In our collective experience, of nearly 100 years of working across eight Operators’ organisations, no well’s AFE has ever carried provision for blowouts nor for serious well control incidents. However, for the drilling of every well, series of wells or development, there is indeed a “risked cost” of such well control events, but this is often never properly calculated nor clearly articulated to senior management in a meaningful way.
After a lot of research and development, Safe Influx has built, and is continually upgrading, a global database of kick frequencies, blowout frequencies, blowout durations, blowout damage levels and frequencies, environmental spill frequencies and clean-up costs, fatality frequencies, asset repair costs, human factor issues etc, and has now developed a detailed Total Cost of Risk (TCoR) model. This TCoR model, that takes into account additional factors like insurance costs and reputational damage, will produce a risked cost of well control for single or multiple wells. The NPV loss associated with deferred production caused by serious well control events can also be included in the model. Sensitivity analyses (Tornado Plots) are also run so that one can understand how the risked cost profile will change with changes to various individual inputs.
The purpose of developing this TCoR model was primarily to demonstrate the value of the Safe Influx Automated Well Control technology in reducing an Operators’ well control risk, but the tool can be useful for a variety of situations where there is a need to better understand well control risk, and understand the ultimate level of cost exposure should such an unfortunate incident actually materialise. Insurance companies, of course, need to assess these risks, but in our experience, they do not make these assessments to anywhere near this level of detail. Operators may therefore be paying for insurance that is not commensurate with, and most likely more than, their actual risk, but have hitherto not had the evidence at hand to contest such premiums.
Safe Influx Automated Well Control technology provides value by manifestly removing the numerous and significant human factor elements associated with detection, shut-in decision making and the physical act of shutting-in a well. The value comes from significantly reducing blowout risk, and also significantly reducing the size of influxes shut-in in the wellbore for controlled kick incidents. The latter is as a result of reducing the time period from the moment the influx enters the wellbore until pressure equalisation is established after BOP closure. A smaller influx means there are more remedial kill options, and therefore there will be less time and less cost expended in performing kill procedures before the operations can then safely resume.
Typically, for both onshore and offshore, the risked cost associated with kick incidents is usually greater than the risked costs associated with blowout incidents. Even though the costs of dealing with a blowout are much higher than those of dealing with a kick, the risked cost of a kick incident is higher because it is dominated by the probability; i.e. the probability of a kick is normally two orders larger than that of a blowout. That said, the Safe Influx Automated Well Control technology always significantly benefits both risks. We believe there may also be an additional value in the technology due to potential reductions in insurance premiums.
The TCoR model calculates risked cost down to a $/day basis. Below are two output diagrams pertinent to a typical GOM MODU well operation.
The diagram above shows the total risked cost exposure, with and without Automated Well Control, and the diagram below the individual savings in kick exposure and blowout exposure, all on a $/day basis. So in summary, on this particular well, the overall risked cost exposure to well control incidents is $29,812 /day. Safe Influx Automated Well Control technology can reduce that overall total to $6,995 /day, resulting in a saving of $22,817 /day. For clarity, that saving is made up from a $15,688 /day saving in kick recovery risk, and a $7,129 /day saving in blowout risk.
If you would like to learn more about our TCoR model, or indeed the value our Automated Well Control technology could bring to your operations, please do get in contact.