Well Cost - Basic Concepts Release 5000.1.12.0

Well Cost – Basic Concepts
Release 5000.1.12.0
Training Manual
© 2014 Halliburton
Part Number 220001 Revision D February 2014

© 2014 Halliburton
All Rights Reserved
Information in this document is subject to change without notice. No part of this document may be reproduced or transmitted in any
form or by any means, electronic or mechanical, for any purpose, without the express written permission of Halliburton.
Unauthorized reproduction or distribution of this documentation, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under law.
Halliburton may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject
matter in this document. The furnishing of this document does not give you any license to these patents, trademarks, copyrights, or
other intellectual property.
Halliburton | Landmark Software & Services

2107 CityWest Blvd, Building 2, Houston, Texas 77042-3051, USA
P.O. Box 42806, Houston, Texas 77242, USA
Phone:713-839-2000
FAX: 713-839-2015
Internet: www.halliburton.com/landmark
Trademark Notice
3D Drill View, 3D Drill View KM, 3D Surveillance, 3DFS, 3DView, Active Field Surveillance, Active Reservoir Surveillance, Adaptive
Mesh Refining, ADC, Advanced Data Transfer, Analysis Model Layering, ARIES, ARIES DecisionSuite, Asset Data Mining, Asset
Decision Solutions, Asset Development Center, Asset Development Centre, Asset Journal, Asset Performance, AssetConnect,
AssetConnect Enterprise, AssetConnect Enterprise Express, AssetConnect Expert, AssetDirector, AssetJournal, AssetLink, AssetLink
Advisor, AssetLink Director, AssetLink Observer, AssetObserver, AssetObserver Advisor, AssetOptimizer, AssetPlanner, AssetPredictor,
AssetSolver, AssetSolver Online, AssetView, AssetView 2D, AssetView 3D, Barrier Assurance Monitoring, BLITZPAK, CartoSnap,
CasingLife, CasingSeat, CDS Connect, CGMage Builder, Channel Trim, COMPASS, Contract Generation, Corporate Data Archiver,
Corporate Data Store, Data Analyzer, DataManager, DataServer, DataStar, DataVera, DBPlot, Decision Management System,
DecisionSpace, DecisionSpace 3D Drill View, DecisionSpace 3D Drill View KM, DecisionSpace AssetLink, DecisionSpace AssetPlanner,
DecisionSpace AssetSolver, DecisionSpace Atomic Meshing, DecisionSpace Base Module, DecisionSpace Data Quality, DecisionSpace
Desktop, DecisionSpace Geosciences, DecisionSpace GIS Module, DecisionSpace GRC Module, DecisionSpace Nexus, DecisionSpace
Reservoir, DecisionSuite, Deeper Knowledge. Broader Understanding., Depth Team, Depth Team Explorer, Depth Team Express, Depth
Team Extreme, Depth Team Interpreter, DepthTeam, DepthTeam Explorer, DepthTeam Express, DepthTeam Extreme, DepthTeam
Interpreter, Desktop Navigator, DESKTOP-PVT, DESKTOP-VIP, DEX, DIMS, Discovery, Discovery 3D, Discovery Asset, Discovery
Framebuilder, Discovery PowerStation, Discovery Suite, DMS, Drillability Suite, Drilling Desktop, DrillModel, DrillNET, Drill-to-the-
Earth-Model, Drillworks, Drillworks ConnectML, Drillworks Predict, DSS, Dynamic Frameworks to Fill, Dynamic Reservoir
Management, Dynamic Surveillance System, EDM, EDM AutoSync, EDT, eLandmark, Engineer’s Data Model, Engineer’s Desktop,
Engineer’s Link, ENGINEERING NOTES, eNotes, ESP, Event Similarity Prediction, ezFault, ezModel, ezSurface, ezTracker,
ezTracker2D, ezValidator, FastTrack, Field Scenario Planner, FieldPlan, For Production, FrameBuilder, Frameworks to Fill, FZAP!,
GeoAtlas, GeoDataLoad, GeoGraphix, GeoGraphix Exploration System, Geologic Interpretation Component, Geometric Kernel,
GeoProbe, GeoProbe GF DataServer, GeoSmith, GES, GES97, GesFull, GESXplorer, GMAplus, GMI Imager, Grid3D, GRIDGENR, H.
Clean, Handheld Field Operator, HHFO, High Science Simplified, Horizon Generation, I2 Enterprise, iDIMS, iEnergy, Infrastructure,
iNotes, Iso Core, IsoMap, iWellFile, KnowledgeSource, Landmark (as a service), Landmark (as software), Landmark Decision Center,
LandNetX, Landscape, Large Model, Lattix, LeaseMap, Limits, LithoTect, LogEdit, LogM, LogPrep, MagicDesk, Make Great Decisions,
MathPack, MDS Connect, MicroTopology, MIMIC, MIMIC+, Model Builder, NETool, Nexus (as a service), Nexus (as software), Nexus
View, Object MP, OneCall, OpenBooks, OpenJournal, OpenLink, OpenSGM, OpenVision, OpenWells, OpenWire, OpenWire Client,
OpenWire Server, OpenWorks, OpenWorks Development Kit, OpenWorks Production, OpenWorks Well File, Operations Management
Suite, PAL, Parallel-VIP, Parametric Modeling, Petris WINDS Enterprise, PetrisWINDS, PetroBank, PetroBank Explorer, PetroBank
Master Data Store, PetroWorks, PetroWorks Asset, PetroWorks Pro, PetroWorks ULTRA, PLOT EXPRESS, PlotView, Point Gridding Plus,
Pointing Dispatcher, PostStack, PostStack ESP, PostStack Family, Power Interpretation, PowerCalculator, PowerExplorer, PowerExplorer
Connect, PowerGrid, PowerHub, PowerModel, PowerView, PrecisionTarget, Presgraf, PressWorks, PRIZM, Production, Production Asset
Manager, PROFILE, Project Administrator, ProMAGIC Connect, ProMAGIC Server, ProMAX, ProMAX 2D, ProMax 3D, ProMAX
3DPSDM, ProMAX 4D, ProMAX Family, ProMAX MVA, ProMAX VSP, pSTAx, Query Builder, Quick, Quick+, QUICKDIF, Quickwell,
Quickwell+, Quiklog, QUIKRAY, QUIKSHOT, QUIKVSP, RAVE, RAYMAP, RAYMAP+, Real Freedom, Real Time Asset Management
Center, Real Time Decision Center, Real Time Operations Center, Real Time Production Surveillance, Real Time Surveillance, Real-time
View, Recall, Reference Data Manager, Reservoir, Reservoir Framework Builder, RESev, ResMap, Resolve, RTOC, SCAN, SeisCube,
SEISINFO, SeisMap, SeisMapX, Seismic Data Check, SeisModel, SeisSpace, SeisVision, SeisWell, SeisWorks, SeisWorks 2D, SeisWorks
3D, SeisWorks PowerCalculator, SeisWorks PowerJournal, SeisWorks PowerSection, SeisWorks PowerView, SeisXchange, Semblance
Computation and Analysis, Sierra Family, SigmaView, SimConnect, SimConvert, SimDataStudio, SimResults, SimResults+,
SimResults+3D, SIVA+, SLAM, Smart Change, Smart Deploy, Smart Flow, Smart Skills, Smart Start, Smart Sustain, Smart Transform,
Smart Vision, SmartFlow, smartSECTION, smartSTRAT, Spatializer, SpecDecomp, StrataMap, StrataModel, StratAmp, StrataSim,
StratWorks, StratWorks 3D, StreamCalc, StressCheck, STRUCT, Structure Cube, Surf & Connect, SurfNet, SynTool, System Start for
Servers, SystemStart, SystemStart for Clients, SystemStart for Servers, SystemStart for Storage, Tanks & Tubes, TDQ, Team Workspace,
TERAS, T-Grid, The Engineer’s DeskTop, Total Drilling Performance, TOW/cs, TOW/cs Revenue Interface, TracPlanner, TracPlanner
Xpress, Trend Form Gridding, Trimmed Grid, Tubular Basic, Turbo Synthetics, Unconventional Essentials, VESPA, VESPA+, VIP, VIP-
COMP, VIP-CORE, VIPDataStudio, VIP-DUAL, VIP-ENCORE, VIP-EXECUTIVE, VIP-Local Grid Refinement, VIP-THERM, vSpace,
vSpace Blueprint, vSpace Onsite, WavX, Web Editor, Well H. Clean, Well Seismic Fusion, Wellbase, Wellbore Planner, Wellbore Planner
Connect, WELLCAT, WELLPLAN, WellSolver, WellXchange, WOW, Xsection, You’re in Control. Experience the difference., ZAP!,
ZEH, ZEH Plot, ZetaAnalytics, Z-MAP, Z-MAP Plus, and ZPS are trademarks, registered trademarks, or service marks of Halliburton.
All other trademarks, service marks, and product or service names are the trademarks or names of their respective owners.
Note
The information contained in this document is subject to change without notice and should not be construed as a commitment by
Halliburton. Halliburton assumes no responsibility for any error that may appear in this manual. Some states or jurisdictions do not
allow disclaimer of expressed or implied warranties in certain transactions; therefore, this statement may not apply to you.
Third Party Licenses and Attributions
Halliburton acknowledges that certain third party code has been bundled with, or embedded in, its software. The licensors of this
third party code, and the terms and conditions of their respective licenses, may be found at the following location:
PathNameInInstallationDir/Third_Party.pdf
Disclaimer
The programs and documentation may provide links to external web sites and access to content, products, and services from third
parties. Halliburton is not responsible for the availability of, or any content provided on, third party web sites. You bear all risks
associated with the use of such content. If you choose to purchase any products or services from a third party, the relationship is
directly between you and the third party. Halliburton is not responsible for: (a) the quality of third party products or services; or (b)
fulfilling any of the terms of the agreement with the third party, including delivery of products or services and warranty obligations
related to purchased products or services. Halliburton is not responsible for any loss or damage of any sort that you may incur from
dealing with any third party.
Contents
Introduction to Well Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

Key Software Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-1
Introduction to the Course. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2
Monte Carlo Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1
Planning a Drilling and Completion Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2
Setting Up the Typical Simulation Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-3
Exercise 2.1: Performing the Die Throw Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

Determining How Many Iterations are Enough . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6
Central Limit Theorem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-7
Probability Distribution Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9

Uniform Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-10
Triangular Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-10
Normal (Gaussian) Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11
Lognormal Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11
PERT Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-13
Stepped Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14
Probable Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14
Discrete Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15
Input based on Distribution Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-15
Remarks on Distribution Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-16
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-18
Quick Design Using Offset Well Phases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
Exercise Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3
Exercise 3.1: Getting Started—Creating a New Design . . . . . . . . . . . . . . . . . . . . . . . . . 3-4
Exercise 3.2: Setting Up the Time Configuration Panel. . . . . . . . . . . . . . . . . . . . . . . . . 3-8
Well Cost Basic Concepts i

Contents
Exercise 3.3: Probabilistic Setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-14

Running the Monte Carlo Simulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21
Simulation Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-21
Entering Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24
Exercise 3.4: Completion Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-30
Exercise 3.5: Generating the AFE Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-34
Exercise 3.6: Viewing Other Spreadsheet Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-36
Well Cost Detailed Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1
Hole Sections and Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
Exercise Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-3
Exercise 4.1: Getting Started — Creating a Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-4

