For every well event, the following are provided:
- Well cost ( D&C/D&A) - derived from PSAC and other selected sources
- Cost per boe (D&C) - calculated by Canadian Discovery Ltd.
- Primary versus secondary zone cost differentiation - calculated by Canadian Discovery Ltd.
How Costs are Determined for Each Objective Play
Based on PSAC's annual study and other data sources, Canadian Discovery assigns:
- an average cost for drilling each meter of open-hole
- a cost for elevation, casing and gas completion (where applicable)
- a cost for elevation, casing and oil completion (where applicable)
- a cost for abandonment.
Play costs are derived from a variety of industry sources, including PSAC's biannual well cost study. Well costs are derived from corporate data for selected data points in Western Canada. Wherever possible, they reflect new technology such as directional/horizontal drilling, coil tubing, SAGD and natural gas from coal (NGC/CBM).
How Costs are Determined for Each Well
To calculate the drilling cost for each well, the objective play costs are utilized for the cost to drill each meter. By multiplying the drilling cost per meter by the total measured depth, the total cost of drilling each well (first event only) is calculated. Plays consistently drilled directionally utilize costs based on that practice. Wells which are drilled directionally in plays which commonly are drilled vertically do reflect a higher cost. If the well is abandoned, an abandonment cost is added to the drilling cost to calculate the final drilling costs. For completed wells, the appropriate (oil or gas) completion cost is added to the well drilling cost to obtain the total drilling and completion cost. For second and subsequent events for each well, only the play completion costs are utilized.
How Cost per BOE is Determined
Once the well cost for each event has been calculated, it is divided by the total ultimate recoverable hydrocarbons (Ult Rec BOE) for each event, in order to obtain the cost per boe. Users must understand that second to subsequent events generally have a much lower cost per boe due to the fact that there are no drilling, and only completion, costs.
An Illustrative Example
The following example represents a typical well drilled in the Minnehik-Buck Lake area.
| Event |
Completion Details |
Cost Analysis |
| 1 |
A well is drilled in the Mississippian Banff, to a depth of 2,085 m, in order to evaluate the Banff Subcrop play (Objective Play). No production results from the Banff. However, the well is completed as a gas well in the Nordegg with relatively poor results. Ultimate recoverable hydrocarbons are only 20,000 boe. |
Well Event Cost (Drilling and Completion)
= cost per meter for the Banff Subcrop (Objective Play) * meters drilled + cost to case and complete the Nordegg
= $606/m * 2,085 m + $250,000 = $1,515,510
Cost per BOE
= Well Cost/Ult Rec
= $75.67/boe (uneconomic)
(This cost is used for statistical purposes.)
|
| 2 |
The well is subsequently completed in the Glauconitic and Ellerslie zones (commingled) with good results. Ultimate recoverable hydrocarbons are 70,000 boe. |
Additional Well Event Cost (Completion Only)
= cost to case and complete the Glauconitic and Ellerslie zones (based on the completion cost for the deepest zone)
=
$350,000
Incremental Cost per BOE
= Well Cost/Ult Rec
= $5.00/boe
(This incremental cost is used for statistical purposes.)
|
| 3 |
The well is completed in the Edmonton and Belly River zones (commingled) with good results. Ultimate recoverable hydrocarbons are 42,000 boe. |
Additional Well Event Cost (Completion Only)
= cost to case and complete the Edmonton and Belly River zones (based on the completion cost for the deepest zone)
=
$175,000
Incremental Cost per BOE
= Well Cost/Ult Rec
= $4.16/boe
(This incremental cost is used for statistical purposes.) |
| All |
Total ultimate recoverable hydrocarbons are 132,000 boe. |
Total Well Cost (Drilling and Completion)
=
$2,038,510
Average Cost per BOE
=
$15.44
(This is the cost per boe that will display in list view next to each well event.)
|
The costs per boe, as calculated by the EDGE, must of course be used with discretion. For the drilling and completion of every well, numerous significant variables come to play. Completion costs vary significantly from one area to another, and are less predictable for some plays. Since costs are assigned on a play-by-play basis, significant variances may exist. Furthermore, the data points used to establish costs are limited and subject to error. Every effort is made to provide accurate data, and accuracy does increase with time. Both costs and hydrocarbon recovery factors are updated quarterly.
|
