Well delivery optimization: a commercial engineering approach
An optimal contract structure to realize safety and maximum recovery in the most economical way
During the planning phase many constraints apply, including
budgetary, geological, casing limitations and many others.
Setting the appropriate commercial terms and conditions and
contract structure actually helps to avoid expensive mistakes. A
close collaboration between contract manager, well engineer
and field service companies gives huge benefit.
Safety first ! Clearly, no one will argue this. Planning for safety
is planning for success. During the planning phase, multiple
objectives need to be realized and depending on geological
information at hand or not, well planning may vary in
difficulties, time spent and costs.
Planning for excellence does not only imply that the
engineering principles need to be satisfied. The quality of the
commercial terms and conditions, the timely delivery of
equipment, the quality of log data to be included and decisions
on cementing and mud programs all contribute to the costs of
Well planning is a multi-disciplinary science as it involves
engineering principles, well costing, contract management and
procurement, corporate philosophies and standards,
geophysical considerations and for some also negotiating the
commercial terms and conditions.
Experienced drilling engineering resources are scarce and more
often than not certain activities are sacrificed in order to meet
In some instances, it may even happen that some of the critical
analysis during the planning phase is sacrificed for the false
belief of cost reduction. For instance, a lot of knowledge can be
retrieved from historic wells data, which allows companies to
incorporated learnings and to avoid expensive mistakes. Data
collection is another typical activity that is often sacrificed. Not
only is the collection of data time-consuming, but retrieving the
learnings and eliminating the errors and inconsistencies from
historic data is both cumbersome and time consuming.
For a leading LNG operator, we engineered the optimal contract structure and financial terms and
conditions. The operator was planning a new campaign and was considering an alternative rig. The key
question was, which contract strategy maximizes success? Success defined as the safe recovery of
gas in the most economical way.
It was recognized that transparency and close collaboration between operator and service provider would provide the best
results. The planning of the campaign is complex involving many different stakeholders, including government, field service
providers, local community, and the internal organization that consists of different departments.
While many different elements in contract negotiations need to be considered, an important one is to assess the capability of
the rig and crew to perform under the conditions that are likely going to be encountered. For instance,the geological
conditions may be complex or uncertain and bold decisions may have to be taken during the planning and execution phase.
Using historic information, various conditions were analyzed and the capabilities of various equipment was subsequently
simulated and tested on various conditions, including decisions that may need to be taken. While, it is difficult to predict the
future, this way it is possible to prepare the organization for creating a robust plan which is in line with the contract
stipulations. The contract model forms an integral part of our framework that integrates commerce and well planning.
Well planning, a multi disciplinary science
Not cleansing the data in an effort to presumably save
time and cost can turn out to be a very expensive
mistake, when unlikely events occur . . . , Read >>
Contract models that interface between contract managers and well engineers on the operator side and field service
companies are an enabler to assess the optimal contract structure and to work on safety and maximum oil recovery in the
most economical way.