Review and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-6
Exercise 4.2: Setting and Configuring Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-7

Entering Time and Cost Configuration Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9
Entering Phase Time Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10
Activity Configuration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10
Normal (Planned) Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-11
Configuring Risk Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
Well Level Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
Exercise 4.3: Loading the Remaining Phases and Activities . . . . . . . . . . . . . . . . . . . . .4-23
Exercise 4.4: Determining Cost Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-26

Some Notes on Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-32
Other Uses of the Formula Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-33
Constants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-33
Functions Supported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34
Examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-34
Testing the Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-35
Loading the Remaining Cost Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-35
Notes on General Cost Editing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-37
General Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-38
Exercise 4.5: Reviewing and Analyzing Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-40
Exercise 4.6: Running the Monte Carlo Simulation. . . . . . . . . . . . . . . . . . . . . . . . . . . .4-41
Exercise 4.7: Reviewing the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-42

Time vs Depth Plot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-42
ii Well Cost Basic Concepts

Contents
Data Reader. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-43

Cost vs Depth Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-44
Risk Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-45
Time vs. Probable Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-46
Cost vs. Probable Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-47
Alternative Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-48
Activities and Costs Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
Exercise 5.1: Plan and Estimate the Cost of a Horizontal Well . . . . . . . . . . . . . . . . . . . 5-3
Open the New Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-4
Running the Simulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-7
Working with Offset Well Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
Exercise 6.1: Creating a Well Design with Offset Well Data . . . . . . . . . . . . . . . . . . . . . 6-3
Naming the Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-3
Open Test Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-4
Offset Well Times by Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6
Supporting Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6
Specifying Offset Wells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-8
Sampling Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-11
Examining the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-13
Single Phase Histogram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-14
Offset Well Times Plot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-16
Historical (Offset Well) Data at the Activity Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-17
Working with Queries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1

Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
Exercise 7.1: Casing Depth Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2
Exercise 7.2: Cost Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
Exercise 7.3: Activity Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-11
Well Cost Basic Concepts iii

Contents
Monitoring Active-Well Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-1
Exercise 8.1: Plot Plan vs Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-2
Exercise 8.2: Lookahead – Partial Well Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-7
Exercise 8.3: Retrieving Status from OpenWells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-10
Estimating a Multi-Well Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-1
Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-2
Exercise 9.1: Wells in Sequence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-3

Bore 1: Execute from MIRU to Run/Cement Surface Casing . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10
Bores 2 through 7: Execute from Other to Run/Cement Surface Casing . . . . . . . . . . . . . . . . . . 9-10
Bore 8: Execute from Other to RDMO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
Exercise 9.2: Improving the Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-13
Exercise 9.3: Batch Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-15
Exercise 9.4: Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-18
Exercise 9.5: Extra Non-Rig Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-19

Site Preparation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-19
Reclamation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-20
Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Contacting Landmark Customer Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Support Via Web Portal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Regional Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2
iv Well Cost Basic Concepts

Chapter 1
Introduction to Well Cost
The Well Cost software is a Monte Carlo based simulation tool that
gathers input on the activities, costs, and uncertainties associated with
well planning and development, and predicts the AFE cost and drilling
time.
• Invented by drillers to enable more effective and economical

well planning and construction
• Features a systematic, standardized approach that leverages the

work performed to plan and develop previous single wells and
well campaigns
• Provides for built-in collaboration (built on the Landmark

Engineer’s Data Model)
The Well Cost software is applicable in virtually all development and

production environments.
Key Software Features

The Well Cost software includes the following features:
• Probabilistic time and cost estimation

• Estimate multiple well campaigns
• Compare plan vs actual
• Customizable
• Time-saving templates
• Automatic plots and reports
• Estimation wizard
• Integrated with Landmark Drilling applications
In summary, Well Cost provides fast and accurate cost estimates, from
well design through the well life cycle. Well Cost also integrates cleanly
with existing tools to save time preparing the cost plan and generating
AFEs, while achieving consistent results. Just as importantly, Well Cost
enables statistical analysis so engineers and analysts can quickly
evaluate and quantify operations schedules and control risk.
Well Cost Basic Concepts 1-1

Chapter 1: Introduction to Well Cost
Introduction to the Course

As a prerequisite to this course, students must have a working
knowledge of Well Explorer.
This manual comprises the following content, organized in nine

chapters.

• Time and cost planning
• Deterministic and probabilistic
• Program features
Chapter 2: Monte Carlo Simulation and Probabilities in Well

Cost Estimation
• Simulation using Excel
• Distributions
• Correlation
• Understanding the results
Chapter 3: Quick Design Using Offset Well Phases

• Entering casings and phases
• Offset well data
• Simulation
• Entering Costs
• Completion Event
Chapter 4: Well Cost Detailed Workflow

• Risks and risk costs, remedial activities
• Different input units, distributions
• Different cost types and allocations
1-2 Well Cost Basic Concepts

Chapter 5: Activities and Costs Transfer

• Creating a copy of a design
• Change to a Horizontal Well
• Review the results
Chapter 6: Working with Offset Well Data

• Offset Well Phase analysis
Chapter 7: Working with Queries

• Casing Depth Variation
• Cost Variation
• Activity Variation
Chapter 8: Monitoring Active-Well Status

• Time versus depth comparison
• Getting current status from OpenWells.
Chapter 9: Estimating a Multi-Well Campaign

• Drilling Wells in Sequence
• Operations in Batch Mode
• Limit by phase and apply learning curve
• Comparison and non-well operations
Appendix A: Support
• Provides detailed information on Well Cost product support


Chapter 2
Monte Carlo Simulation
This chapter introduces you to the use of Monte Carlo simulation, by means of an exercise that
does not require the use of the Well Cost software. You can perform the exercise in this chapter in
Microsoft® Excel®.
This chapter also provides an overview of probability distribution types.
Overview
Monte Carlo methods are a class of algorithms that rely on repeated

random sampling to simulate the variables in a problem. Typically, an
algorithm is developed to model the problem, and then the algorithm is
run from a few hundreds of times to several millions of times to develop
a statistically valid data set that describes how the model behaves.
Example
The following is an example of a simple problem with underlying
complexity that is more suitably solved by Monte Carlo methods than
conventional mathematical methods.
Suppose your commute to work consists of the following elements:
• You will drive two miles on a highway, with 90% probability

you will average 65 MPH the whole way, and a 10% probability
that a traffic jam will result in your average speed being only 20
MPH.
• You will come to an intersection with a traffic light that is red for
90 seconds and then green for 30 seconds.
• You will travel two more miles on a surface street, averaging 30

MPH, with a standard deviation of 10 MPH.
You want to know how much time to allow for the commute so you have
a 75% probability of arriving at work on time; and for the occasions
when you have a important meetings, you also want to know how early

Chapter 2: Monte Carlo Simulation
you need to leave your house to have a 99.5% probability of arriving on

time.
Planning a Drilling and Completion Project

In the well-drilling and completion context, your project sponsor (your
partners) want to know some basic information before they commit
funds and other resources.
• How much is the well is going to cost?
• How long it will take to bring it into production?
• What is the confidence in the proposed Authorization for

Expenditure (AFE) amount?
• What is the probability of a cost overrun?
In drilling operations there are many complicating considerations of

importance. Among them are:
• The variability of time estimates.
• Costs are variable, and are at least partially dependent on time

(for example, is the rig rate dependable over time, and is
availability a factor?).
• Time and cost are depth dependent, and calculations can become
complicated when drilling multiple directional wells with varied
depths.

Setting Up the Typical Simulation Workflow

Solving the simulation problem is typically achieved as in the figure
below, by repeating the sequence a set number of times.
Note:
The Well Cost software defaults to 10,000 times.

Exercise 2.1: Performing the Die Throw Experiment
The die throwing experiment in Excel demonstrates how the Monte

Carlo simulation works. The experiment consists in throwing a six-sided
die 10 times.
1. Open Microsoft Excel and create a new workbook.
2. In workbook cell A6 enter the following formula:
=INT(RAND()*6+0.999999)
The interval A1:A5 will be filled later with information.
3. Copy A6 and paste the value to the workbook area A6:J105

(100 rows x 10 columns).
4. Put your cursor in cell K6.
5. In the Excel Home tab, click AutoSum, or in cell K6 enter

=SUM(A6:J6).
6. Copy K6 and paste the value into cells K7:K105.
7. Select the cell interval K6:K105.

8. Click the Excel Insert tab, and with cells K6:K105 selected, click
the Bar Chart icon. A horizontal bar chart is displayed.
97
89
81
73
65
57
49 Series1
41
33
25
17
9
1
0 10 20 30 40 50 60
9. Copy Column K6:K105, and with your cursor in cell L6, right-click
and select Paste Special > Values.
10. Select L6:L105 and, using the sort option on the Data tab, sort the
values from the smallest to the largest.

11. With the interval L6:L105 selected, click the Insert tab, then click
the Bar Chart icon. A bar chart similar to the following is
displayed.
97
89
81
73
65
57
49 Series1
41
33
25
17
9
1
0 10 20 30 40 50 60
Note:
A six-sided die toss produces a uniform distribution between one and six.
The above chart is a typical cumulative density function for Normal

Distribution.
Determining How Many Iterations are Enough

One of the big problems in simulation is knowing when to stop; that is,
knowing how many iterations are enough. Typically, you do this by
determining the level of difference in simulation results that you can
accept. When you reach an acceptable point you are finished. When
projects are valued in the millions of dollars, this is typically when the

difference is in the hundreds of dollars. However, depending on your

risk aversion, this tolerance may vary.
1. First determine the average of the unsorted results. Put your cursor
in an empty cell and enter:
= AVERAGE(K6:K105)
2. Now change the value in a cell to cause the results to be

regenerated. In our die rolling example, 100 iterations are
performed. This can be increased by changing the paste range to
cell 1005 and working out the mean value again. Notice how the
average changes. Generally, a larger number of iterations produces
better precision.
Central Limit Theorem

When you combine several independent input distributions into a total
model you obtain the following:
• Results that resemble a Normal (Gaussian) distribution.
• The spread of the results (P10, P90) is not as wide as expected

(it is not the same as adding together all the P90s or P10s).

Correlation will tend to reverse this effect. This is illustrated below.

Probability Distribution Types
Probability Distribution Functions (PDF) provide a mechanism for

spreading data to realistically model the range of the possible input
values (depth, time, cost).
The Well Cost software can automatically select the best distribution to
fit data available for an input process. Data to which a distribution is fit
normally comes from the following.
• Expert Data: the (expert) user enters the most likely value and
range of values based on experience and projections (rig
capability, contract costs, and so forth).
• Offset Data: statistical derivation of input distribution and

parameters are based on historical (offset) data.

Uniform Distribution
The uniform distribution creates an equal spread of values between the
Minimum Value and Maximum Value.
Advantages: Suited to expert data; generates a good statistical spread.
Disadvantages: Simplistic and does not have the asymmetry of

operations time data.
Triangular Distribution
Triangular distribution creates a distribution based on a minimum value,
most likely peak and maximum value.
Advantages: very simple to understand from expert data; can generate

a long tail, which is typical of operations times.

