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Review of NQ Academy Webinar #3: The Three Million Dollars Well

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Monday December 7, 2020

Geothermal drilling cost contribute about 35% of the Total Cost of Geothermal Power Plant Project. A study conducted by Directorate of Geothermal, General Directorate of New and Renewable Energy and Conservation Energy (EBTKE), based on data 2018 and 2019, resulting drilling costs are in the range of $ 3M - $ 12M per well with an average drilling cost of $ 2,500-3,800/m.

The 3rd NQ Academy Webinar entitled The Three Million Dollars Well: A Lesson Learned from Geothermal Drilling in Indonesia, shared a low drilling project cost, presented by Ashadi, M.T., Drilling Manager of KS Orka Renewables Pte. Ltd & Co-Founder Jakarta Drilling Society.

The webinar discussed about Well SMP T-09, a development well on WKP Sorik Marapi with 2100 m depth, drilled without incident & accident, achieved in 95 Days without LTI. The total estimated cost of well SMP T-09 is USD 2,955,030 from an original budget of USD 4,013,398, there are savings of up to 25%.

So, where is 25% saving come from? It is a result of improving efficiency of the drilling cost, means improving: Well Design, Well Components, and Well Execution. Combining Process Design and “Push the Limit”.

Well Design consist of well targeting, well depth and well size. For well targeting, we should avoid the hazard and minimize difficulties (geoscience aspect). For well depth, optimize well depth on feed zones study, deeper wells means more expensive. For well size, consider the contingency plan, for development well we could choose either big or standard well, slim well is not recommended for development well, since it does not has contingency plan.

Well Component, it is about tangibles things like choosing casing, wellhead, bit, etc. We do not have to choose the best and expensive one, just the standard and fit for purpose to get the efficiency.

Well Execution, it is about intangibles things consist of unit price and time. The efficiency could be done in the following things:

Contracting Scheme, a discrete contract able to reduce 25% in USD per meter compare to IPM contract. Discrete contract allows negotiation and review-qualified personnel assigned to the project.
Rig Selection, drilling rig could contribute 42% of well drilling cost. An option of rig investment could be considered. We could get 1,000 HP rig rate of $ 10,000/day for own rig compare to $ 14,000 - $15,000/day for rental rig. Other benefits for owning rig are saving mob-demob cost and able to improve equipment continuously.
Drilling Time, by applying new technology to improve time efficiency. For example: using mud motor for fewer trips, bit selection for better ROP, using high temperature mud additive for better maintaining mud property, using quick connection casing, and using pre welded wellhead.

How efficiency could be done? What are essentials needed to lowering the drilling cost? The company should prepare and optimize the following things: drilling team, drilling stakeholder, drilling procedure (SOP), drilling database.

In his response, Mr. Eko from NRECE (EBTKE) who did study on drilling costs, show highly appreciated on Mr. Ashadi presentation, and conveyed that drilling costs are one of several special concern by Government and asked that the drilling costs could be in the range of $ 2000/m.

In his closing statement, Mr. Ashadi said that towards the biggest geothermal power producer, Indonesia must have geothermal drilling excellence. Believe that together we can continuously improve the efficiency of geothermal drilling cost.

The 3rd NQ Academy Webinar was attended by almost 200 participants who were quite enthusiastic about this topic, Mr. Ashadi present his presentation in 40 minutes only, so plenty of time for Questions & Answers session. Questions related to geoscience and drilling hazard were answered jointly by Mr. Ashadi and Dr. Yunus Daud.

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