Applications Engineering Course

FY2001

Drill Bit Technology:

Economics
 Session Objectives

Drilling cost per foot calculation & comparison

Break even calculation
 Economics of Bit
Applications
The cost of the bit is not the concern!
Performance is more important
projected ROP
projected footage
Relevant cost parameter is Cost per Foot
daily operations cost
trip time
bit cost
 Cost per Foot (CPF)
CPF = bit cost + rig rate (rotating hours +
trip hours) / footage drilled

CPF = B + R( T + t )
F
where
bit cost, B, is in dollars
rig rate, R, is in dollars per hour
rotating time, T, and trip time, t, are in hours
footage drilled, F, is measured in feet
 Direct Application of CPF

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 results versus depth
select bits based on lowest CPF per interval
Example Application - 9-7/8 hole section
four (4) offset wells; 31 total bit runs
six (6) different bit types in database of runs
Example - Direct Use of CPF
Cost per Foot, $
0 100 200 300 400
8000
Well 1
9000 43 Well 2
7 Well 3
10000 Well 4
Depth, ft

53
7
11000
53
7
12000
52
7
13000 53
7
14000
 Direct Application of CPF

Direct application in bit selection

calculate CPF for all bits in all offset wells
plot results versus well depth
select bits based on lowest CPF per interval
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
 Indirect Application of CPF

Indirectly use CPF to select a bit

project the economics of an untried bit
use CPF to derive a breakeven curve
make judgement as to which side of the breakeven curve the
untried bits performance is likely to fall
 Breakeven Curve

Compare best previous bit ROP, ft/hr

with an untried bit 100
Derive footage equation
80
F = B/CPF + R (T+t)/CPF
60 Cost
Use best CPF and cost of
Effective
untried bit, B, to find 40 Region
footage to breakeven at Not
20
several values of T Effective
0
ROP = F/T; plot vs. F 0 500 1000 1500 2000 2500

Footage
 Indirect Application of CPF

Indirectly use CPF to select a bit

project the economics of an untried bit
use CPF to derive a breakeven curve
Pros and Cons
can provide incentive for an expensive bit
requires:
reasonable estimates of ROP & Footage
good judgement that breakeven is feasible
 Summary of the Bit
Selection Process and
Economics Tool
Collect information
Identify potential bits
derive compressive strength log
match strength to bits
Use offset data to make a CPF chart
Select bit with lowest historical CPF
Identify alternative bit opportunities
Conduct breakeven analysis
Class Problem
Bit Selection Exercise
 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 26 456 17.5 349.5

7 2,449 1,801 1,932 4,865 7 14.5 131 9 817.15

6,139 4,865 13 40.5 587 14.5 453.86

Proposed Cost of CPM to be Rig Trip Rotating Meters ROP
PDC Bit Prop. Bit Competitive Rate Time Hours Drilled (m/hr)
Brand x 46400 453.86 4865 7 2 198.7 99.4
Brand x 46400 453.86 4865 7 4 220.1 55
Brand x 46400 453.86 4865 7 6 241.6 40.3
Brand x 46400 453.86 4865 7 8 263 32.9
Brand x 46400 453.86 4865 7 10 284.5 28.5
Brand x 46400 453.86 4865 7 12 305.9 25.5
Brand x 46400 453.86 4865 7 14 327.3 23.4
Brand x 46400 453.86 4865 7 16 348.8 21.8
Brand x 46400 453.86 4865 7 18 370.2 20.6
Brand x 46400 453.86 4865 7 20 391.7 19.6
Brand x 46400 453.86 4865 7 22 413.1 18.8
Brand x 46400 453.86 4865 7 24 434.5 18.1
Brand x 46400 453.86 4865 7 26 456 17.5
Brand x 46400 453.86 4865 7 28 477.4 17.1
Brand x 46400 453.86 4865 7 30 498.8 16.6
Brand x 46400 453.86 4865 7 32 520.3 16.3
Brand x 46400 453.86 4865 7 34 541.7 15.9
Brand x 46400 453.86 4865 7 36 563.2 15.6
Brand x 46400 453.86 4865 7 38 584.6 15.4
Brand x 46400 453.86 4865 7 40 606 15.2
Brand x 46400 453.86 4865 7 42 627.5 14.9
Brand x 46400 453.86 4865 7 44 648.9 14.7
Brand x 46400 453.86 4865 7 46 670.3 14.6
Brand x 46400 453.86 4865 7 48 691.8 14.4
 Breakeven Curve

120.0
100.0
80.0
ROP (m/hr)

60.0
40.0
20.0
0.0

542
199
242

285

327
370

413
456

499

585

628
670
Meters Drilled
 Breakeven Curve

120.0
100.0
80.0
ROP (m/hr)

60.0 615m @ 22m/hr

40.0
20.0
0.0

542
199
242

285

327
370

413
456

499

585

628
670
Meters Drilled
Thank-you