Disadvantages: sometimes poor for historical data, because it can

generate a negative minimum value; this distribution will underestimate
the amount of spread of the data.
Normal (Gaussian) Distribution

The familiar bell shaped-distribution which is characterized simply by
mean and variation parameters.
Advantages: simple to assess from historical data; realistic in some

cases.
Disadvantages: can generate negative numbers; not suited to time

values, and in many cases depths and costs, because there are limits on
the extremes.
Lognormal Distribution
Lognormal is a variation on the Normal distribution that uses the log
(natural) of the input value. It will produce an asymmetric result (tail
heavy), depending on the standard deviation value. It is well suited to

normal times and short duration NPT time and is easy to derive from
offset data (or in Excel).
Advantages: simple to generate from historic time data (in Excel) and
also quite realistic for abnormal drilling times (long NPT chains).
Disadvantage: not for expert data, not good for depths and costs; can
produce extreme values (infinite times) but not very often.

PERT Distribution
The PERT distribution, a special case of the Beta distribution, is an
alternative to the triangular distribution and is specified by the same
inputs. While more complicated, the PERT distribution typically does a
better job of reflecting real-life situations and modelling the tails of the
distribution.

Stepped Distribution
The stepped distribution is similar to a Uniform distribution, except half
of the values generated are spread between the minimum (a) and most
likely (c) parameters while the other half are spread between the mostly
likely (c) and the maximum (b).
Advantages: well-suited for modeling historical data, as it avoids

generating negative values or requiring distribution minimum and
maximum values that are far outside the range of the data; distribution
parameters have good agreement with what an expert expects the limits
to be.
Probable Distribution
Probable distribution is the ability to generate an occurrence of a risk
activity. It is purely the percent chance of the occurrence of an event
(NPT activity).
• Activities: the user enters a cost and cost code associated with
the occurrence, such as the cost of Lost-in-Hole charge.
• Phases: for NPT, this combines both the probability and the
Most Likely and Maximum for a triangular distribution (the
minimum is assumed to be zero).

Discrete Distribution
Discrete distribution is available for Costs and Depths. It allows the user
to define two outcomes for a result and the probability of the first
occurrence. For instance, two wellheads are available; one costs
$125,000, the other is $250,000, and there is a 30% chance of the well
requiring the more expensive wellhead (or it being available).
Input based on Distribution Type

The distributions require the following input:
Distribution Type Label 1 Value 1 Label 2 Value 2 Label 3 Value 3
None N/A N/A N/A N/A N/A N/A
Uniform N/A N/A Min Minimum Max Maximum
Triangular Min Minimum Likely Median Max Maximum
Normal N/A N/A Mean Average SD Standard

Deviation
Lognormal N/A N/A Mean Average of SD Deviation of

Log values Log values
PERT Min Minimum Likely Median Max Maximum
Stepped Min Minimum Likely Median Max Maximum
Probable (risk Cost#: Cost line Cost$ Additional Prob. Probability

activity) from Cost Occurrence
config. amount
Probable (phases) Likely Triangular Maximum Triangular Prob. Probability

Likely Maximum Occurrence
Discrete Value1 1st Value 2 2nd Prob of Probability of

Outcome Outcome 1 Outcome 1
The Well Cost software assesses a distribution fit to the data by

examining the following:
• Mean – average
• Standard Deviation – a measure of the spread of the data from

the mean

• Skewness – a measure of the balance of the distribution, left

right tailed
• Kurtosis – a measure of the squareness (uniform) or the

peakness (normal) of the distribution
The distribution with the best fit in terms of these parameters is selected
when using the Run Sample Statistics button in the Offset Well pane
(see Chapter 6) or the Query for Distribution feature (see Chapter 7).
Remarks on Distribution Functions

Studies (e.g. Williamson) have shown that the distribution selected is
not as important as the correctness of the mean and standard deviation.
However, with Correlation the effect of asymmetric distributions is
more pronounced.
Correlation
Correlation is the percent dependence of one random sample on the
previous. In real-life terms, it is the dependence of one bad (or good)
occurrence to be followed by another bad (or good) occurrence. In
practical use in the program it is very hard to directly establish a value
for correlation. It can be calibrated by adjusting it as a tuning parameter
to alter the time spread of P10 and P90 to fit the best and worst cases on
offset well data.
Correlation is arranged in three groups:

• Time: this directly affects well time spreads between P10 and
P90 for all well operation times within a single well.
• Time for multiple well projects: this secondary correlation

correlates times across a multiple well project.
• Cost: correlation should be used (either 0% or 100%) if there is

a factor that affects all costs like inflation or currency exchange
variations.
The table below shows the effect of changing correlation value on the
P10/P50/P90 times of the wells.
Table of Correlation P10 P50 P90
Overall 0 53 61 70
Well 50 51 61 75
Times 70 50 61 79
100 50 65 85
The following Time vs. Depth graphs below show 0% correlation on the
left and 100% correlated on the right. Notice the increase in spread.
In practice it has been found that a correlation of 50% works best for
phase time values, to match the overall spread between offset well times.

Similarly, 50% correlation provides acceptable results for both costs and
multiple wells.
Conclusions
Garbage input results in garbage output. In a Monte Carlo simulation,
however, it is hard to detect garbage in the results.
It is also very easy to unintentionally bias Monte Carlo simulation

results. Assume you have a well-reasoned range value for some of the
major costs in your project (e.g., rig rate, well test, and rig move). You
then ask a consultant to provide a range for the other cost items (about
40) in the range of minus 25% to plus 50% of the likely value. Creating
such an asymmetric spread will likely make the P10 value and P50
values too high. However using a minus 50% for the lower range will
likely produce better results. Note that this is based on actual experience
of customers using the product.

Chapter 3
Quick Design Using Offset Well
Phases
This chapter provides a high-level view of the functionality of the Well Cost software.
Overview
In this chapter you will perform several exercises based on a

hypothetical Landmark engineering contract that requires a probabilistic
analysis that will produce a time projection (and hence a cost projection)
for a well.
Assume Landmark Consulting has an engineering contract with a

company drilling in South Texas. The company plans to drill a new well
that is similar to four that the company has drilled and for which they
have historical data on phase times. Using this data, they want to
perform a probabilistic time projection for the planned well.
Martin
Temple Swenco Temple Lumber Deterministic
Master Creek 20-1 18-1 A-24-1 31-1 Data (TL)
Phase Time (hrs) Time (hrs) Time (hrs) Time (hrs) Time (hrs)
MIRU (Move In/Rig Up) 77.5 73 70 73 70

Drill Surface Hole (17.5") @150' 92.5 80 68 80 68
Run/Cement Surface Casing @ 150' 79.5 70 48 70 48
Drill 1st Intermediate Zone (12.25") to 4500' 182 305 246 473 182
Run/Cement 1st Intermediate Casing @ 4,500' 49 42 68 40 40
Drill 2nd Intermediate Zone (8.5”) to 13,800' 197.5 216 224 316 197
Run/Cement 2nd Intermediate Casing @ 13,800' 315 43 133 71 43

Drill to Production Depth (6.5") to 20,900' 397 537.5 456 629 456
Run/Cement Production Liner/Casing @20,900’ 42.5 48 39.5 45 42.5
Run Completion 20,900’ 72 72 72 72 72
RDMO (Rig Down/Move Out) 24 24 24 24 24

The total cost for the new well will be based on the following
incremental costs.
• Tangibles (one time, lump sum payment): $1,000,000
• Rig Rate (per day): $40,000
• Other Services (per day): $15,000
The exercises are designed to demonstrate how the functionality of the

Well Cost software will provide statistically reliable estimates.
The exercise topics are:
• Setting up the wellbore design
• Setting up a time configuration panel
• Probabilistic setup
• Setting up the Cost Schedule
• Adding the Well Completion phase
• Generating the AFE report
• Viewing the plots and reports available to aid with analysis

Exercise Workflow
The material in this chapter follows this workflow.

Exercise 3.1: Getting Started—Creating a New

Design
The first step is to create a new design in the Master Creek wellbore.
1. In the Well Explorer window navigate to the Master Creek well

bore. Right click and select New Design.

2. In the Design Properties dialog enter New Design in the Design:

field and click OK.
3. In the Well Explorer, double-click New Design to open the design.

Now you will enter information about the well on the General
Information, Wellpath, Formation, and Casing panes.
4. No changes are required on the General Information pane, as the

design will initially use only the Start Event. You can enter other
project specific information as you like, but it is not required as part
of this exercise.
5. On the Wellpath pane, enter 1 line for a TD station for vertical

well.

Because Formations will not be used in this exercise, no modifications

to the Formations pane are required.
6. On the Casing pane enter four casings, as shown below:

Exercise 3.2: Setting Up the Time Configuration

Panel
The MIRU phase is added and configured as follows.
1. On the Time Configuration panel right-click ODR Event and

select Add Phase.
2. In the Phase section of the Time Configuration panel, enter data

as depicted below. Since no casing is associated with this phase,
leave the Class value as Pre Well.

3. In like manner, build the following list of phases.
Casing
Phase Name Size Class Type Use
MIRU (MOVE IN/RIG UP) Pre Well Y
DRILL SURFACE HOLE 13-3/8" Surface Casing Y
RUN/CEMENT SURFACE CASING 13-3/8" Surface Casing Y
DRILL 1ST INTERMEDIATE ZONE 9-5/8" Intermediate Casing Y
RUN/CEMENT 1ST INTERMEDIATE CASING 9-5/8" Intermediate Casing Y
DRILL 2ND INTERMEDIATE ZONE 7" Intermediate Liner Y
RUN/CEMENT 2ND INTERMEDIATE CASING 7" Intermediate Liner Y
DRILL TO PRODUCTION CASING/LINER DEPTH 4-1/2" Production Liner Y
RUN/CEMENT PRODUCTION CASING/LINER 4-1/2" Production Liner Y
RUN COMPLETION 4-1/2" Production Liner N
RDMO (RIG DOWN/MOVE OUT) Post Well N
When you are finished the Time Configuration pane should look like
the following image.

4. Open the Phases and Activities pane and confirm the data was
entered correctly.
5. As noted above, historical data (including deterministic time

values) is available from previous drilling experience. Enter the
deterministic times directly into the Deterministic Time Hrs
column. Note that as the data is entered, the Deterministic Time
Cum Days column is automatically updated. After the data is
entered the Phases and Activities pane will look like the following
image.
Now that you have entered some times you can look at some of the
available output plots.

6. Select Results > Plots > XY Graphs> Time vs Depth to launch

the Time vs. Depth plot.
The graph will initially appear blank, as it is set to show Probabilistic

values.
7. Click the Switch Probabilistic/Deterministic toolbar icon.

The plot will be displayed (see image below).
The plot shows the simple phase-based time vs. depth chart. You can
right-click the plot and select any of several other chart types.

8. To display the Well Schematic, right-click the Time vs. Depth plot
and on the right-click menu, select Well Schematic (image below).

