Abstract
This paper outlines the Low Cost Drilling (LCD) initiative rolled out in support of Cost Reduction Alliance 2.0 (CORAL 2.0) launched by Malaysia Petroleum Management (MPM), the regulatory body of PETRONAS, to propagate the practices of twenty six (26) Value Levers identified under four (4) key areas that could potentially lower the wells costs by Petroleum Arrangement Contractors (PACs) in Malaysia, with targeted savings of MYR 850 million from planned one hundred twenty five (125) wells in 2015.
Malaysian Oil & Gas industry has evolved from 3-4 PACs back in 1990s to over 25 PACs by 2014. Similarly, the number of wells drilled each year continue to rise to meet the production target. The average well cost has steadily increased annually due to inflation and increasing demand over supply for drilling tools and services. In 2014, Drilling & Well Intervention (DWI) section or widely known as MPM Drilling, under Petroleum Operations Management (POM) of MPM, has embarked on a study of the "Best In Class" over low cost wells delivered for the past two (2) years by PACs in Malaysia.
A total of twenty six (26) Value Levers were identified in the overall findings which could be categorized under four (4) key areas; 1) Planning & Well Design (12 elements), 2) Operational Practices (10 elements), 3) Fit for purpose technology (1 element), and 4) Logistics Operation (3 elements).
The initiative was rolled out in February 2015 by MPM Drilling in support of CORAL 2.0, where PACs were requested to identify Value Levers that could be applied to their wells with estimated potential cost savings. Twelve (12) PACs have responded with total targeted savings of MYR 850 million over 125 wells planned for 2015. This averaged to a cost reduction of around MYR 6.8 million per well. The progress savings will be monitored on quarterly basis against the initial target. Actual realized savings for 2015 will be confirmed in Quarter 1, 2016.
