Along with technical preparations before drilling a well, cost estimation is one of the central activities leading up to an AFE (Authorization for Expenditure) approval. Traditionally, a single well cost estimate has been provided. However, in recent years a probabilistic well cost estimate, or at least an understanding of the potential well cost range, is required as a part of the internal procedures of the E&P companies.

In order to introduce and strengthen the application of probabilistic well cost estimation, a tool and methodology has been developed for use in Eni E&P drilling departments.The challenges encountered during the development of the methodology were to lower the threshold for drilling engineers to perform probabilistic well cost estimation and to systematize the corresponding workflow such that:

  • assessment of risks and uncertainties are made simple and transparent

  • alternative well designs can be compared in terms of cost uncertainties

  • the major risk drivers are understood

  • the results can easily be communicated to other parts of the organization

This paper aims at strengthening the argumentation for using probabilistic well cost estimation, give a brief overview of the underlying mathematics, present the full workflow as performed by a drilling engineer using the tool and give several examples of how the tool can be applied and communicated in a decision making setting. A case study is presented in order to illuminate the above points.

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