Exercise 3.3: Probabilistic Setup
You can modify a variety of options. Most of these options will not be
covered in this exercise, but you can see all available options by
exploring the tabs of the Options dialog. Context sensitive help is
available, which will help you learn about them.
For this exercise, you do not want to include Unplanned Time (NPT) for
every phase. You will use the Options dialog to turn off this setting.
1. Select Input > Options to display the Options dialog.
2. On the Options dialog select the Time Calculation tab and

uncheck the Include Unplanned Time For Each Phase box. Click
OK.
You will now use the historical data from the other wells to generate a
probabilistic estimate for the completion time of the new well. You will
add the previous wells on the Offset Wells pane.

3. Select the Offset Wells pane. It will be populated with the design
phases entered earlier.
4. Click the User button on the Offset Well Selector section (see
image above) to specify the previous wells. The User Offset Wells
dialog is displayed (see below).

5. Add four rows, entering the names of the offset wells (Temple 20-1,
Swenco 18-1, Temple A-24-1, and Martin Lumber 31-1) in the
Well Name column.
6. Click OK to return to the Offset Wells pane, which will now show
the new wells in separate columns.

7. Enter the historical time values for each phase (these were
presented earlier).
Note:
If this historical data was available in the EDM database you could use the EDM
button in the Offset Well Selector section (see above) to automatically populate the
Offset Wells pane with the data from these wells.
At this point you can use the Export Well Data button (see above image)
to export these offset well definitions to a file (WCO). After the file is
created, you can use the Import Well Data button (see above image) to
load offset well definitions into another design. Experiment with this by
exporting the offset well data, pressing the User button and deleting all
the wellbore in the offset well pane, and then importing the offset well
data. The end result will be the same as when you started.

8. To look at the Offset Wells (Time vs Depth) Graph, put your cursor
in the plot area and right-click. On the right-click menu select
Offset Wells (Time vs Depth). This plot displays lines for each of
the offset wells, as well as the deterministic data entered early on
the Phases and Activities pane (Time vs. Depth) Graph and select
offset wells, as well as the deterministic data entered early on the
Phases and Activities pane.
Before you can continue the probabilistic analysis, some additional

options must be configured.

9. Select Input > Options to launch the Options dialog.
10. Select the Variation Input tab. Check the Variations on Times
box and select the Phases radio button. Click OK to return to the
Offset Wells pane.

11. On the Offset Wells pane, click the Run Sample Statistic button
and the Well Cost software will fit the appropriate probabilistic
distribution and associated parameters to each phase, based on the
historical data brought in from the Offset Wells.
The following warning message will be displayed. Click Yes to

continue.
The results in the lower spreadsheet will be as follows.
As discussed previously, the Well Cost software has selected the

Distribution (Stepped, Triangular, Normal, Uniform) based on a best fit
algorithm that considers mean, standard deviation, skewness, and
kurtosis. The distribution parameters have also been computed. The fit
of the distributions and parameters will not be perfect in this case, as
only four data points are available for each phase.

Running the Monte Carlo Simulation

The phase definitions are now complete, so a Monte Carlo simulation
can be run. Select Actions > Run Monte Carlo or press the toolbar
icon ( ) to start the simulation.
Simulation Results
When the simulation is complete you can analyze the results.
1. Place your cursor in the plot area and right click. On the right click
menu select XY Graph > Time vs. Depth. With your cursor on the
deterministic line, right click. On the right-click menu, select Freeze
Line. This will freeze the line and provide a basis for comparison
(when the line is frozen, it will turn black).

2. Click the Switch Probabilistic/Deterministic toolbar button again

to show Probabilistic instead of Deterministic data. You will now
see the U10, U50, and U90 values shown with the Deterministic
values.

3. Position your cursor over one of the plotted lines and you will see
that the legend is updated with the nearest data point.
4. With your cursor in the plot area, right click. In the right-click menu
select XY Graphs > Time vs. P. Value to show the full range of
probable outcomes.

Remember that the P.Value is the probability of occurrence. This

means:
• P10: 10% of well times are likely to be better than this time
(optimistic)
• P50: 50% of well times are likely to be better than this time
(neutral)
• P90: 90% of times will be better than this (pessimistic)
For AFE Purposes a value of P55 is roughly the average time, but this
also depends on the tolerance of the project sponsors to budget overruns
and hence AFE extensions. A value of P75 may be useful, so only one
in four wells are likely to overrun. The P values are completely
configurable (through Input > Options), allowing you to use the values
that work best for you in your situation.
Entering Costs
To complete the design, the costs associated with drilling the well must
be entered (on the Cost Configuration pane).
Recall that our simple example has the following costs:
• Tangibles: $1,000,000 (casing cost etc., the metal that you leave
in or on the well)
• Rig Day Rate: $40,000
• Other Services (day): $15,000
5. To enter these costs, select the Cost Configuration pane.

6. Expand Tangible (see image above), then expand 4000, and check
the Wellhead and Equipment box. This is where you will enter the
Tangible cost, as depicted below.

7. To enter Rig Rental cost, expand Intangible and then expand

1000. Check the Rig-Rental box. Enter values as depicted below.
The Other Services cost will be entered as a custom cost item under Rig-
Rental.
8. With your cursor on Rig-Rental, right click. On the right-click

menu, select Add Item.

9. Expand Rig - Rental and select Other Services. Enter values as

shown below.
10. To review the details of the cost calculations, select the Cost
Spreadsheet pane.

Before you can examine the effect of the costs on the design, you need
to run the simulation.
11. Select Actions > Run Monte Carlo or click the Monte Carlo
simulation icon ( ). When the simulation finishes, put your
cursor on the View panel and right click. On the right-click menu
select XY Graphs > Cost vs Depth.

You can also examine the Cost vs. P.Value plot, which is perhaps the
most useful graph for discussing the budget with the project sponsors.
This completes the drilling phase.

Exercise 3.4: Completion Phase
To finish the design we will look at the remaining items in the

Completion phase (the phases you added as part of the original project,
but made inactive).
1. Open the General Information pane and add the completion event.
In the Time Configuration pane you will see the OCM event has been
added.
2. Check the RUN COMPLETION and RDMO box to activate the

phase. Select each phase and drag it to the OCM event, to associate
the phases with the event. When you are finished, the Time
Configuration pane will appear as shown below.

These phases will also be shown in the Phases and Activities pane.
3. Add the RUN COMPLETION deterministic time (72) and the

RMDO deterministic time (24).
4. Select the Offset Wells panel, as these phases need data to

complete the Monte Carlo analysis.

5. To populate the data for the new phases, click the Run Sample
Statistics button. On the resulting confirmation prompt, click Yes.
Note that you did not enter times for the two new phases to the Offset
Well data. In this case, you did not have any data for these phases. This
caused no distributions to be selected for the phases. The simulator will
simply use the deterministic values entered on the Phases and
Activities pane for these phases.

6. To complete the analysis, select Actions > Run Monte Carlo or

click the Monte Carlo simulation icon ( ). When the simulation
finishes, select the Phase Time Histogram to see the U10/U50/
U90 data for each phase.

Exercise 3.5: Generating the AFE Report
The Well Cost software will generate a complete AFE Report that saves
you time in creating the final cost report for management.
1. To run the AFE report, select Results > Reports > Well Cost AFE.
2. You may be prompted to save the design before proceeding. If so,

click Yes on the confirmation prompt. The report will be generated
and displayed.
The Well Cost software prepares other output reports (spreadsheet and
PDF) and plots to help you analyze the results of the simulation. Explore

these on the Results menu. Context sensitive help is available on these

features as well.
Note that if you are using OpenWells, Well Cost can transfer costs to
build the Cost Estimate and AFE Report or activities to populate the
Planned Operations section of the Well Planning Report (see the
Actions menu).

Exercise 3.6: Viewing Other Spreadsheet Output
The Monte Carlo simulation creates a great amount of data that can be a
useful part of your analysis.
1. To see this information select Results > Reports > Monte Carlo
Results.
If Excel is installed on your computer it will be launched to display the

report. Depending on your security settings, you may have to enable
macros to see the data.
2. If you see a Security Warning after opening Excel, click the

Options… button.

3. On the Security Options dialog, select the Enable this content

radio button and click OK.
You will now be able to examine the spreadsheet tabs to see the output
tables and graphs. Note that the data and the corresponding graphs will
be on different tabs.
The following image shows the Phase Times tab.

The image below shows the Time Graphs tab.

Chapter 4
Well Cost Detailed Workflow
In this chapter you will use the features of the Well Cost software to create a detailed well design.
Overview
The exercises in this chapter are designed to demonstrate how the

functionality of the Well Cost software can be used to create an estimate
for a well project and then create reports and plots to analyze the results.
The exercise topics are:
• Setting up a new wellbore design
• Setting up a time configuration panel
• Loading phases and activities
• Determining cost information
The exercises are based on a scenario in which a hypothetical Landmark

engineering contract requires the execution of probabilistic analysis that
will produce a time projection, and hence a cost projection, for a well.
The estimator requires a detailed drilling program and cost estimate for
a planned vertical well. There is no offset well data, but there is
information from drilling experts on the range of variation of operation
times and tripping rates. The design will be made so it can be used as a
template for other wells of the same style but different depths. A range
of planned costs is also available.

Hole Sections and Phases

For the exercises in this chapter, the phases and depths are shown in the
following table.
Phases Depth From Depth To
Drill Conductor Hole 0 600
Run/Cement Conductor Casing 0 600
Drill Surface Hole 0 3,000
Run/Cement Surface Casing 0 3,000
Drill 1st Intermediate Zone 3,000 7,000
Run/Cement 1st Intermediate Casing 0 7,000
Drill to Production Casing/Liner Depth 7,000 10,500
Run/Cement Production Casing/Liner 6,700 10,500
Plug & Abandon 10,500 10,500
RDMO (Rig Down/Move Out) 10,500 10,500
Assume the well is vertical with total depth (TD) of 10,500. Though it
could be inclined, it does not matter as all the depths in this example are
specified as MD. No specific coding scheme is required, so the default
coding scheme in the database will be used.

Exercise Workflow
The following is a high-level overview of the Well Cost software workflow.

Exercise 4.1: Getting Started — Creating a Design
The required infrastructure was created using default options. These

options are:
• Company: R Operator
• Project: Test Project0
• Site: Test Site
• Well: Test Well
• Wellbore: 1
1. Create a new design, as depicted below. Click OK to create the

design. Using Well Explorer, double-click the design to open it.
2. On the Start Event pull-down menu of the General Information

pane, select ODR ORIG DRILLING.

The Wellpath is normally entered in COMPASSTM. For the following

step, you will enter it directly in the Well Cost software.
3. Create a single station at 10,500 ft.
No formations are needed for this example.
The Casing Scheme is normally entered in the StressCheckTM software.

For this example, you will use the Well Cost software.
4. Create the following entries using the Well Cost software built-in
editor or on the Casing pane.
No string component entries are required for this design.

Review and Analysis

It is good practice to build the Design while viewing the schematic.
5. To see the schematic, select View > View Panel. With your cursor
in the View pane, right click. On the right-click menu, select Well
Schematic. Your schematic is displayed; it should be similar to the
following image.

