Bit Economics
Bit Economics
Session Objectives
Drilling cost per foot calculation & comparison
Break-even calculation
The cost of the bit is not the concern !
Performance is more important
projected ROP
projected footage
Relevant cost parameter is the Cost per Foot
daily operations cost
trip time
bit cost
Applications of Bit Economics
Cost per Foot (CPF)
where
B bit cost, $
R rig rate, $/hr
T rotating hours
t round trip time, hr
F footage drilled, ft
bit cost + rig rate x (rotating hours + trip time)
footage drilledCPF =
B + R x ( T + t )FCPF = $ / ft
Cost per Meter (CPM)
where
B bit cost, Rub
R rig rate, Rub/hr
T rotating hours
t round trip time, hours
F meters drilled
bit cost + rig rate x (rotating hours + trip time)
meters drilledCPM =
B + R x ( T + t )FCPM = Rub / m
Direct application in bit selection
calculate CPF for all bits in all offset wells
combine records for common hole sizes
for each hole size, plot CPF versus depth
select bits based on lowest CPF per interval
Direct Application of CPF
Pros and Cons
? a good approach if there are many offsets
? downside : best bit may not be in database
? rig / crew capabilities may not be consistent
Example - Direct Application of CPF
9-7/8 hole sections, 4 offset wells, 31 bit runs, 6 different bit typesD
epth
, ft
Cost per Foot, $/ft
437
527
537
537
537
8000
9000
10000
11000
12000
13000
14000
0 100 200 300 400
Well 1
Well 2
Well 3
Well 4
Indirect Application of CPF
Indirectly use CPF to select a bit
project the economics of an untried bit
use CPF to derive a break-even curve
make judgement as to which side of the breakeven curve the untried bits performance is likely to fall
Pros and Cons- can provide incentive for an expensive bit
- requires : - reasonable estimates of ROP &
footage- good judgement that breakeven is
feasible
Breakeven Curve
Use best previous bits CPF and untried bits cost (B)
Derive footage equation :
F = B/CPF + R (T+t)/CPF
Use several values of T and calculate F footages
Calculate ROP = F/T
Plot ROP vs. F (BE curve)
0
20
40
60
80
100
0 500 1000 1500 2000 2500
Footage
ROP, ft/hr
Cost Effective
Not Cost Effective
BE
Breakeven Curve
Calculate the actual drilling performance ROP and footage :
ROP = F / T
Plot ROP vs. F
Check this value against
the BE curve
0
5
10
15
20
25
100 200 300 400 500
F bit run length, ft or m
ROP, ft/hr or m/h
Cost Effective
Not CostEffective
BE
Summary of the Bit Selection Process
Collect information
Identify potential bits
derive compressive strength log
match formation strength to bits
Use offset data to make a CPF or CPM plot
Select bit with lowest historical CPF or CPM
Identify alternative bit opportunities
Conduct break-even analysis
Class Exercise
Bit Selection Problem
CPM = 3690 + 4865 (6 + 26 )312
= 510.80 $/m
CPM = 2449 + 4865 (7 + 14.5 )
131= 817.15
Analyze Previous Bit Runs
CPM = 4390 + 4865 (7 + 31)417
= 453.86
Bit Cost Depth In Depth Out Rig Rate Trip Time Rotating Time ROP CPM
Bit ($) (meters) (meters) ($/hr) (hrs) (hrs) Meters (m/hr) ($/m)
6 3,690 1,345 1,801 4,865 6 26 312 12 510.80
7 2,449 1,801 1,932 4,865 7 14.5 131 9 817.15
8 4,390 1,932 2,349 4,865 7 31 417 13.5 453.86
9 46,400 2,349 4,865 7
Calculate Data for BE Curve
L9 = B9 + R (t + T9)
CPM8=
46,400 + 4865 (7 + T9)
453.86
ROPi = Ti
Li
Li = 10.72Ti + 177.27
Create a table : Ti Li ROPi2468
198.7 99.4
Price of new bit B9 = $46,400
Proposed Cost of CPM to be Rig Trip Rotating Meters ROPPDC Bit Prop. Bit Competitive Rate Time Hours Drilled (m/hr)
Brand x 46400 453.86 4865 7 2 198.7 99.4Brand x 46400 453.86 4865 7 4 220.1 55Brand x 46400 453.86 4865 7 6 241.6 40.3Brand x 46400 453.86 4865 7 8 263 32.9Brand x 46400 453.86 4865 7 10 284.5 28.5Brand x 46400 453.86 4865 7 12 305.9 25.5Brand x 46400 453.86 4865 7 14 327.3 23.4Brand x 46400 453.86 4865 7 16 348.8 21.8Brand x 46400 453.86 4865 7 18 370.2 20.6Brand x 46400 453.86 4865 7 20 391.7 19.6Brand x 46400 453.86 4865 7 22 413.1 18.8Brand x 46400 453.86 4865 7 24 434.5 18.1Brand x 46400 453.86 4865 7 26 456 17.5Brand x 46400 453.86 4865 7 28 477.4 17.1Brand x 46400 453.86 4865 7 30 498.8 16.6Brand x 46400 453.86 4865 7 32 520.3 16.3Brand x 46400 453.86 4865 7 34 541.7 15.9Brand x 46400 453.86 4865 7 36 563.2 15.6Brand x 46400 453.86 4865 7 38 584.6 15.4Brand x 46400 453.86 4865 7 40 606 15.2Brand x 46400 453.86 4865 7 42 627.5 14.9Brand x 46400 453.86 4865 7 44 648.9 14.7Brand x 46400 453.86 4865 7 46 670.3 14.6Brand x 46400 453.86 4865 7 48 691.8 14.4
Data for the BE Curve
be
0
20
40
60
80
100
120
198.
7
214.
8
230.
9
247.
0
263.
0
279.
1
295.
2
311.
3
327.
4
343.
4
359.
5
375.
6
391.
7
407.
8
423.
8
439.
9
456.
0
472.
1
488.
2
504.
2
520.
3
536.
4
552.
5
568.
6
584.
6
600.
7
616.
8
632.
9
649.
0
665.
0
681.
1
Meters drilled
RO
P, m
/hr ECONOMICAL
NOT ECONOMICAL
BREAK-EVEN CURVE
Plot the BE Curve
ROP
BE curve
Actual ROP vs drilled length
BE ROP = .. m/h
Drilled m in . hrs
Read the BE Curve
F
BE ROP
BE footage