An Alternative Drilling Contract Type (Non IPM) for Geothermal Exploration and Development Drilling

Abstract

One of the key elements of successful drilling campaign is the drilling procurement and contracting plan. Selecting the qualified reputable contractors is important. However, selecting the right contract type to engage the qualified reputable contractor is more than important. There are at least three drilling contract types that have been used for geothermal exploration and development drilling in Indonesia: 1. Discrete contract; 2. Semi-IPM Contract and 3. IPM Contract. Based on recent data presented by Indonesia Directorate of Geothermal, Ministry of Energy and Mineral Resource, the Semi-IPM and IPM Contract have been dominating the contract type used by geothermal operators in Indonesia for geothermal exploration and development drilling for period of 2010 – 2018. In 2014 a Bundled Services Contract Type, An Alternative Drilling Contract Type (Non IPM), was introduced by new geothermal operator in Indonesia. The main reason of introducing the Bundled Services Contract Type is lean drilling organization had by the geothermal operator to execute the exploration drilling program. The operator only had two drilling experts to run the procurement and contracting process and therefore the Bundled Services Contract Type was proposed to integrate drilling services as many as possible; to simplify the tender process, to simplify contract management and ultimately to simplify operations. As a result of using a Bundled Services Contract, the cost per well of Bundled Services Contract is found to be cheaper compared to the cost per well of Semi-IPM and IPM Contract. Indonesia Directorate of Geothermal, Ministry of Energy and Mineral Resource has analyzed and has presented that the cost per well of Bundled Services Contract Type is categorized as top tier and very competitive together with Discrete Contract Type for geothermal drilling in Indonesia. The average cost per well of Bundled Services Contract Type is US$ 3,027 per meter compared to average cost per well of US$ 3,963 per meter for Semi IPM Contract Type and US$ 5,411 per meter for IPM Contract Type. The average cost per well for Discrete Contract Type remains to be the best with average cost per well of US$ 2,930 per meter. The used of Bundled Services Contract Type is increasingly in demand in Indonesia.