Exercise 4.2: Setting and Configuring Options
With the basic design and operations data configured in the design, the
next step is to configure some options.
1. Select Input > Options to display the Options dialog. On the Monte
Carlo tab of the Options dialog make sure the following values are
set:
P1 Level: 50
P2 Level: 10
P3 Level: 90
Number of iterations: 10,000
Default Distribution: Triangular

2. On the Variation Input tab of the Options dialog, select the

Activities radio button and check the Variations on Costs
checkbox. This will allow you to use probability distributions to
vary the data used for activities and costs for each iteration of the
simulation.
3. The Time Calculation tab should look like the following image (no
change).

4. On the Cost Calculation tab check the Use Deterministic Value =

Median/Mean Value checkbox.
To summarize, the settings on the Options dialog should be as follows

(do not change values that are not mentioned here).
Number of Iterations: 10,000 is the default
Default Distribution: use Triangular for entering activities, though for

the cost data entry it is useful to set this to Uniform; however, you can
set this to be whatever distribution you prefer, so it will be selected by
default when the Use Distribution checkbox is activated.
P Levels: defaults to P50, P10, P90 – keep these values for this exercise;
however, you can customize the P levels as you like, to match the values
you normally use for generating AFEs
Variation On Times: using Activities, Time correlation is 50%

(standard)
Variation on Costs: enabled with 50% correlation (default).
Unit Lengths: 91.50 (stand), 42.00 (joint), 30.50 (single)
Entering Time and Cost Configuration Information

The next step is to specify the remaining information needed for the
simulation. This information is entered in the Time Configuration and
Cost Configuration panes. The Time Configuration and Cost

Configuration panes contain tree controls for entering Phases,

Activities, and Costs.
Entering Phase Time Data

To add phases, use the Time Configuration pane. To add or remove
phases you can use the buttons above the tree or you can use the
commands of the right-click menu.
All phases must have an associated casing type. Some phases do not
require physical casing, so the casing types of Pre Well and Post Well
are provided. Pre Well is meant to designate those operations that occur
before the first casing section. Similarly, Post Well designates those
operations that occur after the last casing section.
The exercise in this chapter requires entering data for portions of the
first two phases. Create the two phases, as shown below, and associate
them with the 30” conductor casing.
Activity Configuration
The two main types of activities are:
• Normal — planned operations that are scheduled
• Risk — anticipated activities that add risk to the design; several

risk sub types exist
Activities for this example were presented in spreadsheet format. The

full contents are found in the file: InputData (10500 – Vertical).xls.

For this training course, enter only the highlighted activities for the first
two phases (conductor hole section), as shown in the following image.
Normal (Planned) Activities

5. With your cursor on the DRILL CONDUCTOR HOLE phase, right
click, and add five activities. Using the comment field, name the
activities.

6. Enter the configuration data as shown in the following image. The

Triangular distribution will be selected by default. The
deterministic time will be filled in automatically after the
parameters of the Flat Time Varian (Minimum, Likely, and
Maximum) are specified (this is because the option Use
Deterministic time = Median/Mean Value was checked earlier.

7. Configure the Drill 26” Hole with 36” Hole Opener using ROP:
The 2nd activity is a drilling activity, so click the ROP and Use
Distribution check boxes and enter the parameters as shown below.
8. For the third activity, “Circulate…,” enter the flat time range (1,2,4
hrs), as for the first activity.

9. Enter the fourth activity (POOH) as a Trip Rate activity. On the

Units pull-down menu, select Stand/hr and then enter the
following values:
Minimum: 13
Likely: 15
Maximum: 17
.
10. Enter the fifth Activity (L/D 26” BHA) using flat time values of
1.5, 2, and 3 hours.
Configuring Risk Activities

Well Cost supports multiple levels of risk activities such as those
associated with drilling the 26” Hole. Consider the following:
The above shows that during the Drill 26” hole activity, there is a 50%
chance that the bit will ball up. If this situation does occur, there is a 90%
chance that the result will be a minor time loss and a 10% chance that it
will be a major time loss. Follow the steps below to add these risks to
the well program.

11. With your cursor on the Drill 26” Hole Activity, right click. On the
right-click menus, select Add Risk Level 1.
12. In the comment field, enter values as depicted below.
Now add the two types of consequence: Major and Minor Lost Time.

13. In the tree, select Bit Balling. With your cursor on Bit Balling,
right-click. On the right-click menu select Risk Level 2. Add two
“Risk Level 2” items to the “Bit Balling” risk. In the Comment
field, enter the risk name Minor - Lost Time. Repeat this step to
create the risk name Major - Lost Time.
14. Configure Minor - Lost Time as in the image below.

15. Configure Major - Lost Time as follows.
Major and Minor are Risk Level 2 activities. Although it appears they
are exclusive events, they are not. Well Cost software factors the time
into the analysis as probable risk.
Well Level Risks

Additional risks apply to the time predictions, independent of particular
activities. The Well Cost software includes several types of risks that
fall into this category. For example, some Well Programs may present
the following risks.
Rig Repair and Labor Problems

Rig Repair and Labor problems are the equivalent to the “Risk Well”
activity type in the Activity configuration. A Risk Well activity defines
a risk that has a given probability of occurring no more than once during
the well program. An End Risk activity can be used to stop the risk from
occurring. Risk Well activities are inserted at the first phase in which
they are likely to happen.

16. To insert a new activity before the R/U BHA to Drill 36” activity,
select R/U BHA to Drill 36” and right click. In the right-click menu
select Insert Activity.
17. In the Type pull-down menu, select Risk Well. In the Comment
field enter Rig Repair.
18. In the tree, select Rig Repair. On the Use Distribution pull-down
menu, select Uniform. Enter values as depicted below.
With Probability set at 100%, the risk will occur once during the
well program at a random position.

Do not enter Labor Problems activity, as this information will be

imported later.
Subsurface Troubles Non-Productive Time (NPT)

For Subsurface Troubles NPT, you will apply a 10% multiplier to all
planned times in the well operations, through a Risk Well activity. Add
another activity above the R/U BHA to Drill 36” as you did for Rig
Repair, but use the new name.
19. In the tree, click Subsurface NPT. Set the configuration as follows
(see image below):
Type: Risk Well

Comment: Subsurface NPT
Flat time: 1.00
Units: Days
Use Distribution: Prob/Day
Probability: 10.00
Note that Prob/day is used in this case to calculate the chance of

occurrence at 10% per planned day. When the risk occurs, the
consequence is one day of NPT, causing an additional 10% to be added
to the overall planned well time.

20. Enter the highlighted activities for the Second Phase: Run/Cement
Conductor Casing.
All of these activities follow the same pattern as for the first phase
(above), so no screen shots are provided. Remember to use ROP if the
units for the activity are ft/hr, Trip Rate if the units are joints/hr or
stands/hr, and Flat Time for anything else.
Note that two third-level activities are associated with the “Major – P/O
Cond. / Wiper Trip & Re-Run” activity, and these are different from the
other item types you have seen previously.
21. With your cursor on Major – P/O Cond. / Wiper Trip & Re-Run,
right click. On the right-click menu, select Add Risk Level 3. Add
these risk-planned activities (or remedial actions) as follows.

Risk Planned Activities

Planned operations can follow a Risk Level 2 activity, so these
operations are only performed when the risk occurs.

In this example two Risk Planned activities follow the Major Tight Hole
event when running the conductor. After entering information, your
phase and activity list should look like the following image.

Exercise 4.3: Loading the Remaining Phases and

Activities
Load the remaining phases and activities through the configuration

import.
1. Select Input > Config Spreadsheets.
2. On the Phase Configuration tab of the Time and Cost

Configuration dialog, click Import.
3. Select the Training10500.wcp file provided to you by your

instructor.
4. On the Activity Configuration tab of the Time and Cost

Configuration dialog, click Import.

5. Select the Training10500.wca file provided to you by the

instructor.

6. When Training10500.wca is loaded, click OK. All phases and

activities will be shown.

Exercise 4.4: Determining Cost Information
Certain costs share similar attributes and are best analysed with the same
distribution type. Doing so facilitates applying variation for a number of
input cost items as the data entry is simplified. For your example, the
distribution you favour for cost items is the Uniform (as opposed to
Triangular for phase and activity times). The first thing you will do is set
up the Options dialog, to set Uniform as the Default Distribution.
1. On the Input menu select Options. When the Options dialog opens,
click the Default Distribution pull-down menu and select
Uniform. Click OK.
The complete cost list will comprise the items in the following table.
However, you will enter only highlighted items. The configuration of
the remaining items will be imported.

As with the Phase/Activity information, Cost information is entered

using a tree control on the left and with corresponding data entry panels
on the right.
2. Select the Cost Configuration pane.
The cost pane automatically loads all configured cost codes into Class
(Tangible/Intangible in this case), Code (1000, 2000, 3000, and 4000 for
our example), and Subcode (various) nodes in the tree. In order to enter
the cost categories shown in the above table, a number of custom cost
items had to be created. You will create these items.
3. In the tree, click Rig - Rental. Enter values as shown below.

4. In the tree, select Similarly for Rig Mob/Demob Rate, Rig – Other.
In the Type pull-down menu select Lump Sum. In the Unit Cost
field enter 100,000.00. Setting up the cost in this way allocates
costs to phases in which they were incurred, proportioned by the
number of days spent in the phases. In this example, the cost will
only apply to the DRILL CONDUCTOR HOLE and RDMO
phases, so the Limit to Phases option will be used to restrict the
phases in which the cost occurs.
There is no applicable cost category for Rig Fuel, so it will be entered as

a custom item under Rig – Rental.
5. With your cursor on Rig - Rental, right click. In the right-click

menu, select Add Item.
Fuel consumption varies, depending on the level of rig activity.

6. In the tree, click Rig - Fuel and enter data, as in the image below.
Type: Day
Use Distribution: Uniform
Minimum: 4,000.00
Maximum: 8,000.00
.

7. In the tree select Other Drilling Equipment and enter data.
Type: Day
Minimum: 3,000.00
Maximum: 7,000.00.

8. In the tree, under Employees, click Project Engineering Planning

and enter data.
Type: Lump Sum
Minimum: 150,000.00
Maximum: 250,000.00.
Project Operations Management (supervision) is a single day rate of

$30,000, which you will enter as you would enter the rig day rate.
Project Engineering Planning is a lump sum for the whole well,

uniformly distributed, ranging from $150K to $250K.
For Multiple cost items of the same type (cost code), it is best to add as
single items under the same code (for example, drill bit cost).

