Often there is a confusion as to what the difference is between probabilistic and deterministic planning.
The transparency in the calculated costs which consider realistic operations and prices for services, is important as this allows the management to see that the risks have also been identified and quantified.
Clearer overview of well costs’ division gives a higher level of confidence for the drilling investment decision.
Probabilistic vs Deterministic Drilling Cost Planning
There is some confusion as to what the difference is between probabilistic and deterministic planning.
The normal deterministic approach allows for only one course of events. This approach makes it very hard to address all of the uncertainties that may arise during a drilling operation.
Using probabilistic planning based on a simple spreadsheet offers benefits of ranges for time and cost, it is, however, difficult to enter information on the different paths that may present themselves during planning an operation.
Using probabilistic planning software that is designed for drilling operations allows the well team to simulate and identify various operational paths and assignment of probability of their occurring.
Drilling cost planning software
By applying, for example, P1™ software, the drilling teams are able to achieve a comprehensive understanding of the time-cost risk spread in well projects. This can help provide detailed answers to the three basic questions in managing well investment decisions:
What is the likelihood of overrunning the budget?
What is the level of exposure associated with any overrun that may occur?
Where do the individual risks lie that need to be mitigated against in order to avoid overrun?
If the risks can be mitigated, then the level of exposure can be reduced and projects can be delivered with greater budgetary certainty.
With the detailed output available, interested parties can see exactly what risks have been taken into account and the cost impact.
iQx™ P1™ has been field proven through 20+ years application offshore globally and is continually developed. The application offers AFE outputs, time/depth and cost/depth simulation outputs to name just a few. For a demo, please contact AGR’s Software team.
To see the functionalities in the software in more detail, visit our Youtube channel.