.66 10.95 10.78 12.69 19.16 11.08 2.36 3.78 2.36 3.78 5.81 9.29 16.13 9.08 15.49 17.18 9.46 7.47 7.47 1.78 5.69 0.60 2.74 2.57 3.27 1.32 5.44 1.37 3.76 1.46 3.09 Meridianpredictionsofhydrothermal wellsfromIMGEOdatabase(Entingh, 1989).Onlybasewellcostsshown. PredictedCostsArmstead&Tester(1987) ActualcostsMilora&Tester(1976) ActualcostsBatchelor(1989) ActualcostsMilora&Tester(1976) 635 CamborneSchoolofMines($1=1GBP) Predict.forRooseveltHotSprings,UT PredictedCosts PredictedCostsbasedon HeatMining RosemanowesSite,Cornwall,UK. ActualCosts.(TesterandHerzog,1990) Low:$1=1GBP High:$1.6=1GBP FentonHillSite, NewMexico,USA.ActualCosts (TesterandHerzog,1990) Comments
TableA.6.3a(continued)
SNL NonUS SNL NonUS SNLNonUS SNL NonUS SNL NonUS SNLNonUS SNL NonUS SNL NonUS SNL NonUS SNL NonUS SNLUS SNLUS SNLUS SNLUS SNLUS GPK3 GPK4 CooperBasin, Australia Habanero 2 636 2317 2374 2377 2739 2760 2807 2819 2869 3021 3077 2277 2334 1703 2590 2627 5101 5100 4725 7603 7789 7800 8986 9055 9210 9249 9414 9912 10096 7471 7658 5588 8496 8618 16731 16728 15498 1.539 1.729 1.377 1.867 1.320 2.979 0.915 1.030 1.060 1.514 1.186 0.822 0.804 2.220 1.760 6.571 5.14 6.3 1996 1997 1996 1997 1997 1996 1997 1996 1996 1996 1985 1986 1986 1991 1997 2003 2004 2004 3.88 4.05 3.47 4.37 3.09 7.51 2.14 2.60 2.67 4.04 2.70 2.21 1.96 5.85 4.12 6.88 5.14 6.3 Soultz,France.Troublecostsexcluded. (1USD=1.13EUD)(Baria,2005) Troublecostsexcluded. (1USD=0.724AUD)(Wyborn,2005) Actualgeothermalwellcostsfrom SandiaNationalLaboratories (SNL)(Mansure,2004)
1.M$=millionsofU.S.$. 2.AlistinganddiscussionoftheoriginsofmanyoftheactualandpredictedwellcostsisgiveninTesterandHerzog(1990). 3.CurrencyconversionsbasedonyearlyaverageofInterbankconversionrate.
TableA.6.3bPredictedgeothermalwelldrillingandcompletioncostsfromWellcostLitemodel (inyear2004U.S.$). WellID WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell WCLBaseCaseWell Rosemanowes SoultzGPK4 CooperBasinHabanero2 Depth (meters) 1500 2500 3000 4000 5000 6000 7500 10000 2800 5100 4725 Depth (feet) 4921 8202 9842 13123 16404 19685 24606 32808 9200 16750 15500 Estimated Cost(2004M$) 2.303 3.372 4.022 5.223 6.740 9.172 14.645 19.731 4.195 6.705 5.872 Estimatesmadeusing actualcasingprogramfor specificindividualwells Comments WellcostLite(WCL)Base CaseWells Assume10%Contingency Costs
A.6.2
WellcostLiteModel
A.6.2.1 BackgroundandbriefhistoryofthedevelopmentofWellcostLite
A more robust, yet easiertouse costing model, Wellcost Lite, was developed to more readily accommodatechangesinthedrillingsystem. TheWellcostLitemodelhasbeenqualifiedbyofferingthecostestimatetosomeoneinvolvedindrilling that area, for their comment, agreement or disagreement. This was especially true of the earlier models.Wellcostswerenotnormallymadepublicbythecompaniesand,tosomedegree,stillarenot. Recently,agreementshavebeenmadebetweenSandiaandoperatorstoaccesssomerecords.Someof theserecordshadbeenkeptonaRimBaseformat.RimBaseisacostandtimeaccountingsystemfor useonthedrillrig.RecordsthatwerenotinitiallyonRimBasewerehandenteredintotheRimBase format.ReasonableagreementhasbeenmadefromthoserecordstoWellcostLitemodelresults. Butevenwiththoserecords,anestimateforawelltobedrilledwithadifferentdepth,finaldiameter, casingdesign,etc.isstillneeded.ComparisonbetweenWellcostLitemodeledcostandfielddrilling numbersisanongoingeffortthroughSandia.
A.6.2.2 WellcostLiteHowdoesthecostmodelwork?
WellcostLiteisasequential,eventbasedanditemcostbasedestimatefordrilling.Themodelapproach takesintoaccountthetimeandmaterialscostforeachactionrelatingtothedrillingofthewell.The Input field acts as a reminder for each step of drilling and the cost and time involved. The Cost InformationSpreadsheetretainsanestimateofthecostandperformanceofmaterialsandservices.
Well design/well planning. Each cost model is constructed by developing a well design profile. Sequentially,asthewellisdrilled,detailsforeachintervalareenteredintheInputSectionand aresummedintotheWellcostSection,andsubsequentlypresentedonanAFEoutputformator otherformat.
WelldesignistheinitialstepindevelopingthecostofanEGSwell.Thewelldesignschematicand casinginformationisprovidedordevelopedbythemodeler.Thedownholegeologysets(orestimates) thearrayofformationstobedrilledinaparticularwell.Aperformancemapforthewelliscreatedfor bitsandholeopeners.Withthetectonicallyjumbledregions,geothermalwellsareverylikelytovary evenwhenclosetooneanother.Theexpecteddownholegeologicalconditionsareestimatedfromthe experienceofgeologistsandengineersfamiliarwiththeareasinquestion. Wellcontrolisconsideredinwelldesign,especiallyinthetopintervalsofthehole.Geothermalwell control pressures are mostly determined based on the temperatures expected in the well and occasionallyforartesianpressuresaswell.Thefracturetolerancegradientoftheformationsisused todeterminethesafedepthsforthesurfacecasingandsubsequentcasingstrings. Experiencehastaughthowmuchopenholecanbeexposedduringdrillingbeforeitisnecessaryto run and cement casing to protect the integrity of the well. Wellbore stability can be a mechanical problem,whereweakandrattyformationsexist;oritcanbeachemicallybasedproblemwherethe claysintheshalesandotherformationsareweakenedwhenexposedtothedrillingfluid.Theamount ofopenholeputslimitsonhowlonganintervalcanbeandhowlongitmaybesafetoexposethe formationstothedrillingfluids.
637
