Integrated Drilling Services is a new concept in which all services and equipment and even in some cases material procurement are integrated under one contract. This model of a contract is technically and economically feasible for the geothermal concession owners who usually lack all infrastructures running a complicated drilling project. Instead of making contracts with 7-9 service providers, you can do with only 2-3 contracts. Project management becomes simpler and therefore more efficient.

Further this can lead to improved well design, better selection of rig equipment and technology selection. Based on terms and conditions, the experienced Drilling Company are more responsible for problem solving, better drilling systems for different well sections, and good operational coordination which usually leads to drilling optimization and cost efficiency.

The ideal example of this kind of arrangement is the Wotten Waven drilling project in Dominica. This type of an integrated contract we sincerely believe was of great benefit to the operator (the PMU of Dominica).  Another example is also in the Caribbean in the island of St. Vincent.

For Operators of drilling projects not having their own infrastructure and expertise for handling all this procurement, one option is to source these services out to a professional

Drilling Contractor

The benefits are:

  • By integrating multiple services which is needed in the drilling operation into a single one hand, we aim to simplify the process by making it easier and more economical for the developer to start the drilling operations without the need of assembling number of players into the planning phase and operation. Let the “one” contractor do that for you.
  • Because of better workflow you will have Reduced risk of onsite difficulties. –
  • Reduced risk of delays in the drilling time plan.  The contractor will be responsible for supplying all the material, which means that he will strive for delivering at the right time all the material supplies needed.  In case that will fail, they simply will not be able to operate the rig, and therefore not entitled to a “daily rate”In other words.
  • Your will have one stop shop for information and communication, Increased quality of communication, due to fewer people involved.
  • Ergo, Easier monitoring of processes
  • Which should lead to …..higher quality of work.
  • Due to reduced cost because of less overhead, you will have better economy in the whole project.
  • Improved security (less people on site).

This type of drilling contract is being offered by an increasing number of drilling contractors who have experience offering a wide array of services under one contract as an Integrated Drilling Solution.

A good understanding of the contract options for drilling operations is important.  Geothermal developers have in recent years increasingly chosen to use integrated type of contracts. Few service companies on the market have been able to offer this type of service using the name such as “Integrated Project Management” or IPM.  In those cases, then the drilling contractor is hired as subcontractor by larger service companies, only as one element in the whole project execution.

Drilling Companies have also been able to offer this type of extended services. Then the drilling contractor is the lead contractor, but handling all the material procurement, and managing all the other services needed.   Of the three type of drilling contracts, then integrated type of drilling contract is being offered by an increasing number of drilling contractors who have experience offering a wide array of services under one contract as “Integrated Drilling Services” or IDS.

For new developers and smaller concession owners not having the in-house expertise, then the integrated contract solution is an interesting approach which are getting increased attention due to its simplified setup, less risk involved and improved performance

Compared to day-rate contracts, it is fair to say that meter rate contracts in deep geothermal drilling are less common.  This has though changed in recent 5 years or so.  While meter rate contracts are dominant in Iceland and to some extent also in Turkey, this has not be the case on other markets.

In this case the drilling contractor receives an agreed lump sum per meter of a well drilled, based on different sections and diameter of the well. One tends to believe that this type of agreement will result in cheaper drilling cost.  But this is not necessary true assumption. In this case the drilling contractor calculates into his price schedule a substantial risk factor of the operations and receives a lump sum payment upon supplying a well down to a certain depth.

Even though this includes a certain risk for the drilling contractor, certain exceptions are usually build in the contract when the drilling contractor encounter unexpected incident related to geological difficulties. In such cases an hourly rates are applicable.  The contractor takes on all risk related to slow drilling that may delay the drilling work. 

For the drilling work in meter rate contract two unit prices are applicable:

Majority of all deep drilling contracts (that means oil and gas and also geothermal wells) are in the form of standard day rate contracts. The biggest demand comes from oil and gas companies who have been doing exploration for decades and have already big departments filled with specialists in this field. 

In a standard day rate contract the service of a drilling company is limited to supplying only the rig equipment and safe operation of its crew. 

The rig equipment (ath myndir)

Very often, some of this equipment is quoted separately, and therefore not included in the dayrate.  Example of this is for example the BOP‘s, top drive, and drill strings. In other words, it is very difficult to compare day rate unless having full understanding of the responsibility of the contractor.  Usually, people are comparing apple and oranges.

Drilling rig with crew may includes for example;

  • BOP‘s 
  • Drill string
  • Topdrive
  • Solids Control Equipment
  • Mud cooler (specially for geothermal projects

The handling of all other related services and material procurement are the obligation of the Operator, who normally has a big staff of experienced drilling experts for planning and execution.  (oil & gas producers like Shell, Exxon etc.)

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