Title: Risk assessment and risk modelling in geothermal drilling

Abstract

Development of geothermal energy has advanced in the last few years and will continue to do so in
the coming years. But this development is slowed by the high risks and costs associated with the
drilling phase of geothermal development. The goal of this study was to find out the risk factors
that can interrupt or delay the delivery, or compromise the quality of a geothermal well and how
these risks are perceived by drilling professionals in Iceland and in Kenya. Sixty-four (64) risk
factors were identified, an online questionnaire developed and the survey tool QuestionPro used to
send out the survey. The results showed that drilling risk analysis is subjective and risks are
ranked, or perceived to be high or low, depending on the project setting such as physical, economic
and political environments. Generally, toxic gas release was ranked the highest risk for drilling
operations, followed by high cost of drilling and lost circulation.
The second part of the study looked at the value of integrated cost and schedule risk in execution
of drilling projects, allowing for accurate budget and schedule estimation. The project risk
management software RiskyProject was used for this purpose to simulate a sample drilling project.
The results show that cost and schedule risk management can play an important role in geothermal
drilling projects. The deterministic method of costs and schedule estimation commonly in use could
easily result in cost and schedule overruns or underruns due to the influence of risks and
uncertainties encountered within and outside the project. A Monte Carlo simulation run on the
sample drilling project showed that the P50 values giving the most likely values for cost and
schedule, gave a higher value than the base values determined for the project. P1/P99 range was
1,115,369 USD for cost and 343 hrs for schedule. The simulation showed that drilling the 8½"
section has the largest influence on the well completion time and therefore greater effect on the
cost and schedule of the drilling project.

For further studies, the cost effects of the risk events should be studied as this was not possible
in this project. In conclusion, the risk management process has the potential to create value for
all aspects of drilling projects. It also recommends that the geothermal drilling industry need to
embrace risk management especially integrated cost and ol for controlling of
budget and
schedule overruns.