Optimized Well Construction Cost Estimate in South of Iraqi Fields/ Case Study from Zubair Field

Abstract

Cost estimation and control is a crucial activity for well engineering and construction. In
addition to the technical preparation before drilling an oil well, well construction cost is one of
the essential activities leading to AFE (authorization for expenditure). Recently the
probabilistic method for cost estimate became necessary for understanding the risk and
uncertainty of a certain cost range instead of a single (deterministic) value. This work describes
the main types of drilling contracts have been used in Basra oilfields and discusses the
principles of well construction cost estimate according to those contracts. In addition, it
summarize the relevant cost breakdown for drilling operations. The research also illuminates
the probabilistic method for effective well cost estimating along with deterministic method. the
study subdivided the process of well construction into segments for cost tracking, emphasized
the main aspects influence the well cost and leading to a methodology that can be applied by
the operator for onshore well in the south of Iraqi fields. The methodology used in this work
includes, first, analyzing data from offset wells to facilitate the possible cost out comes, and
second, subdivide the well construction activities into fixed costs, time dependent and depth
dependent costs. A probabilistic model (Monte Carlo simulation) for cost estimating is
constructed using @ Risk software. The results released for risked drilling operation, which
includes the NPT. While revising the historical cost performances in Zubair field, it has found
that the best practices and lesson learned of the previous activities has significantly contributed
in time and cost reduction of well operation. The findings of this work contributes to improve
the decision-making by managers for best investment, enhance the planning for next activities
and confident choice of well budget. It also helps to investigate the critical factors and actions

that can be applied on operational and contractual parameters to achieve cost reduction. A case
study from Zubair field will be presented in order to illuminate the mentioned points.