Welldepthandfinaldrillbitdiametercomeintoplayindesigningthewellschematic.Theschematic isarepresentationoftheselecteddiameters,weightsofthecasing,andthegradeofmaterialusedin themanufactureofthepipe.Theproductiveintervalbitdiametersetsthediametersfromthebottom tothesurface.Geothermalwellstendtouselargerdiametercasingthanareusedinoilandgaswell completions.Forthemostpart,K55,L80,andT95casinggradesareusedinmakingtheestimates. Availablesizesandweightsaredeterminedbycontactingthecasingvendors. Modelingthewellcostalsoconsiderstherequirementspresentedbythegeologicstratigraphytobe drilled,thedesireddepth,andthefinalproductionintervalbitdiameter.Usingtheserequirements, the well is designed. The traditional, casingwithinacasing design can be estimated based on the available sizes, desired clearance for cementing, and accepted risk of the amount of open hole. Normalwellboretocasingclearancesinuseinthegeothermaldrillingindustryareappliedwherever possible.Thereissomeleewayinthewelldesignwheremultiplecasingstringsaretoberun. Thegeothermalindustryhastodependontheoilandgasdrillingindustrytosettheavailablesupplyof casingsizes,andweightsandgradesofsteelavailableforgeothermalcompletions.Geothermaldrillinghas littleornoimpactontheavailableinventory.Onshoreoilandgaswellstendtobesmallerindiameterthan geothermalwells.Thissometimesputsalimitationoftheavailabilityofcasingsizes,weights,andgrades.
638
CIS 3rd Quarter 2004. The Cost Information Spreadsheet (CIS 3rd/2004) is used to set the costs of goodsandservicesataparticulardate(orperiodoftime)andtosetguidelinestobeusedinmaterials, equipmentandservices,timelines,performance,andcost.Afileforcasingcostismaintainedforthe different casing sizes, weights and grades, and connections. The CIS also provides for collapse calculations and costs for largediameter welded pipe used in the tophole section of the well (20casingisthelargestseamlesscasingnormallymanufacturedandthreaded).
Drillingcostsaresubjectedtoconsiderablevolatility. Therigrentalrate,materialcosts,andservices are all subjected to supplyanddemand cycles that are not necessarily tied to the Consumer Price Index.Thereis,however,aDrillingCostIndexthatreflectschangesindrillingcost.Butthisisan annualizedrecordandoflittlehelpifcostingacurrentwell.Unfortunately,thevariationsoccurona monthly rather than an annual basis. Because geothermal wells use a slightly larger selection of casing diameters, weights, and grades, the supply for geothermal may be limited. Each cost information spreadsheet (for example, CIS 3rd Quarter 2004) has a date stamp. Models have been usedfor1979,1996,2000,thirdquarter2004,andfourthquarter2005. Informationwillbeenteredforalldrillingintervalsandeachsubsequentendofintervaltimeand costandfortheinitialcompletionofthewell.
Prespud. Prespudexpensesarelistedandaccounted.Theseareexpensesthatareincurredbeforethe holeisactuallystarted(spudded).Prespudcostforthecostofmobilizinganddemobilizingtherig, settingupawatersupply,thedrillsiteconstruction,conductorholedrillingandcementing,thewell cellar, etc.areallestimatedandappearinthePrespudsubsectionoftheInputSection. Dailyoperatingexpenses. A costforthedaily(and,therefore,hourly)costofoperationsisdevelopedby makingdailycostentriesforeachitemlisted.Therigdailyrentalrateandtheotherrunningcosts suchasinsurance,overhead,management,drillingengineeringcharges,rigsupervision,andother miscellaneous timebased charges (daily or hourly operating cost) are entered for the overall
operation.Thereisanhourlycostfortherig,forfuelfortherig(computedfromhorsepowerrating of the rig), for a drilling supervisor, a drilling management activity, charges for insurance, power, water,etc.Someofthesecategoriesofcostsareoftenomittedfromdrillingcostrecords.Thelevelof detailnecessaryforparametricchangestothewelldesignareoftenmissing.
TableA.6.4Inputsection,toppage.
CostInformationField EGS5000m16400ft E Rev7105/8 WellConfiguration HoleDia ConductorPipe/LinePipe SurfaceCSG IntermediateCSG IntermediateCSG2 ProductionZone PrespudandMobilization 26bit/36HO 28 20 143/4 103/8special 12/3/2005 Depths 80 1,250 5,000 13,120 16,400
Casing 300.375Wallwelded118lb/ft 220.625Wallwelded 16109lbK55Premium 113/473.6lbT95Premium 85/836lbK55slottedButt Depths Casing Criticalpsi
Cost/ft $90.00 $107.00 $70.86 $78.24 $29.80
Interval Conductor 1Casing 2Liner 3Casing 4 perf Liner
ROP
BitLife
25 25 18 15
90 80 65 45
Frac Gradient MudShoe psi/ft Pressure 0.8 9.6 40 624 2496 6550 8187 0 220.625lb 16109lb 113/473.6lb 85/836lb CsgString
ActivityCost Mobilization MobilizationLabor Demobilization DemobilizationLabor WasteDisposal&Cleanup $132,000 $16,500 $66,000 $16,500 $30,000 $261,000.00 LocationCost SiteExpense Cellar DrillConductorHole WaterSupply InitialMudCost PrespudCostTotal $32,000 $25,000 $8,000 $10,000 $10,000 $85,000.00 $346,000.00
80 1,250 5,000 13,120 16,400 0
112psi 570psi 3180psi 5920psi 9320psi N/A
64 1000 4000 10496 13120
639
Description DailyOperatingCost RigDayRate Fuel Water ElectricPower CampExpense Drilling Supervision DRLG Engr&Management MudLogging HoleInsurance Administrative Overhead MiscTransportation SiteMaintenance WasteDisposalandCleanup MiscServices $1,040.65 $687.50 $24,975.60 $16,500.00 $1,425.60 $400.00 $50.00 $200.00 $1,200.00 $1,000.00 $1,800.00 $250.00 $500.00 $500.00 $200.00 $200.00 $750.00 2,000 hp 1,200,000mast
0.45xhpx0.06xcostpergalx24 Cost Per Gallon Estimated Estimated Estimated $1000/day1man Estimated CurrentRate Estimated Estimated Estimated Estimated Estimated Estimated $1.10
TableA.6.5Inputsection,Interval3example.
