Well Cost Calculations
Cost Per Foot
Overall well cost excluding the production = cost of drilling a foot of hole that includes bit cost, downhole drilling tools cost, and rig rental cost only + all other cost of making a foot of hole such as, casings, mud, cementing services, logging services, coring services, site preparation, fuel, transportation, completion, etc
Bit Run Cost
Bit run cost = bit cost ($)+ rig cost,$/hr(Drilling time, hrs+ Trip time, hrs+ Connection time, hrs)/ Formation interval drilled, ft, by the bit number
Trip Time
The trip time = 2 x (average time required to handle one stand of drillstring, hrs/ average length of one stand of drillstring, ft)x depth where trip was made, ft.
Coring Cost
Coring cost per foot = (1/ core recovery percentage) xcore bit cost ($)+ rig cost,$/hr(coring time, hrs+ Trip time, hrs+ Connection time, hrs + core recover time, hrs)/ Formation interval cored, ft,
Future Value (FV)
Future value = present value (1+( Periodic interest rate or growth rate in fraction / number of payments per year )^( number of payments per year x number of years)
Price Elasticity
Price elasticity is ratio of the percentage of change of wells and footage drilled to the percentage change in the crude price. It describes the degree of responsive of the rig in demand or rig in supply to the change in the crude price.
Ranges of Elasticity
- Inelastic: Elasticity < 1
The number of drilling rigs does not respond strongly to the oil price
- Elastic: Elasticity > 1
The number of drilling rigs responds strongly to the oil price
- Perfectly Inelastic: Elasticity = 0
The number of drilling rigs does not respond to the oil price change
- Perfectly Elastic: Elasticity a
The number of drilling rigs responds infinitely to the oil price change
- Unit Elastic: Elasticity = 1
The number of drilling rigs responds by the same percentage as the oil price change