9. In the tree, click Drill Bits. Right-click, and select Add Item. Add
four items.
10. Enter the data shown earlier for the four items. For example, enter
the configuration for the 12-1/4” bit as in the image below.
Note that only a simple single cost is required for the first two drill bits.
For the second two drill bits, a quantity of two is required, which you
can enter directly into the formula field.
Some Notes on Formulas

Although it will not be used extensively in this course, the formula field
is used to alter both the total and phase costs in the cost spreadsheet as

well as the probabilistic cost calculations. The formula operates in

conjunction with the other input values, as follows.
Cost = ( RateMultiplier ) ( Cost ) ( Formula )
Note:
The rate multiplier is 1.0 for every cost type except Day. For the Day cost type it is
the appropriate number of days.
Other Uses of the Formula Field

The formula field can also be used to insert a Call-Out-Charge by
inserting a “+” before the amount. In the example below, $10,000 is
added to the first phase in which Services – Mudlogging is used. The
other charges for mud logging are applied at day rates of $1,500/day.
Constants
Well Cost defines constants for use in the formulas.
HSIZE Hole diameter for the casing for this hole section
CSIZE Casing size for the casing for this hole section
BTMMD Casing shoe depth for the end of this hole section
BTTVD Casing shoe vertical depth
BTINC Inclination at the casing shoe depth (degrees)
TOPMD MD of the top of this casing
TOCMD MD of the top of cement
DTR Degrees to radians conversion
EXCH1 Exchange rate 1 (entered on the Options dialog)
EXCH2 Exchange rate 2 (entered on the Options dialog)
DAYS Number of days on this phase
TDEPTH Measured depth at the end of this phase (all phases)
PDEPTH Elapsed measured depth on this phase (drilled phases)

Functions Supported
Well Cost also supports the following functions in formulas.
SINH Hyperbolic sine
COSH Hyperbolic cosine
TANH Hyperbolic tangent
COTH Hyperbolic cotangent
ASIN Arc sine
ACOS Arc cosine
ATAN Arc tangent
ACOT Arc cotangent
SIGN -1 if the argument is negative; +1 if it is positive
SQR or SQRT Square root of the argument
SWON +1 if the argument is >= zero, 0 otherwise
SWOFF 0 if the argument is >= zero, +1 otherwise
SIN Sine
COS Cosine
TAN Tangent
COT Cotangent
ABS Absolute value of the argument
EXP e raised to the power of the argument
FAK Factorial
LN Natural log
LG Log base 10
X**Y or X^Y Raise X to the power Y, i.e. 5**2 = 25 and 5^2 = 25
Examples
Consider the case where the cement cost depends on the volume of
cement (barrels) of the annulus to be cemented (Well Cost assumes that
the values are in display units, in this case inches and feet). You can add
in excess.
CementCost = ( HSIZE – CSIZE ) ( BTMMD – TOCMD ) ( 0.785 )  ------------

2 2 12
7056
In some cases a cost may only apply to a portion of the days in a given
phase (e.g., helicopters may only operate three days out of seven, or
directional drilling [hourly rates when in hole] may only be used from
the kick-off depth, which is half way through a drilling phase). To
implement such items, the formula field simply needs an entry of 0.5.

Testing the Formula

You can enter the formula directly in the Cost Spreadsheet and then you
can check the resulting values. If the Well Cost software cannot evaluate
the formula, the result will be blank.
11. In the tree, expand Tangible > Wellhead and Equipment. Enter
data in appropriate fields.
Note that the cost for the casing is specified as cost/ft and the length in
feet of the casing string is put in the Formula field. Note also that there
are several ways of specifying casing cost (for example, with the type as
Tot. Depth or with type as Casing).
Loading the Remaining Cost Items

Load the remaining cost items through the configuration import.

1. Select Input > Config Spreadsheets to open the Config

Spreadsheets.
2. On Costs List tab, click the Import button.
3. Select Training10500.wcc (provided to you by your instructor).

4. When Training10500.wcc is loaded, click OK on the Time and

Cost Configuration dialog. All cost items will be shown in the tree
in the left panel.
Notes on General Cost Editing

You can find complete details on cost editing in the Well Cost software
Online Help.

• Enter the Description for identification purposes. Select the Type

as Single for a cost that occurs only once per phase (e.g., Bits and
Casing). Multiple units can be accounted for using the formula
field.
• Day – costs that are multiplied by the number of days in a phase

(for example, Rig Rental).
• Lump Sum – a cost that is allocated to all phases (engineering

and planning) and is spread proportional to the days in the phase,
but the total will always equal the input value.
General Process
1. Select the Vendor/Contract/Item details. Many cost items are
particular to one or more vendor contracts. Thus, Well Cost allows
you to enter details of these contracts (vendor names, the associated
contract numbers, as well as the items included in those contracts,
with their description, cost, and formula) into a pick list which is
stored in the EDM database. When a cost item has at least one entry,
you will be able to select these catalogue items, which will then be
used to populate the other cost item information. This functionality
is covered in detail in the System Administrator course.
2. Enter a Unit Cost, i.e. the deterministic cost (no variation) that is
used to compute the total for the item.
3. Specify a Formula. For items that are priced by unit, such as drill
bits or casing joints, specify the number of units, such as two drill
bits at $25,000. You can also use this field to build equations as
described earlier.
4. Add Unit Cost Variation. Specify the variability of the cost of a

single unit.
5. Limit to Phases if the cost does not apply to all phases in the well
program. The Well Cost software allows you to select up to six
individual phases or ranges of phases. If no phases are specified,
the cost will apply to all phases.
Note:
Custom cost items can be deleted. Standard cost items, which are database pick list
driven, cannot be deleted.

Note:
Any cost item can be removed from the calculations and reports by unchecking the
box.

Exercise 4.5: Reviewing and Analyzing Data
Before running the next simulation it is good practice to review the data.
You can obtain detailed views of the Deterministic, Probabilistic, and
Cost spreadsheets in the Phases and Activities pane. Selecting a phase
in the upper portion of the screen causes the activity detail to be shown
in the lower portion of the screen. In the following sample, the phase
Run/Cement Conductor Casing has been selected in the upper portion of
the screen.
At this stage, only deterministic times and activities are shown, as the
simulation has not yet been run.
Note:
Any cost item can be removed from the calculations and reports by unchecking the
box.

Exercise 4.6: Running the Monte Carlo Simulation
1. To run the Monte Carlo simulation, click the Run Monte Carlo icon
on the toolbar, or select Actions > Run Monte Carlo.

Exercise 4.7: Reviewing the Results
Various graphs and reports are automatically created to present the

results. The following are but a few examples of the plots available.
1. To access any of these, select View > View Panel or click the toolbar
icon ( ).
2. Right click and select the desired plot.
Time vs Depth Plot

Data Reader
The XY graphs are enhanced with a data reader. The data value for the
line at the cursor position will be reported next to the legend. This is the
exact reading for the point closest to the cursor.
To move or anchor the Legend, right click and select Properties.
Note that the header of the graphs shows multiple costs in the header.
• P50 Cost — computed using the variable costs. The P value

shown is the level chosen as the first P value (P1) in the Options
dialog Monte Carlo tab.
• P10 Cost — computed using the variable costs. The P value

shown is the level chosen as the second P value (P2) in the
Options dialog Monte Carlo tab.
• P90 Cost — computed using variable costs. The P value shown

is the level chosen as the third P value (P3) in the Options dialog
Monte Carlo tab.
• Actual Cost — the actual cost that has been entered (or retrieved
depending on the method used) on the Phases and Activities
panel. The Actual Cost can be shown against the estimated
value, allowing for comparisons.
Note that the above costs will only be listed as P50, P10, and P90 if
Unplanned Time is included in the analysis (see the Include Unplanned
Time for Each Phase option on the Time Calculation tab of the Input >
Options dialog). If unplanned time is NOT included in the analysis, the
values shown will be U50, U10, and U90 (or as appropriate for the
selected P1, P2, and P3 values).
Also note that the P50 cost is not the same as the AFE cost from P50
time using static costs. This is because for times the results are sorted
into time order and the P50 sample is the midpoint value (5,000 of
10,000 runs). For cost, the cost results are sorted into order of cost and
the 5,000th value is taken. The cost order is not necessarily the same as
the time order, but normally it is quite close.

Cost vs Depth Graph

Risk Time

Time vs. Probable Value

Cost vs. Probable Value

Alternative Data Entry

Note
The “Config Spreadsheets” show the same data found in the Time Configuration and Cost
Configuration panes, but in spreadsheet format. The spreadsheets can be useful for exporting
and importing data into a spreadsheet program, such as Microsoft® Excel®.
Important!
Landmark recommends using the Time Configuration and Cost Configuration

panes (trees with input panels) to enter time and cost data, and not the Config
Spreadsheets. Only experienced users should consider modifying the data in the
spreadsheets.
The following points are important to keep in mind during the

configuration of the well program.
• To map the casing depths to the phases it is important to specify the

Class and Type. The only exception is for intermediate casings, in

which a number is required to identify which intermediate casing

the Phase maps to.
• When working with the tree controls, some commands you will see
are:
— Add Activity - to add a new Activity within the selected Phase

— Insert Phase - to insert a new Phase above the selected Phase
— Delete Phase - to remove the selected Phase, and all child
Activities, from the tree
• Be careful not to inadvertently delete items. For example, if you
delete a Phase, all child Activities are deleted.
• The check boxes turn on or off the phases, activities, and costs from
the main simulation. This feature is useful for templates in which
not all items are required in the well program.


Chapter 5
Activities and Costs Transfer
In this chapter you will use the design completed in the previous section to develop a new
horizontal well design with different depths and costs.
Overview
This chapter covers planning and estimating the cost of a horizontal

well.

Setting the Context
The Estimator wants to quickly plan and estimate cost for a shallow
horizontal well based on the casing and drilling program of the previous
well. The tripping times and rates of penetration are salable to the
shorter casing depths. This is possible by creating a copy of the previous
design and making a few minor modifications.
All the details for the changes are presented in the Excel sheet “Input
Data (7150 Horizontal).xls” highlighted in yellow (this Excel file will be
provided to you by your instructor).

Exercise 5.1: Plan and Estimate the Cost of a

Horizontal Well
1. In the tree put your cursor on Test 10500 and right click. In the right-
click menu, select Copy.
2. Select the same wellbore and right click. On the right-click menu
select Paste. Rename it Horizontal 7150.

Open the New Design

3. Modify the Wellpath (Trajectory) to the following horizontal well
profile (remember to have the schematic open during the
modification of the Wellpath and casing data).
4. Change the Casing depths, as follows.
The intermediate depths for some operations can be changed using the
Length Override field. This field is available when deterministic Trip
Rate or ROP is selected. It is important to note that Trip Rate takes the
TD depth at the start or end of the current phase while ROP takes the
depth of the previous phase or casing and subtracts that number from the
current phase or casing, resulting in the elapsed depth. There are times
when these cascaded depths are not correct for the operation (as in our
case). For example:
• Programming an intermediate bit trip/logging at a depth
• Setting cement plugs/sidetracks
• Running in hole with a liner (the liner may have a separate trip
speeds from the drill pipe)

For our example, the value entered in the Length Override field is the
trip interval, which is the absolute value of the Depth From, less the
Depth To.
This applies to the run cement production liner for the liner and DP
depths, and to the plug and abandon for the cement plug depths.
The value to be entered is the difference between the two highlighted

depths because this is the length of pipe/casing movement for the
operation.

Change and add cost codes: Additional codes will have to be added for
the Directional Services and Standby Cost.

Running the Simulator

5. Run the simulator and analyze the results.
The following are sample plots from the new design.

The following image is a Well Cost software AFE Report from the new
design.