EGS5000m16400ft E Rev7105/8 InputInformationInterval3 ProductionCasing DepthofInterval3 IntervalLength 143/4 13120 8120 ROPft/hr BitPerformance 143/4bit HourlyRates DeltaTimeHrs TechnicalChangesHrs&$ DrillingFluids MudCost$/Hr MudTreatmentEquip MudCoolingEquip AirService Hrs&$ D/HToolsandTimes BHAChangesHrs BITTripsHrs 2 14.00 63.42 $18,970.00 x x x x x x $0.00 $0.00 12.00 0.00 $0.00 $0.00 Hours toChangeBHA TotalIntervalTripTime $132,790.00 143/4$17,000each $26,558.00 $19,918.50 $17,000.00 $3,000.00 $5,000.00 $4,000.00 ReamingHrs&$ $0.00 HoleOpeningHrs&$ $100.00 $25.00 $20.00 $150.00 x x x 451.11 451.11 20.00 $45,111.11 $11,277.78 $9,022.22 $3,000.00 $4000.00 HourlyMudExpense $1000.00 MudTreatment Equipment $1000.00 MudCoolers $2,000.00 AirDrillingServices 18.00 RigTime 451.11 Casing ShoeDepth IntervalLength BitLifeHrs 65.00 ChargeTime NotRigTime No.ofBits 7 Misc.Hourly Expense OneTime Expenses ExplanationofChargesand sourceofInformation ComputedDrillingHours 113/473.6lbT95Premium 13,120 CasingLength $78.24
640
BITS Stab,Reamers,HO DRLGTools.Jars,Shocks D/HRentals,DP,DC,Motor DrillStringInspections SmallToolsandSupplies ReamingHrs&$ HoleOpeningHrs&$ Directional DirEngrServicesHrs&$ DirToolsHrs&$ MudMotorsHrs&$ Steering/MWDEquipHrs&$ Trouble FishingHrs&$ LostCirculationHrs&$ MISCTroubleHrs&$
$40.00 $10.00 $200.00 $100.00
10.00 x x x
451.11 451.11 451.11 451.11
$18,044.44 $4,511.11 $90,222.22 $45,111.11
$1,200.00 DirectionalDrillingExpense $4,000.00 DirectionalDrillingTools $1,000.00 MudMotorCharges $1,000.00 MWDCharges
$10.00
0.00 0.00 12.00
0.00 0.00
$0.00
$1,000.00 FishingStandbyand Expenses 0.00 LostCirculationEstimated MiscTroubleCost
TableA.6.5(continued)
EGS5000m16400ft E Rev7105/8 Endofinterval LoggingHrs&$ CasingServices$ CSG/LinerHrs&$ CasingCementingEquipment LinerHangerandPackers CementingHrs&$ EndofIntervalHrs&$ Wellhead$ WeldingandHeatTreat BOPEHrs&$ TestandCompletion LocationCost TestingCoringSampling WellTestingHrs&$ CompletionHrs & $ ProductionTreeandValves x 0.00 0.00 12.00 0.00 $249,081.11 TotalIntervalRigHours 706.53 DailyOperating $735,251.60 $1,772,325.30 $2,756,658.01 $1,212.00 30%excess 18.00 x 48.00 x 0.00 22.00 12.00 8.00 24.00 12.00 Rental163/4 BOPE Install 11 BOPE $0.00 $0.00 $0.00 WellTestingExpenses $20,000.00 Valves $84,000.00 MasterValvesandexp Spool $22,781.11 $40/ft
3
$36,000.00 LoggingTimeand Expense $40,350.00 CasingService,or Welding,andMob. $1,026,508.80 CasingTimeandCost $8,000.00 $0.00 LinerHangerifused $270,000.00 Cementingtime,WOC andexpense $20,000.00 EndofInterval $15,000.00 WellHeadCost $25,000.00 Welding and Heat Treat $3,000.00 BOPERental,Change outTime,Testing
641
InputSection. TheInputSectionactsasareminderofeacheventwithineachintervaltobeaccounted. A timeandcostforeachactivityinanintervalareentered.Forallactivitiesthataffectthehoursfor the rig, the hourly operating rate is charged and tracked in the interval. All direct costs are also entered.Forchargesthatdonotaffectrighours,achargetimeisdevelopedandmultipliedbythe numberofhoursthatwouldbechargedfortherentalorservice.Thereisarunningcostbasedonthe additional equipment that is on the clock during drilling operations. Some of these events and equipmentalsorequirefreightcharges,mobilizationcharges(orinitiationcost),anddemobilization charges.Eacheventorequipmentselectionmayalsoresultinadirectcostformaterialssuchasbits orpackersorwellheads.Withthisdegreeofdetail,themodelcanbealteredtoaccountforchangesin procedures and for differences in service and equipment performances. The model can also be adapted to develop costs for alternative drilling methods and technologies. The costing process is adaptableandflexible.
Attheendoftheseintervalsteps,thereareaseriesofendofintervalactivitiesthatarelistedanda cost and time recorded for each activity. That includes circulating and conditioning drilling fluid, loggingthewell,runningcasing,cementingthecasing,andchangingoutthewellcontrolequipment toaccommodatethenewdiameterofdrillingtooccurnext. Themodelisdevelopedforaparticularwellbyaccountingforeachtimeandeachcostduringthe drillingofawell.Ateachstepalongtheway,anaccountiskeptoftheamountoftimerequiredofthe rig, the amount and cost of materials, and the time and cost of services to develop the well to completion.
642
WellcostSection. TheWellcostSectionsumsthecostsandtimesintoanaccountforeachinterval.The amount of time and dollars can be determined from the Wellcost Section for each activity in each interval.Itispossibletotracktheintervalcostsfrombeginningtoend.Attheendofeachinterval,a sumoftheintervalcostisavailable. AFESection. AllofthecostsandtimesarethentransferredorsummedtoanAFESheet.TheAFE Sheetwaschosenastheprimaryformofoutputbecausemostavailableinformationisrecordedin thatformat.Thetotalwellcost,thetime,andthecostforeachmajortypeofexpenseislistedinthe authorizationforexpenditures(AFE)spreadsheet.
TableA.6.6AFESection,Page1.
