Impact of drilling costs on the US gas industry: prospects for automation

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Title: Impact of drilling costs on the US gas industry: prospects for automation
Authors: Crow, DJG
Anderson, K
Hawkes, AD
Brandon, N
Item Type: Journal Article
Abstract: Recent low gas prices have greatly increased pressure on drilling companies to reduce costs and increase efficiency. Field trials have shown that implementing automation can dramatically reduce drilling costs by reducing the time required to drill wells. This study uses the DYNamic upstreAm gAs MOdel (DYNAAMO), a new techno-economic, bottom-up model of natural gas supply, to quantitatively assess the economic impact of lower drilling costs on the US upstream gas industry. A sensitivity analysis of three key economic indicators is presented, with results quoted for the most common field types currently producing, including unconventional and offshore gas. While all operating environments show increased profitability from drilling automation, it is found that conventional onshore reserves can benefit to the greatest extent. For large gas fields, a 50% reduction in drilling costs is found to reduce initial project breakevens by up to 17 million USD per billion cubic metres (MUSD/BCM) and mid-plateau breakevens by up to 8 MUSD/BCM. In this same scenario, additional volumes of around 160 BCM of unconventional gas are shown to become commercial due to both the lower costs of additional production wells in mature fields and the viability of developing new resources held in smaller fields. The capital efficiency of onshore projects increases by 50%-100%, with initial project net present value (NPV) gains of up to 32%.
Issue Date: 1-Sep-2018
Date of Acceptance: 21-Aug-2018
ISSN: 1996-1073
Publisher: MDPI AG
Journal / Book Title: Energies
Volume: 11
Issue: 9
Copyright Statement: © 2018 The Author(s). This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0 -
Sponsor/Funder: Shell Global Solutions International BV
Funder's Grant Number: PO 4550156770
Keywords: 09 Engineering
02 Physical Sciences
Publication Status: Published
Article Number: 2241
Online Publication Date: 2018-08-27
Appears in Collections:Chemical Engineering

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