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Drilling cost effectiveness and feasibility of high-temperature drilling - Reykjavik, Iceland, Workshop4
Drilling cost effectiveness and feasibility of high-temperature drilling - Reykjavik, Iceland, Workshop4
1-5 July 2007 ISOR
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High Temperature Wells - Cost Analysis
In the following the cost of high temperature 
geothermal wells is analysed.  This includes the 
preparation, the drilling and the completion of the well.  
In high temperature geothermal wells the temperature 
of the reservoir can be up to 300°C.  The analysis is 
based on experience gathered in Iceland for the past 
ten years.
The total cost of geothermal power plant has been 
roughly divided in drilling, steam supply system, el-mech 
and buildings.  The cost of drilling is 30–40% of the 
total cost.  Usually this is for example higher than the 
cost of turbine generator unit.  The feasibility of a 
geothermal power plant is therefore highly dependent 
on how successful the drilling is.  Preferably the wells 
should be productive and at the same time inexpensive.
We divide the total drilling cost in three main parts:
•	Preparation i.e. building a drilling pad, water 
supply system and drilling and running a surface casing.
•	Drilling of the high temperature well, including 
casing material
•	Completing the well after drilling i.e. 
wellhead, silencer, drainage system and a house for 
the wellhead.
The percentage of the different parts of the drilling cost 
will vary some what depending on the type of well 
being drilled but the drilling itself is always by far the 
largest.  The total cost of drilling 2000 m deep vertical 
well having ø8 1/2” production part is approximately 
225 MISK (2,6 MEUR).  This is excluding VAT.  Design 
and supervision is however included.
The production parts in high temperature wells in 
Iceland is drilled either by using ø8 1/2” drilling bit or 
ø12 1/4” drilling bit.  The larger diameter production 
part is generally considered more feasible where the 
enthalpy is low and the smaller diameter where the 
enthalpy is high. Well 20 in Krafla Geothermal Power 
Plant was the first directionally drilled high temperature 
well in Iceland.  This was back in 1982.  For the past 
ten years directional drilling is becoming more and more 
common and now every 3 or 4 wells out of 5 are 
directionally drilled.  While a directionally drilled well is 
more expensive than a vertical one they have important 
advantages.  Wells can be made to cut promising 
fissures, parts of the reservoir inaccessible from directly 
above become accessible and several wells can be 
drilled from each drilling pad. 
The total cost of drilling different types of wells have 
been compared.  The comparison is based on 2000 m 
deep wells.  Included is the preparation, drilling and 
completing the well after drilling.  If one would also 
include the cost of the steam supply system the 
difference between vertical and directionally drilled 
wells would be less. 
For the past year aerated drilling has been tried in 
Iceland and more than ten high temperature wells have 
been drilled using this technique.  The result has been 
positive with respect to drilling but it is still too early to 
confirm that the productivity of these wells is higher 
than the productivity of conventional wells.  The trial 
aerated drilling carried out for the past year adds 7–
12% to the total cost of drilling.
The drilling cost has been divided into drilling, other 
work carried out during drilling and material.  This is 
only the drilling cost i.e. neither preparation before 
drilling or completion after drilling is included.  It is 
conclude that for high temperature drilling the cost of 
work is 70–80% and the cost of material is 20–30% .
The drilling cost as a percentage of the drilling cost of 
each well and the well depth has been studied.  The 
cost of drilling the last 500 m (from 1500–2000 m) is 
approximately 15% of the drilling cost.  By extrapolation 
one can conclude that the drilling cost would be 
increased by 15% if a 2000 m well would be drilled to 
2500 m.   
A primitive study has been carried out for evaluating 
how the drilling cost of high temperature wells in 
Iceland has developed for the past eight years.  
Reservation must be made regarding the method used 
and how accurately it represents the drilling cost.  It is 
also questionable if the cost index used in the 
comparison, the Icelandic “byggingavísitala”, gives the 
correct indication of general price increase.  According 
to the study the cost of drilling was more or less the 
same until 2003.  Since then it has decreased by over 
20%.  The large drilling contracts which have been 
made in the past years are the primary explanation 
why the cost has decreased.  Because of those it has 
been easier for the drilling contractor to organize the 
drilling work and the drilling rigs are now working all 
year round and not only in the summer time as before.  
Bearing in mind how important the drilling cost is in the 
total cost of geothermal power plants it is obvious that 
the price development in the past years will affect 
geothermal power plants feasibility in a positive way.
Id: 22
Place: ISOR
Grensasvegur 9
Room: Vidgelmir
Starting date:
02-Jul-2007   14:40
Duration: 20'
Primary Authors: Mr. INGASON, Kristinn (VGK-Hönnun Consulting Engineers)
Co-Authors: Mr. MATTHíASSON, Matthías (VGK-Hönnun)
Presenters: Mr. INGASON, Kristinn
Material: slides Slides

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