EGS5000m16400ft E Rev7105/8 BJL DescriptionsofCosts NoEntryPoint TangibleDrillingCosts Casing Cond Int1 Int2 Int3 Int4 300.375WallWelded 220.625WallWelded 16109lbL80Premium 113/473.6lbK55Premium 85/840lbK55Slotted OtherWellEquipment WellheadAssembly ProductionTreeandValves LinerHangersandPackers TotalofTangible DrillingCosts Intangible DrillingCosts ok ok ok ok DrillingEngineering DirectSupervision MobilizationandDemobilization DrillingContractor Bits,Tools,Stabilizers,Reamers etc BitTotals Int1 Int2 Int3 Int4 ok Int1 Int2 Int3 Int4 0to1250Interval28 1250to5000Interval20 5000to12000Interval143/4 12000to 16000Interval103/8 Stabilizers,ReamersandHoleOpeners 0to1250Interval28 1250to5000Interval20 5000to12000Interval143/4 12000to16000Interval103/8 OtherDrillingTools,Jars,ShockSubs,etc Int1 Int2 Int3 Int4 0to1250Interval28 1250to 5000Interval20 5000to12000Interval143/4 12000to 16000Interval103/8 D/HRentalsDP,DC,Motorsetc DrillStringInspections SmallTools,Services,Supplies Reaming HoleOpening $72,000.00 $12,500.00 $20,000.00 $7,500.00 $ $48,247.13 $6,478.50 $8,022.00 $19,918.50 $13,828.13 $64,329.50 $8,638.00 $10,696.00 $26,558.00 $18,437.50 $321,647.50 $43,190.00 $53,480.00 $132,790.00 $92,187.50 $75,619.70 $90,743.64 $346,000.00 $1,247,725.03 643 $35,000.00 $104,000.00 $52,000.00 $1,768,155.80 $1,577,155.80 $7,200.00 80ft $139,750.00 1250ft28bit $287,897.00 5000ft20bit $1,034,508.80 13120ft14.75bit $107,800.00 16400 ft10.375bit AFEAmount $6,600,809.43 12/3/2005 AFEDays: 76
EGS5000m16400ftERev7105/8
TableA.6.7AFEsection,Page2. DirectionalServicesandEquipment Directional DirectionalEngineeringService DirectionalTools MudMotors Steering/MWDEquipment Trouble FishingToolsandServices LostCirculation Misc.TroubleCost DrillingFluidsRelated DrillingMuds,Additives&Service MudCleaningEquipment MudCoolers AirDrillingServicesandEquipment CasingCementingandEOI CasingToolsandServices
644
$272,975.56 $36,451.11 $23,191.11 $140,222.22 $73,111.11
$5,000.00 $40,000.00 $
$104,227.78 $25,744.44 $19,395.56 $45,500.00
$127,060.00 $49,000.00 $554,000.00 $ Casing Casing ShoetoSurface PerforatedLiner $122,000.00 $162,000.00 $270,000.00 $
WeldingandHeatTreat CementandCementServices Mob/DemobCementingEquipment Int1 Int2 Int3 Int4 0to1250Interval28x22 1250to 5000Interval20x16 5000to 12000Interval143/4x113/4 NoCementPerforatedLiner WellControlEquipment Blow outPreventer Rentals Int1 Int2 Int3 Int4 Int5 Diverter 211/42000Stack 163/43000Stack 135/83000Stack 135/83000Stack
$48,546.67 $3,500.00 $10,750.00 $25,781.11 $8,515.56 $ 26to1,000 20to5,000 143/4to10,000 103/8to15,000 77/8to20,000
TableA.6.8AFEsection,Page3.
EGS5000m16400ftE Rev7105/8
LoggingandTesting ok Int1 Int 2 Int 3 Int 4 Int 5 MudLoggingandH2SMonitoring&Equip. ElectricalLogging 0to1250Interval 1250to5000Interval 5000to12000Interval 12000to16000Interval 16000to20000ProductionInterval Testing,Sampling&Coring WellTest CompletionCosts MiscExpenses ok ok ok ok TransportationandCranes Fuel WaterandSystem ElectricPower LocationCost ok ok CampCostandLivingExpenses SiteCleanup,Repair,WasteDisposal SiteMaintenance LocationCosts MiscAdministrativeandOverhead AdministrativeOverhead WellInsurance MiscellaneiousServices TotalIntangibleDrillingCosts TotalTangibleDrillingCosts TotalTangibleandIntangibleCosts Contingencies10%ofIntangibles TotalDrillingCosts $37,809.85 $18,904.92 $56,714.77 $4,393,321.48 $1,768,155.80 $6,161,477.28 $439,332.15 $6,600,809.43 75.620days $15,123.94 $15,123.94 $15,123.94 $
645
$136,115.46 $94,000.00 $ $18,000.00 $36,000.00 $40,000.00 $ $2,000.00 $130,000.00 $95,000.00
$37,809.85 $107,803.44 $30,247.88 $3,780.98
Trouble costs. Time and costs for troubles are entered into the Input Sections as expected. Some companies do not permit trouble cost expectations to be entered in the originating cost estimate. Separatecostingmodulescanbecreatedfortroubleeventssuchaslostcirculation,stuckpipe,failed cement,etc.Thefrequencyoftheseoccurrencesismoredifficulttoestablish,becausetherearenot enoughexamplestoestablishastatisticalfrequency.Whentroubleistobeincluded,interviewswith individualswithknowledgeoftheareahavebeenusedtoestablishthelikelihoodofthesetrouble events.AtroubleeventtimeanddirectcostcanthenbeenteredintoWellcostLiteInputSheetin theappropriateinterval.Inmanygeothermalareas,forthetophole,itiscommontohaveseverelost circulationespeciallyabovethewatertable.Thenumberofeventsintheintervalisestimatedfrom interviews and what records are available. The degree of the trouble is also estimated. Lost circulation, stuck pipe, twistoffs, and the resulting fishing, instrumentation temperature limitations, and failed cement jobs can be significant cost items. Failed cementing jobs and collapsed casing are more complicated and difficult to properly include. For geothermal drilling records,onlytheidentifiabletroublesarelisted.Troubleeventtimesandcostscanbeestimatedfor eachtypeandseverityofproblem. Outputofwellcosts. Theoutputofthecostmodelcantakeanumberofusefulforms.Theinformation enteredintotheInputSectionisautomaticallysummedintheWellcostSection.Thecostsummary foreachintervalisavailablefromtheWellcostSection.Attheendofeachinterval,atotaltimeand costaresummedandlisted.
Becausemostdrillingauthorizationsareputinanauthorizationforexpenditures(AFE)format,itis usedasoneoftheoutputformatsforWellcostLite.Otherformatshaveevolvedforspecificuses.The variations needed for the EGS Cost of Geothermal Power consideration were reduced to a representative curve, a simplification, for ease of use. There will be a unique curve for different geologicalareas.
646
TableA.6.9Descriptionsection,Page1. EGS5000m16400ft E Rev7105/8 $6,600,809 $6,161,477 $346,000 $2,593,216 $1,768,156 $825,060 $3,222,261 $2,508,886 $223,078 $83,182 $45,000 $362,115 $6,161,477 12/3/2005 TotalWellCostw/cont TotalWellCostwo/cont Prespud WellConstruction Tangible NonTangibleWellConstructionExpenses Drilling DrillingHoleMakingRelated MgmtandOverhead SiteRelated TroubleCost Evaluation ChkSumshouldEqualTotalwo/cont
$391 $162 $363 $229 $229
Totalw/contprespud/depth WellConstruction/depth Totalwo/contprespud/depth Drilling+Contingency/depth Totalw/contprespudconstruction/depth