Chapter 6
Working with Offset Well Data
In this chapter you will see how to use historical (offset well) information to reduce the time
required to produce an accurate estimate (offset wells are similar wells drilled in the same area).
Overview
Instead of basing the estimate on expert data, offset wells (also referred
to as historical data) can be the basis for the estimate. Any number of
available wells can be used, but normally the number of wells used is
between three and 100. In general, the larger the number of offset wells
the better the quality of the results.
Since the Monte Carlo simulation of time and cost for a planned well is
only as good as the quality of the input data, the quality of input data is
always a matter of concern. It is always best practice to review all input
values.
In the Well Cost software the offset well can come from almost any data
source, including:
• OpenWells Database
• A SQL database
• Other tabular format that can be put into the clipboard for later
pasting
• Paper records that can be used as a source for hand-entry data
Well Cost will analyse casing depths, phase and activity times, and costs
for variations, and apply a suitable distribution (PDF) with parameters.
The exercise in this chapter creates a well estimate using offset well
data.

Setting the Context
The Grizzly well is the 11th well in a development project of offshore

horizontal wells. There is good operational reporting data from
OpenWells for the previous 10 wells. The estimator wants to use this
previous experience to get an accurate estimate of the time required for
the 11th well.

Exercise 6.1: Creating a Well Design with Offset

Well Data
1. In the tree, put your cursor on Grizzly GZ 1/16 (11/22/1996) and

right click. In the right-click menu, select New Design... .
Naming the Design

2. In the Design Properties dialog, enter “Test Design” in the Design
field.

3. Using the Associated Data View and the Well Explorer, drag-and-
drop (or copy-and-paste) the Wellpath, Formations, Casing, and
Tubing from the My ODR design onto Test Design, answering yes
to all confirmation prompts. Note that it is possible to copy multiple
items at the same time.
Open Test Design

The options, phase, activity, and cost configuration were set up
previously and saved as a template for later re-use in other designs. To
retrieve this setup, import the appropriate Template File.

4. Select File > Import > Template file...
5. Select Grizzly My ODR Template.cwt, which will be provided by

your instructor.
6. Using the wizard bar buttons, review the design information.
• General Information — three events are included: drilling,

completion, and abandonment
• Wellpath — a full survey of a horizontal well; review the

schematic

• Formations — twelve formations are entered
• Casings — six items are in the casing spreadsheet
• Time Configuration — set of phases and associated activities

have been configured for each event
• Cost Configuration — cost details have been specified
Offset Well Times by Phase

Because our historical data is at the phase-level, the Variations on Times
must be set to Phases.
7. On the Options dialog, select the Variation Input tab. Click the
Variations on Times box and click the Phases radio button. Click
OK.
Supporting Events
The design supports the drilling, completion, and abandonment events.
For the purposes of this exercise, only the drilling event will be used.

8. On tree of the Time Configuration pane uncheck the boxes for the
OCM ORIG COMPLETION and ABN ABANDONMENT
events.
9. On the Phases and Activities pane, examine the deterministic

phase sequence.

Specifying Offset Wells

10. To specify Offset Well information open the Offset Well pane and
click the EDM button.

11. In the tree, select the Universal Exploration > Kodiak project.
Click the > button to select all the wells on this project. The Offset
Wellbore Data Selector will appear.
12. TDP2002 well is known to contain poor data. Therefore, select it in

the right panel and click the Delete button to remove it. Click OK
to finish the selection process and load the data from the offset
wells.
The offset well spreadsheet (upper spreadsheet in the panel) will now
look like the following image.
Notice the following.
• Blank cells indicate that the Phase does not exist on the offset well.

• For each phase on the offset well, the DM_ACTIVITY table is

examined for records with the same phase, and the total is
presented.
• Unplanned time is computed for each phase, using the NPT Coding
scheme in OpenWells.
• Red values phases (drilled phases) are adjusted for the difference in
depth between the offset well phase and the planned well phase.
• Information for wells that do not exist in EDM can be added

through the User button. Click the EDM button to enter one or more
well names. After the wells are added you can manually enter data
for the wells or copy-and-paste.
Overriding Values
Notice that the MIRU time for the KDS-07 well is 366.5 hours. The plan
for this well is only to skid the rig from an adjacent slot. In the case for
the KDS-07 well, the rig (a jack-up) was moved in from another
location. Thus, this does not look right for our sample data and we do
not want to consider it when fitting distributions to the data.
13. To remove it, check the Show Use Columns check box. In the Use
column before the value, select Don’t Use from the list of choices.

14. Uncheck the Show Use Columns check box.
Sampling Statistics
15. To generate PDF (distribution) values for each phase of the offset
data, click the Run Sample Statistics button, answering Yes to
confirmation prompts.

The spreadsheet in the lower half of the pane will now appear as follows:
16. To run the simulation, click the Run Monte Carlo icon.

Examining the Results

You can now look at some graphs that explicitly show offset well data.
17. Select View > View Panel.
18. Using the right-click menu, select XY Graphs > Offset Wells.
19. Check the Show Offset Depths box to show the depths of each
phase in the offset well.
20. Before moving to the next section, uncheck the Show Offsets
Depths box.

Single Phase Histogram

Select this plot from the right click menu.
21. Select the phase RUN/CEMENT 1ST INTERMEDIATE

CASING in the Phase combo.
The following image shows the distribution for the planned times on that
phase. The yellow is the simulation by the program and the purple is the
frequency of occurrence of this time on the offset wells.

22. Check Show Only Unplanned to show the distribution for the
unplanned times.

Offset Well Times Plot

This plot shows the offset well times and the estimated time for the
current plan.
You can Show Only Unplanned if you like. The following image
shows the results for the phase DRILL TO PRODUCTION CASING/
LINER DEPTH.

Historical (Offset Well) Data at the Activity Level

The example you have just completed analyzed the historical data at the
phase level. However if operational reporting data is available at the
activity level, you can use the Well Cost software to analyze the data at
this more-detailed level.
23. On the Options dialog, enable the Variations on Times check box.
Click the Activities radio button.

24. Select the Offset Wells pane. You will see a row for the Planned
and Unplanned time for each activity currently in the well program.
Historical data can be retrieved as shown previously, using either the

EDM method (if the data is in the EDM database) or User method (if the
data is available in other database or will be entered manually).

The Run Sample Statistics is used to fit distributions to the activity data.
After clicking the button and acknowledging the confirmation prompt,
the data in the lower portion of the screen appears as follows.
The design is now ready to be simulated. After running the simulation

you can analyse the results using the plots and reports provided, and
make any required changes before finalizing the estimate.


Chapter 7
Working with Queries
This chapter discusses how to use the Query function to fit distributions to offset well data.
Overview
You can use the Query function to compute the best fit distribution
parameters based on offset well data (or simply values pasted from a
spreadsheet). In this chapter you will look at examples.
You can access this function by clicking the Query button, which
appears in the Time and Cost Trees beside the Distribution value entry
point.
The exercises in this chapter deal with filtering distribution for the
following:
• Casing Depth
• Cost
• Activity

Exercise 7.1: Casing Depth Variation
1. In the Options dialog (Input > Options), click the Variations on

Casing Depths box. Click OK.

2. On the Time Configuration pane, and select the phase Drill to

Production Casing/Liner Depth in the ODR event. Click the
Query button in the Casing Depth Variation section.

3. The Import Query File dialog appears. Click the Database radio
button. Select the Casings.wcq install drive. Click Open.

The query is run and the result set is displayed, as in the image below.
The values in the grid column are analyzed for their statistical
distribution. A graph is shown of the data (red) and the matched
distribution (green).
4. To change the distribution, select the Use Distribution and select a

different distribution.
5. To eliminate outliers, select the Filter Values checkbox and specify

the appropriate Minimum and Maximum values. The results of the
queried data are computed and shown as a distribution graph.
In this case a Uniform distribution has the best fit to the data. Click
Finish.

In the Time Tree, the values for the Casing Depth variation are filled in
with the new information.

Exercise 7.2: Cost Variation
The same process can be applied to cost items. In this case the
distribution is determined for the Rig – Rental cost.
1. Open the Options dialog and click the Variations on Cost box.
Click OK.

2. In the Cost Configuration pane, select the Rig – Rental item and
click the Query button.
The Import File dialog appears.

3. Ensure Database is selected for Import From and pick the

Costs.wcq file, then click the Open button.

The query should result in the following.
4. Click Finish to update the information in the cost item.

Exercise 7.3: Activity Variation
Querying for distributions is also supported at the activity level.
1. For example, select BHA, BHA Pickup, P/U BHA in the DRILL
SURFACE HOLE phase and then click the Query button.

2. Use the database option on the resulting Import File and pick the
ActivityTime.wcq file. The result of the query will look like the
following image.
3. Click Finish to update the Activity with new information.
You may have thought that using the query tool will be a long process
to get a good picture on an individual cost basis as we have seen how
historical data can be used to fit distributions at both the phase and
activity level. Unfortunately there is no good automated way of doing
this for costs because of data quality and granularity issues.

Chapter 8
Monitoring Active-Well Status
In this chapter you will learn how to estimate the remaining time and cost for wells that are in
progress, a process referred to as lookahead planning.
Overview
There are two methods for working with wells that are partially
complete.
• Plot current progress as Plan vs. Actual
• Re-estimate the time and cost, using Partially Complete Well
The exercises in this chapter will demonstrate the following

functionalities:
• Plot plan versus actual
• Lookahead — a partial well case
• Retrieving status from OpenWells

Exercise 8.1: Plot Plan vs Actual
The current Plan vs. Actual Time vs. Depth can be plotted using the
“Offset Wells (Time vs. Depth)” plot.
1. Using the design completed in the last section (Test Design), change
Input > Options so analysis is done at the Phase level. Go to the
Time Configuration pane and include all phases of the Completion
and Abandon events in the analysis.
2. In the Offset Wells pane, click the EDM button to open the Offset
Well selector. Select all wells on the right side of the dialog and
click the Delete button (X). Click OK. The upper portion of the
Offset Wells panel will be empty.

3. Click the EDM button again and then add back the wells from
UNIVERSAL EXPLORATION (remember to remove TDP2002)
and then also add the current well (GRIZZLY GZ 1/16).
4. When you are finished, the upper portion of the Offset Wells pane
will look like the following image.

5. Re-run sample statistics and then run the simulator. This will update
the probabilistic distributions fit for all but the P10, P50, P90, and
GZ 1/16.
6. Select View > View Panel, then select the Offset Wells (Time vs.
Depth) plot, uncheck the Show Offset Depths option. Then put
your cursor over other wells and right click. In the right-click menu
select Hide Line for all but the P10, P50, P90, and GZ 1/16 lines.
Note that in this case the plot shows the depth going shallower for the
last hole section. This is because the casing definition has the Production

Tubing at a measured depth of 15,001.73 ft, whereas the depth of the

Production Liner is at a measured depth of 15,743.01 ft.
If you do not want the plot to show this backwards jump in depth, you
can click the Depth Plots not Backwards check box on the Cost
Calculation tab of the Options dialog.

Selecting this option causes the Offset Wells (Time vs Depth) plot to
look like the following.

Exercise 8.2: Lookahead – Partial Well Case
The Well Cost software also supports the estimation of times and costs
from a partially completed well.
1. In the Activities pane check the Partially Complete Well option.
In this example, the first five phases have been completed. Work thus
far has taken three days, cost $1M, and has gone to a depth of 4,000 feet.
Note that if you check for a given phase, Well Cost assumes that all
phases above it are complete as well.
2. Check the Complete box for Drill 1st Intermediate Phase and the
first five phases will be marked as complete.

