Decision and Risk Analysis

Well Planning

Steve Murphy
Director – CO2 Projects & Operations

RGU Well Engineering

13th April 2010
 Contents

 Decision Analysis Approach

 Probabilistic Well Cost Estimating
 With offset data - #2
 Without offset data - #49
 Choosing the Optimum Well Design
 Conclusions

April 2010 RGU Well Engineering

 Methodology
DA is a systematic process to expose uncertainties and quantify their impact

Identify Uncertainties Impact of Uncertainties Chance of Outcomes Managing Uncertainty

Structure Deterministic Probabilistic

Appraisal
the problem Analysis Analysis

 Develop an  Identify crucial  Define range  State how to

understanding of uncertainties of possible control,
the drivers which dominate outcomes and reduce or
 Assess potential the problem likelihood of eliminate
impact occurrence risks & what
 Identify the value is
uncertainties
 Identify risks

April 2010 RGU Well Engineering

 #49 HAZID
The systematic HAZID approach captured knowledge very efficiently

HAZID Leader

For Example
Operational Pressure
Key Words
Procedures Access
New
Temperature
Stuck

For Example
Completions
Drilling Expert Panel
Production
Rig
Reservoir
Coil Tubing
Electric Line
Multi-laterals
Operations Action List
HAZID Secretary
& Plan

April 2010 RGU Well Engineering

 Model Template
Technical Limit P10, P50, P90 Estimates

Activity Total Time No. Trips Operational No. Trips Operational

Time Time

Trip Speeds

April 2010 RGU Well Engineering

 #49 - Results The pilot hole was forecast to take 55 days and cost $3.0MM

100 100

90 90

80 80

70 70
Cumulative Probability (%)

Cumulative Probability (%)

60 60

50 50

40 40

30 30

20 20

10 10

0 0
2.50 2.70 2.90 3.10 3.30 3.50 50 55 60 65 70

Cost ($MM) Time (Days)

April 2010 RGU Well Engineering

 #49 - Analysis

 Ranges narrower than expected

 possibly due to events immediately prior to HAZID
 A total of 24 hazards were identified,with the potential to create over 20
days of trouble time
 The major hazard was motor failure which could cause up to 4 days of
trouble time

April 2010 RGU Well Engineering

 #49, Actual vs Forecast

 The actual cost of $3.6MM is greater than the maximum of the forecast
range
 Well programme changes
 Core barrel become differentially stuck & hole was lost
 Hole problems were identified during the HAZID but the consequence of
losing the hole was not

April 2010 RGU Well Engineering

#2 - Offset Trouble Time

16
MSCT Problems
14 MDT Problems
Waiting on Logging Tools
12 Blocked Suction Line & Nozzles
Junk Run
10 Lost Circ / Remedial Cmtg
Days

Lost Circ Running 9 5/8" csg

8 Wiper Trip
12 1/4" Losses
6 Kick taken in Turonian
Lost Cones in 17 1/2" hole
4 Dropped Rotary Bushing
Pump Repairs
2 Hole Problems running 20" csg

0
-1 -2 1 1 1 2 1 -1 N-5
N N F- E- SE- SE- W- C
A A K L L
I I R EM ML ML ML M M

April 2010 RGU Well Engineering

 #2 - Results
IAN-2 : PROBABILISTIC TIME - COST CURVE

0
Min Cost P10 P50 P90 Max Cost
$10,148,670 $10,550,780 $10,803,940 $11,065,770 $11,494,370

500

1,000

1,500 Minimum
P10
P50
2,000 P90
Maximum

2,500

3,000

3,500

60 72 80 87 100
4,000
0 20 40 60 80 100
April 2010 RGU Well Engineering D a ys
 #2 Tangible Costs
30 - 40 % are for set-up

$2,500,000 $8,000,000

$7,000,000
$2,000,000
$6,000,000

Cumulative Costs
Tangible Costs

$1,500,000 $5,000,000

$4,000,000

$1,000,000
Tangible Costs $3,000,000
Cummulative Costs
$2,000,000
$500,000
$1,000,000

$0 $0
n rt ng es ob ts ls ls p s s g
io po si Bi ia ia m m st in
ct s rvi
c
em r r a t e o gg
tru ra
n Ca e /D at
e
at
e C
ys tC Lo
ns T S b M M ud S raf c
t al o t o
ns rc tri
Co en i on g
M ud en ss
a
io Ai ec
M
Si
te pm s Ri m e at E l
ui of
es Ce M ic
E q r s si un
P
& d Ha m
m
ia
ls
s pu C o
er -
at P re
M

April 2010 RGU Well Engineering

 Analysis

 Focus on contracting strategy and contract negotiation to minimise non

time related costs.
 Optimisation of the drilling process could lead to some more minor
savings.
 Risk management activities defined by results of HAZID

April 2010 RGU Well Engineering

 #2 Completion Design

 Identifying the optimum completion metallurgy, given the inherent

uncertainty
 Success, tubing size, formation damage and well life are the key
uncertainties
 Cost information from recent market enquiry
 Productivity estimates from offset #1
 Decision based on 10 year net well cost (including value of deferred
production)

April 2010 RGU Well Engineering

 #2 Completion Decision Dry 10.0%
92
0.1
92

Purchase TRUE Chance

3059

Marginal 40.0% 0.4

352 352

0 - 2 years 10.0% 0.035

3,545 4300
70.0% Chance
Optimum
0 2787 Completing & testing with
70.0% 0.245
2 - 7 years
2,006 2761 carbon steel saves over
20.0% 0.07
7 - 10 years
1,370 2125 $0.5MM
Good 50.0% Chance
$755 5817

0 - 2 years 10.0% 0.015

3,545 12886

Too Small 30.0% Chance

8,586 12886

2 - 7 years 70.0% 0.105

3,545 12886

7 - 10 years 20.0% 0.03

3,545 12886

IAN2 Completion Decision

3059

Dry 10.0% 0
0 0

No Purchase FALSE Chance

3588

Marginal 40.0% 0
260 260

Chrome 80.0% 0
4,455 5430

No damage 80.0% Chance

0 5308

Carbon 20.0% 0
3,845 4820

Good 50.0% Chance

975 6969

Chrome 80.0% 0
4,455 13735

Damage 20.0% Chance

8,306 13613.46563

Carbon 20.0% 0
3,845 13126
April 2010 RGU Well Engineering
 Decision Analysis & Risk
Management
To summarise, Risk Analysis consists of:

Effective Risk
Risk Management
Assessment & Control

 Policy & Strategy

 Organisation and
What can go wrong?
Responsibilities
How often?
 Priorities for Action
With what results?
 Engineering Controls
How important is it?
 Management Systems
 Operation and Maintenance
April 2010 RGU Well Engineering
 Conclusions

 The Decision Analysis approach brought a number of benefits

 Hazard identification
 Difficulties of estimating realistic ranges
 Focused risk management activities
 Improved understanding of how to reduce/control costs
 More rational decision making

April 2010 RGU Well Engineering