647
1,815 76 870 179
TotalHours Days RotatingHours TrippingHours 47.9% 9.9%
5000 m / 4 casing
26 bit
5000 m / 5 casing
36 hole 22 csg 1250 20 bit 16 casing 30 casing
26 bit 22 welded casing
5000
5000
20 bit 16 casing 14-3/4 bit 11-3/4 casing

648
10000 11000 12000 13000 14000 15000 16000 16400 13120 10-5/8 bit 8-5/8 slotted 10-5/8 bit 8-5/8 slotted liner 14-3/4 bit 11-3/4 casing
FigureA.6.14and5interval5,000mcasing
A.6.3 ModelResultsforSpecificAreasandDepths WellsselectedtorepresentpotentialU.S.EGSsiteshavebeencostestimatedusingtheWellcostLite modeling technique with the same performance parameters and cost values from earlier work reported.Thevariationsindepthandbitperformancehavebeenaninputforeachmodel.Thelistof U.S.EGSsitesispreliminary,butwellcostcanbeestimatedforanysitethatischosen.Thespecific U.S.EGSsiteswellcostsareasfollows: a. EastTexasNWLA/ETexasBasin Wellcost Welldesignreservoirtemperature Formations Bitperformance Casingshoe TD Openholeinterval b. SEIdahoNUtah/OreIda Wellcost
Welldesignreservoirtemperature
Formations
Bitperformance Casingshoe TD Openholeinterval $6,993,136/81daysofdrilling 265C Basaltto1,500m
649
$7,665,032/69daysofdrilling 200C Sandstonegradingtohardersediments Sedimenttothehotzone,thenalteredsediments 13,350ft 16,400ft 3,050ft
Crystallineto4,500ft(1,500m),thenaltered
sediments,followedbycrystalline
14,100ft
16,400ft,5,0004
2,300ft
TheOreIdawellisestimatedusingthe5,0004well,sinceitisthoughtthatwellborestabilitywillnot beasignificantprobleminthatarea.Ifwellborestabilityisaperceivedproblem,thenthecostwould begreater. c. NEMontana/PoplarDome Wellcost Welldesignreservoirtemperature Formations Bitperformance Casingshoe TD Openholeinterval $3,166,027/37daysofdrilling 135C Madisonlimestone,sandstone,limestoneandshale Alteredsedimentthroughout 6,200ft 7,200ft 1,000ft
d. NorthernCalifornia/ClearLake Wellcost Wellcost Welldesignreservoirtemperature Formations Bitperformance Casingshoe TD Openholeinterval $10,670,125/115daysofdrilling 5 intervals/nostabilityproblems $13,305,073/126daysofdrilling 6 intervals/concernforstabilityproblems 415C Granite,rhyolite,hydrothermallyalteredmetasediments Alteredsedimentfortop5,000ftto9,000ft,then granite 15,800ft 19,700ft 3,900ft
TheClearLakeprospectivesitewilldifferbyalmost$3million,dependingontheamountofashor unstablezonesthatareencountered.Foranunstablegeology,thegreatercostshouldbeused. e. SEOregon/SistersArea Wellcost Welldesignreservoirtemperature

