Inderscience Publishers

How to economically evaluate a drilling fluid plant? A systematic approach

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As the results of government initiative to increase production, large number of wells are planned to be drilled in the next few years. As a consequence of this, huge volumes of drilling fluid are dumped or disposed into land. To maximise savings of drilling fluid, this study aimed to investigate if it is economically viable to set up a drilling fluid plant. This study provides consistent and systematic methodology for evaluating a drilling fluid plant economically. Factors such as well activities, number of fields, location of fields, drilling fluid type and amount of volume dumped act as important elements in determining the feasibility of setting up a drilling fluid plant. Optimum drilling fluid plant locations were determined using analytical method. A practical example is used and detailed economic analysis revealed that it is economically viable to set a drilling fluid plant for the example selected with NPV of $5 million. The findings show that specific attention is needed for average drilling fluid volume dumped; drilling fluid type and operating costs as they impact economics of the drilling fluid plant the most. [Received: September 03, 2008; Accepted: April 08, 2009]

Keywords: oil and gas industry, drilling fluid plants, economic evaluation, investment decisions, optimal locations

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