In traditional Digital Oilfield programs, it is assumed that increasing production from any given well has a positive impact on the operator’s bottom-line. In fact, optimum profitability for a field is dependent not just on production volume, but also on the individual contribution of each well to the overall profitability of the organization.

Understanding the contribution of each well, and operating based on this knowledge, can provide significant benefits over and above traditional production optimization techniques. Specifically, it can allow the field operations team to prioritize highest profitability wells – rather than just highest flow wells – and can even allow the identification of seemingly ‘productive’ wells which actually have an overall negative contribution to the organizations bottom line.

To calculate well –by-well profitability, operators must not only be able to accurately measure/allocate production volume, but must also consider other factors such as water handling cost, ongoing maintenance cost, production sharing agreement impact, short and long-term pricing contracts, etc. These and many other factors all contribute to the financial benefits accrued from a given well.

Understanding the contribution of any well or group of to the profitability of an operator is therefore more complex than simply calculating the production flow for the day and multiplying by the prevailing price for WTI or Brent.

The data necessary to calculate well-by-well contribution is spread across many siloed systems, including production, maintenance and financial applications. At best, operators review production volumes monthly to produce revenue figures when some sort of contribution figure may be possible to calculate. However it rare for any operator to manage cost information at the resolution necessary to calculate P&L accurately, so there has not been the ability to manage daily operations based on well-by-well profitability. Instead, operators have typically calculated a broad ‘field lifting cost’ and applied this across wells.

Clearly, with the high-well counts and heterogeneous production fields that are increasingly common, the potential value to manage wells on a full fiscal calculation rather than just cost can offer significant benefits.

This paper discusses the main contributing factors to well profitability, the potential business value from operating on well- P&L versus traditional volume-based approaches and describes solutions to achieve this capability.

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