650
$7,243,690/87daysofdrilling 225C Granite,tuffs,andesite,andesite/basalticlavas UsealteredsedimentandcrystallineROPandhrs 13,120ft 16,400ft 3,280ft
Formations Bitperformance Casingshoe TD Openholeinterval f. NewHampshire/ConwayGranite Wellcost Welldesignreservoirtemperature Formations Bitperformance Casingshoe TD Openholeinterval
$15,570,743/154daysofdrilling 200C Granitefromsurfacedown UsecrystallineROPandhrs 18,400ft 23,000ft 4,600ft
ThebitperformancevaluesusedintheEGSwellshavebeenassumedtobeslowerandwithfewer hours due to the depth of drilling. The bit performance map used for the New Hampshire well assumescrystallineformationsfromthesurfacedown.
A.6.4 ModelResultsforReworkedWells Theleastexpensivereworkwillbetoextendthedepthofthewellwhiletherigisstillmobilizedover thehole,andbeforetheperforatedlinerhasbeenrunintheshorterinterval. A planned multilateral would mean sidetracking out of the well from a zone shallower than the originallegofthewell.Ifitisnecessarytosidetrackfromashallowerpointinsearchofpromising fractures, then the cost to cement, pull back, and sidetrack the well will be more significant. This effortisaremedialoperationtoenhancetheproduction.Thiscostwouldbesimilartoamultilateral additionalcost.Therigonreworksandremedialoperationswillbecostestimatedforthe5,000m (16,400ft)wellsusingthe4and5intervalmodels.
A.6.4.1 Rigondrilling/deepening460m(1,500ft)/rigstillonthewell
Thecostincrementfordrillinganadditional460m(1,500ft)is$375,000(5,000mwell).Thisisa simpleextensionofthefinalinterval,usingthesameROP/hrsperformancenumbersandaddition lengthtotheperforatedliner. Therigisoverthehole,sothereisnomobilizationcharge.Procuring andhavingtheextralengthofperforatedlinerwouldnotbeasignificantplanningissue.

