New type of drilling contract minimizes well costs by guaranteeing performance

Journal Article · Wed Jun 01 04:00:00 EDT 1988 · J. Pet. Technol.; (United States)

DOI:https://doi.org/10.2118/16091-PA· OSTI ID:6828989

Oeffner, J A

Most current drilling contracts are either (1) daywork, where the operator assumes all risks; (2) turnkey, where the contractor assumes all risks; or (3) footage, where the operator assumes most risks and the contractor is paid on the basis of the length of hole drilled. In a new type of contract, ''shared risk,'' each party assumes the risk it is best qualified to accept. The operator assumes the risk of geology, location-dependent factors, and weather, while the contractor assumes the risk of drilling performance. The shared-risk drilling contract provides a tangible incentive for the contractor to provide better-than-average performance, while the operator is allowed to retain full control over the parameters that result in a well drilled to desired specifications at the lowest possible cost.

• Research Organization: Western Oceanic Inc. (US)
• OSTI ID: 6828989
• Journal Information: J. Pet. Technol.; (United States), Journal Name: J. Pet. Technol.; (United States) Vol. 40:7; ISSN JPTJA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002* -- Energy Planning & Policy-- Petroleum
58 GEOSCIENCES
580100 -- Geology & Hydrology-- (-1989)
CONTRACTS
COST BENEFIT ANALYSIS
DRILLING
GEOLOGY
PARAMETRIC ANALYSIS
PERFORMANCE TESTING
RISK ASSESSMENT
SPECIFICATIONS
TESTING
WELL DRILLING