3. Run the simulation to complete the analysis. The Offset Wells

(Time vs. Depth) plot will now look like the image below.

4. Examine the Time vs Depth and Cost vs Depth plots as well.

Exercise 8.3: Retrieving Status from OpenWells
1. Alternatively, you can click the Get Actual Data from Reports
button to obtain the current status. The current days, cost, depth, and
phase is obtained from the last daily report of any comparable event.
In this example the well is complete so the total days, cost, and depth are
filled in and all phases are marked as complete.
Note:
All Times and Costs are computed from the start of the next incomplete phase using
the input starting values (cost, time, and depth).
Note:
When the Partially Complete Well option is unchecked, the design and results are
restored to the original well condition.

Chapter 9
Estimating a Multi-Well Campaign
In this chapter you will create an estimate for a group of wells drilled and completed in series,
commonly referred to as a campaign.
Overview
Well Cost has the capability for analyzing the times and cost of a
campaign of well operations. These can be:
• Repetitions of the same design, with optional variable casing

depths
• A sequence of independent designs, with inter-well operations

and costs
The exercises in this chapter will help you understand how to create
estimates for the following scenarios:
• Wells in sequence
• Process improvement
• Batch operations
• Comparisons among design of differences factors
• Comparisons incorporating non-rig activities

Setting the Context
A project is planned to drill several wells using a jack-up rig. The

company needs to decide if it is more efficient to batch set conductors
and then surface casing, or to perform the operations in sequence (as
done on a single) well.

Exercise 9.1: Wells in Sequence
A number of wells have been planned by the LCG Drilling Company,

for the West Basin Project.
The following steps review the data in the Bore 1 design. This design is
identical to the ones for the other project wells.
1. Open the Bore 1 design and open the Wellpath pane to see nine
survey stations.
2. Open the Formation pane to see one formation.

3. Open the Casing pane to see two casing definitions.
The operations sequence is laid out as follows.
Note that all of the possible operations are included, whether they are
used in single wells or batch operations.
Some simple costs are entered on each design, such as $100,000 for the
day rate on the rig and a lump sum cost (Rig – Other) of $500,000.

4. Put your cursor on Bore 1 and right click. On the right-click menu
select New Design...
In the Design Properties dialog, enter Wells in Sequence in the Design

field.

5. To make this a Multi-Well design, open the design, select Input >
Options, and click the Variation Input tab. Enter values as depicted
below.
All other options and dialogs will now be disabled, as they have no
function, because the purpose of this design is to connect the existing
single well designs into the campaign.
To define the design sequence open the Time Configuration pane or the
Config Spreadsheets. To can open Config Spreadsheets, select Input
> Config Spreadsheets.

For a Multi-Well design, only the Design Sequence tab is available. If

you will be entering the sequence in this manner, expand the dialog to
show the Time Factor %, if it does not already.
You can also enter the design sequence using the Time Configuration
pane. To do this you simply add designs, as needed, to the project node.
All eight designs available in the project will be executed as part of the
multi-well project. This means we need to add each one to the top level
node. The order in which they are listed here will be the order in which
the simulator executes them. For simplicity we are using numerical
order, but in a real project you would use the order in which the wells
would be drilled (or completed, tested, and so forth). The Time Factor
(sometimes called learning curve) for each design is 100% as it is not
expected that there will be any improvement in execution time as the

execution team moves through the project. There is also no phase limit
for any of the wellbore. That is, all phases of the design will be executed.

6. When you have added and configured the designs, run the
simulator. When the simulation is finished examine the Time vs.
Depth Chart.
The chart shows all wells drilled in sequence to the same depth. The P50
time is around 64 days. Notice that there is a flat spot between wells.
This is because the MIRU (rig move) is included for all the wells. This
is removed by filtering the start phase from each design. The first well
includes MIRU, subsequent wells start with OTHER. This phase has
been configured to pick up the conductor driving equipment. Change the
configuration of sequence to be as follows.

Bore 1: Execute from MIRU to Run/Cement Surface Casing
Bores 2 through 7: Execute from Other to Run/Cement Surface Casing

Bore 8: Execute from Other to RDMO
This results in MIRU being performed only for the first well, RDMO
being executed only for the last well, and Other through Run/Cement
Surface Casing being executed for all wells.
7. Run the simulator again and the P50 time should be about 25 days.

Examine the Time vs P. Value and Time vs Depth graphs.

Exercise 9.2: Improving the Process
Since this is a campaign, it is likely that the crew will perform faster as
they go, thus gaining an improvement over the original estimate. Well
Cost can simulate this through the Time Factor%, which is an element
of the Design Sequence. Assume there will be a 3% improvement for
each follow-on well. This would result in the following changes to the
design sequence configuration:
Bore 1 Time Factor: 100%

1. Make the above changes to each item. The change to Bore 5 is

shown here.
2. Run the simulation. The P50 time should be about 23 days.
3. Change the Time Factor back to 100% for all items, run the
simulator, and click Save. This is required for comparison later on.
After changing the factors back and re-running the simulation,
verify that the P50 time is back to the 25-day value.

Exercise 9.3: Batch Operations
As a counter example, the same operations will be run in batch, meaning

all conductors will be driven first, before drilling and setting the surface
casing.
1. Copy the existing Wells in Sequence design and paste it into the
same wellbore. Rename the design to Wells in Batch.
Open this design and modify the design sequence to be configured, as

follows.
Use Well Wellbore Design Phase From Phase To TF%

Y Bore 1 Bore 1 Bore 1-Prototype MIRU Drive Pipe 100
Y Bore 2 Bore 2 Bore 2-Prototype Drive Pipe Drive Pipe 100
Y Bore 8 Bore 8 Bore 8-Prototype Drive Pipe Run/Cement Surface Casing 100
Y Bore 7 Bore 7 Bore 7-Prototype Drill Surface Hole Run/Cement Surface Casing 100
Y Bore 1 Bore 1 Bore 1-Prototype Drill Surface Hole RDMO 100

When complete, your Time Configuration panel will look like the
following image (the second entry of Bore 5 is shown).
Note that Bore 8 (the last well) is the only well that is not duplicated in
the list.

2. Run the simulation and examine the Time vs. Depth Chart. The P50
is about 23 days (23.36).

Exercise 9.4: Comparison
1. Open the Wells in Sequence design, but do NOT close the Wells in
Batch design.
2. Select the Time vs. P Value Graph. Then turn on the compare
feature by checking the Compare box in the View Panel header. The
graph will show the lines from both designs, allowing you to see the
execution differences.
If you look at the P50 value, there is an almost one-day improvement

when the operations are run in batch. This is achieved because of the
four-hour average time required to install the conductor driving
equipment on seven of the eight wells.

Exercise 9.5: Extra Non-Rig Activities
The design sequence also supports defining activities that are outside of
the well program defined for each well. Things like Site Preparation and
Reclamation are normally included here.
Site Preparation Example

The following image is a site preparation example.

Reclamation Example
The following image is a reclamation example.
After making these changes, run the simulator. The P50 time will be
around 40 days.

Appendix A
Support
Landmark Customer Support is available to you through the internet and phone.
Contacting Landmark Customer Support
Support Via Web Portal

Support information is always available on the Landmark Customer
Support internet page. You can also submit a support request directly to
Landmark Customer Support though the Landmark Customer Support
Portal:
https://www.landmarksoftware.com/Pages/ContactUs.aspx
To request support in the Landmark Customer Support Portal:
1. In the PIN and Password text boxes in the Please Sign In area, enter
your registered personal identification number and password.
2. Click the Sign In button.
3. In the Case & Defect Information area, click the Create A New
Case link.
Well Cost Basic Concepts A-1

Appendix A: Support
4. In the Create Case area, fill in the necessary information. Provide

details about your technical concern, including any error messages,
the workflow steps where the problem occurred, and attachments of
screen shots that display the problem. To help understand the
concern, you can also attach other files too, such as example data
files.
5. Click the Submit button. A support analyst in the nearest Technical

Assistance Center will respond to your request.
Regional Offices
For contact information for regional offices, see the Contact Support
page located at:
https://www.landmarksoftware.com/Pages/ContactUs.aspx
If problems cannot be resolved at the regional level, an escalation team

is called to resolve your incidents quickly.
A-2 Well Cost Basic Concepts

Well Cost - Basic Concepts Release 5000.1.12.0

Uploaded by

Copyright:

Available Formats

You might also like

Well Cost - Basic Concepts Release 5000.1.12.0

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Well Cost - Basic Concepts Release 5000.1.12.0

Uploaded by

Copyright:

Available Formats

Well Cost – Basic Concepts

Part Number 220001 Revision D February 2014

Halliburton | Landmark Software & Services

Introduction to Well Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

Monte Carlo Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1

Exercise 2.1: Performing the Die Throw Experiment . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4

Probability Distribution Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9

Quick Design Using Offset Well Phases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1

Exercise Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3

Exercise 3.1: Getting Started—Creating a New Design . . . . . . . . . . . . . . . . . . . . . . . . . 3-4

Exercise 3.2: Setting Up the Time Configuration Panel. . . . . . . . . . . . . . . . . . . . . . . . . 3-8

Well Cost Basic Concepts i

Exercise 3.3: Probabilistic Setup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-14

Exercise 3.4: Completion Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-30

Exercise 3.5: Generating the AFE Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-34

Exercise 3.6: Viewing Other Spreadsheet Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-36

Well Cost Detailed Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1

Exercise Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-3

Exercise 4.1: Getting Started — Creating a Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-4

Exercise 4.2: Setting and Configuring Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-7

Exercise 4.3: Loading the Remaining Phases and Activities . . . . . . . . . . . . . . . . . . . . .4-23

Exercise 4.4: Determining Cost Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-26

Exercise 4.5: Reviewing and Analyzing Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-40

Exercise 4.6: Running the Monte Carlo Simulation. . . . . . . . . . . . . . . . . . . . . . . . . . . .4-41

Exercise 4.7: Reviewing the Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-42

ii Well Cost Basic Concepts

Data Reader. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-43

Activities and Costs Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1

Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2

Working with Offset Well Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1

Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2

Working with Queries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1

Exercise 7.1: Casing Depth Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2

Exercise 7.2: Cost Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7

Exercise 7.3: Activity Variation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-11

Well Cost Basic Concepts iii

Monitoring Active-Well Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-1

Exercise 8.1: Plot Plan vs Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-2

Exercise 8.2: Lookahead – Partial Well Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-7

Exercise 8.3: Retrieving Status from OpenWells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-10

Estimating a Multi-Well Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-1

Setting the Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-2

Exercise 9.1: Wells in Sequence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-3

Exercise 9.2: Improving the Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-13

Exercise 9.3: Batch Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-15

Exercise 9.4: Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-18

Exercise 9.5: Extra Non-Rig Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-19

iv Well Cost Basic Concepts

• Invented by drillers to enable more effective and economical

• Features a systematic, standardized approach that leverages the

• Provides for built-in collaboration (built on the Landmark

The Well Cost software is applicable in virtually all development and

Key Software Features

• Probabilistic time and cost estimation

Well Cost Basic Concepts 1-1

Introduction to the Course

This manual comprises the following content, organized in nine

Chapter 1: Introduction to Well Cost

Chapter 2: Monte Carlo Simulation and Probabilities in Well