A.6.4.2 Rigondrilling/sidetrackedlateral/asaplannedpartofthewelldesign
To sidetrackthewellasaplannedpartofthewell,thekickoffpointwouldbe645m(2,120ft)above thelastcasingpointof4,000m(13,120ft fora5,000m/16,400ft well)at3,355m(11,000ft).With a build rate of 3/100 ft of measured depth, 305 m (1,000 ft) of drilling would set the angle at 30 degrees.Drillinganother1,145m(3,754ft)wouldbethemiddleofthe1,000m(3,280ft)hotzone. Drillingwouldproceedtoatotalmeasureddepthof5,380m(17,648ft).Thesidetrackedlateralwould havepenetratedcompletelythroughthehotzone.TheTotalVerticalDepthatthe5,380m(17,648ft) measureddepthwouldbe5,000m(16,400ft).Thehorizontaldeparturewouldbe650m(2,132ft). Theplannedlateralwillbeusedtodevelopasecondproduction(orinjection)legtothewell. Usingthe5,0004modelwithoutthesidetrackwas$6,989,859,whichtook1,960hoursin82days. Thetotalwellcostwiththeadditionalsidetrackedintervalwouldcost$8,972,859,donein2,827hours in118days.Thisisanadditionalcostof$1,983,000and36days.
A.6.4.3 Reworks/righasto bemobilized/addalateralforproductionmaintenance/aworkover
651
A wellrecompletion,whichrequiresalateraltorestoreproductionflowortemperature,wouldthen require an additional $400,000 for mobilization/demobilization, blowout preventer equipment (BOPE) rental, and setup. Due to the depth, the rig would need to be of a similar size and specification.Theconfigurationofthewellwouldbethesameasthesidetrackedlateralnotedabove. Therewouldbeanadditionalcostof$90,000forabridgeplugandcement.Thewhipstockiscovered in theabovecostmodel.Thetotalforthelateral,asaremedialoperation,wouldcost$2,473,000and takeapproximately40days.Itisassumedthattheformationsbeingdrilledaremostlycrystalline.
A.6.4.4 Redrillsto enhanceproduction/aworkover/rigtobemobilized
To deepena5,000m(16,400ft)wellby1,500ft to17,900ft,whichrequiresthemobilizationofarig, isconsiderablymoreexpensive.Therewillbeacostof$500,000formobilization/demobilization, BOPE rental, and setup. The total cost of the deepening by 457 m (1,500 ft) would be $900,000.
Almost any workover that requires mobilizing a rig will run between $700,000 and $1 million, dependingonthedepthofthewellbeingreworked.Thecostofacoiledtubingrigforthisoperation isonlymarginallylessexpensive,becausecoiledtubingrigshavegottenquiteexpensive. Maintenance reworks for acidizing, casing scraping, logging, etc. will be in the same range of $600,000to$1millionperwellevent.
652

