Drilling Cost Budgeting

Enorca has 15 years of experience preparing drilling project and cost budgeting

Drilling cost is usually considered to be a key factor when calculating the feasibility of a geothermal project.  This is because the cost of drilling represent high portion of the overall investment in the project.  It can range from 35% to 45% of the total investment cost for a new high temperature power plant, depending on market and local conditions (ISOR:Mar 2012).  Because of this fact, the drilling cost becomes a major concern in the preparation and economical evaluation of a geothermal project.  Therefore the ability to estimate the drilling cost with a fairly good accuracy is important.

Drilling cost varies mainly because of the performance of the drilling contractor and also due to geological circumstances. One should not underestimate the third aspect, which is a proper preparation and the management of the drilling project.  The speed of drilling a regular size geothermal well can vary for example from 30-60 days. Regular sized deep geothermal well is usually 7 “ casing in the production zone and depth is very often between 2000 and 2500 meters, which can be either vertical or deviated.

The time spent drilling one well is crucial having in mind the high cost of drilling per day (day rate). In a proper drilling program, one should include estimated time for each section of the well and various job associated with the work as a benchmark for the drilling project.  This can be done by using experience and performance from older drilling reports. By applying benchmarking performance indicators in a drilling program, one should be able to compare the performance of a drilling contractor in a particular project. But one should always expect certain risk due to unexpected geological situations which may affect the drilling time and thereby the cost.

Other cost issues which affect the total cost of drilling is the technology used, such as the usage of directional tools, and in case the operator chooses to use aerated technology.

Following list includes mentioned parameter and others, which may affect the total drilling cost:

  1. Geological situations
    1. Different type of formations
    2. Instability of formations
    3. Stuck pipe, jarring and fishing required
    4. Pressured zones
  2. Vertical versus Directional well
  3. Aerated equipment
  4. Size of casings, and casing running problems
  5. Size of drilling rig, and tripping time
  6. Quality of bits and other tools
  7. Equipment maintenance
  8. Drilling multiple wells from one drilling pad
  9. Meteorological conditions, climate
  10. Project management
  11. Fluctuation of market prices, mainly applicable to steel casing

The overall economy of the project may then be different due to the fact that a single well output can be different in terms of steam character and steam availability.  In Iceland the average output is around 5-7 MWe, but a single well output can reach up to 20 MW power production.

In this respect, it is of interest to mention the International Deep Drilling project (IDDP) which took place in North of Iceland and involved a drilling activity in the year 2009.  This was a research project with the ultimate objective to increase the output of a single borehole. The goal in the beginning was to drill down to 5000 meters and reach a geothermal reservoir giving superheated steam, and thereby increasing the overall output.  Eventually, the final depth of the well was only around 2200 mtr and not 5000 meters as planned, because the drill bit encountered magma chamber.  Today, the well has been flow tested, and the outcome is around 30 MWe production capacity, which means that it can compensate for up to 5-6 conventional wells.  The second IDDP well is under preparation in 2016, to be located in the south of Iceland.

Considering the conventional wells, a single geothermal project aiming for 50 MW may need on an average 7 production wells and 4 wells for re-injection, given the ratio of approx 0,5:1.  If we calculate failure in drilling of around 25%, meaning wells either failing to produce or not having enough permeability to be used as re-injection, then we arrive at a total of 14 wells.

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