Page 159 - Practical Well Planning and Drilling Manual

Section 2 revised 11/00/bc 1/17/01 12:04 PM Page 135

2.1.5
Preliminary Work For the Drilling Program [ ]

Initial AFE estimate (prior to completing the drilling program).
Most companies require an estimate to be within 10% for AFE purpos-
es. A confident estimate to this accuracy level can only be given after
full engineering work is complete, the well design fully defined, and the
drilling program finished. Often the AFE estimate is required before that
can be done. In this case (as long as all the information as per the Well
Proposal Checklist in Section 1.1.2, “Data Acquisition and Analysis,” is
in hand) actual costs can be used for things that will be known (such as
rig day rate, logs) and estimates made of times, casing setting depths,
and directional work to add in
By using a set of linked spreadsheets, AFE cost estimates can be
done fairly quickly. If similar estimates are available from previous
wells, open the file, save to another name, and modify costs as appro-
priate. This also helps ensure that all the necessities are accounted for
in the estimate.
Revised AFE estimate. Once the drilling program is completed
and approved, the AFE should be revisited to see whether it is still
realistic. If a detailed spreadsheet has been used, this can be done
quickly and easily to see whether the AFE should be supplemented
prior to spud.
The costs for individual items are often known from existing con-
tracts. Where they are not known either contact the relevant supplier
for a cost estimate or look at offset well costs and adjust if rates in gen-
eral have moved since.
An Excel workbook example can be downloaded from the Files
area of http://www.drillers.com, modified, and used for customized esti-
mates (see Fig. 2-2). Following is an explanation of how this spread-
sheet is set up.
Spreadsheet format. The spreadsheet is set up with several layers
of detail. These are described individually below.
Cost summary. At the front is a summary sheet, which gives totals
from the detailed sheets and shows the casing depths and drilling time
estimates that the spreadsheet uses in calculations.
Formulae in the summary sheet cells also calculate the dry hole
cost of the well, the percentage of contingency included, and the daily
operating cost.

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