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Drilling Technology and Costs: Chapter 6

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CHAPTER6

DrillingTechnology and Costs

6.3 HistoricalWellCostData _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _68

6.4 PredictingGeothermalWellCostswiththeWellcostLiteModel _ _ _ _ _ _618

6.5 DrillingCostModelValidation _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _619

6.6 EmergingDrillingTechnologies _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _627

6.7 Conclusions _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _629

A.6.1 WellCostData ______________________________________633

onemightbeabletodescribethewellcostdataasafunctionofdepthusingonlyafewparameters.As Figure6.1shows,theaveragecostsofcompletedoilandgaswellsforthedepthintervalsfrom1,250 feet(380m)to19,999feet(6,100m)canbedescribedasanexponentialfunctionofdepth,thatis:

whereonlytwofittedparameters,a andb1, areneeded.Thus,aplotoflog10(wellcost)vs.depthresults inastraightline:

Geothermal Well Model Predictions

Completed Well Costs (Millions of Year 2004 US$)

Oil and Gas Average

5000 0.1 0 2000

3. Ultradeepwelldatapointsfordepthsgreaterthan6kmareeitherindividual wellsoraveragesfromasmallnumberofwellslistedinJAS(19942000). 4. OtherHydrothermalActualdataincludesomenonUSwells(Source:Mansure2004).

Figure 6.1Completedgeothermalandoilandgaswellcostsasafunctionofdepthinyear2004U.S.$, includingestimatedcostsfromWellcostLitemodel.

Figure6.2MITDDdrillingcostindexmadeusingaveragecostperwellforeachdepthintervalfromJoint AssociationSurveyonDrillingCosts(19762004),withdatasmoothedusingathreeyearmovingaverage (1977=100foralldepthintervals).Note:1ft=0.3048m.

0 1977 1982 1987 Year 1992 1997 2002

Figure 6.3Crudeoilandnaturalgasprices,unadjustedforinflation(Energy InformationAdministration, 2005)comparedto MITComposite DrillingIndex.

0 1977 1982 1987 Year 1992 1997 2002

Figure 6.4Crudeoilandnaturalgasprices,adjustedforinflation(EnergyInformationAdministration, 2005)comparedto MITComposite DrillingIndex.

Drilling Cost Index Value

300 GDP Deflator Index 200

250 Depth Intervals (Feet)

Drilling Cost Index

Depth,m (ft) 1,500 (4,900) 2,500 (8,200) 3,000 (9,800)

Cost, million$ 2.3 3.4 4.0

Depth,m (ft) 4,000 (13,100) 5,000 (16,400) 5,000 (16,400)

Cost, million$ 9.7 12.3 14.4 20.0

Completed Well Costs (Millions of Year 2004 US$)

Cooper Basin Habanero-2

$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 0

Pre-spud Expenses Casing and Cementing Drilling-Rotating Drilling-Non-rotating Trouble

6000 Depth (meters)

Completed Well Cost (Thousands of US$)

4 Casing Strings 5 Casing Strings 6 Casing Strings

6000 Depth (meters)

0 0 2000 4000 6000 Depth (meters) 8000 10000 12000

1.M$=millionsofU.S.$. 2.AlistinganddiscussionoftheoriginsofmanyoftheactualandpredictedwellcostsisgiveninTesterandHerzog(1990). 3.CurrencyconversionsbasedonyearlyaverageofInterbankconversionrate.

Casing 300.375Wallwelded118lb/ft 220.625Wallwelded 16109lbK55Premium 113/473.6lbT95Premium 85/836lbK55slottedButt Depths Casing Criticalpsi

Cost/ft $90.00 $107.00 $70.86 $78.24 $29.80

Interval Conductor 1Casing 2Liner 3Casing 4 perf Liner

80 1,250 5,000 13,120 16,400 0

112psi 570psi 3180psi 5920psi 9320psi N/A

64 1000 4000 10496 13120

$40.00 $10.00 $200.00 $100.00

451.11 451.11 451.11 451.11

$18,044.44 $4,511.11 $90,222.22 $45,111.11

$1,200.00 DirectionalDrillingExpense $4,000.00 DirectionalDrillingTools $1,000.00 MudMotorCharges $1,000.00 MWDCharges

0.00 0.00 12.00

$1,000.00 FishingStandbyand Expenses 0.00 LostCirculationEstimated MiscTroubleCost

$272,975.56 $36,451.11 $23,191.11 $140,222.22 $73,111.11

$104,227.78 $25,744.44 $19,395.56 $45,500.00

$136,115.46 $94,000.00 $ $18,000.00 $36,000.00 $40,000.00 $ $2,000.00 $130,000.00 $95,000.00

$37,809.85 $107,803.44 $30,247.88 $3,780.98

$391 $162 $363 $229 $229

Totalw/contprespud/depth WellConstruction/depth Totalwo/contprespud/depth Drilling+Contingency/depth Totalw/contprespudconstruction/depth

1,815 76 870 179

TotalHours Days RotatingHours TrippingHours 47.9% 9.9%

36 hole 22 csg 1250 20 bit 16 casing 30 casing

26 bit 22 welded casing

20 bit 16 casing 14-3/4 bit 11-3/4 casing

$7,665,032/69daysofdrilling 200C Sandstonegradingtohardersediments Sedimenttothehotzone,thenalteredsediments 13,350ft 16,400ft 3,050ft