As operating costs escalate and the oil price remaining stubbornly low, now more than at any time in the history of the oil industry the economics of every phase of business must be minutely examined from the exploration and appraisal through to production. In addition to this, another problem arises when dealing with a project such as coiled tubing drilling, as whilst this technology will provide a similar end product to conventional drilling practices it is such a departure from conventional drilling practices as to create scepticism. This paper describes some of the ground work involved as part of a feasibility study carried out for coiled tubing drilling for a situation of drilling from top hole to total depth and sets out a system whereby the financial implications of investment into a new technology can be assessed by comparing three strategies. The best scenario for return on investment and increased profitability can then be chosen. The study deals with the economic analysis, risk analysis and the methodology used in achieving the final results. These results compare the three strategies on the basis of numerical values of drilling operational costs and production. Introduction In order to reduce well costs and thereby effectively allocate exploration funds from the exploration portfolio the industry is looking for a low cost drilling method which is currently being envisaged by the emerging slim hole drilling rig technology. This according to companies that have used this type of technology can give attractive cost advantages over conventional drilling technology. It is also felt that further micro savings can be gained, if the same wells were to be drilled using a coiled tubing drilling system but this would require the development of new technology with large costs involved. In today's business environment in order that any new technology of this nature can grow quickly through the development stages it is generally accepted that financial support must come from the oil companies i.e. "customer driven projects". The motivation for such support and the eventual investment into new technology must be to have such technology earlier than it would be normally available without the financial support and to have some form of investment recovery. In addition to this the other advantage for investment into such technology is that the technology can be tailored to what the company really requires. NEW TECHNOLOGY With any new technology it must be proven that it is either more economically efficient or technically superior in order to be competitive with current options and whilst the technical aspects are easy to establish for the engineer, the economic efficiency can present a different set of problems. In developing a conceptual project for coiled tubing drilling it was felt that a system had to be devised whereby it could be proven by theoretical financial risk assessment that investment into new technology was to the company's advantage and where such technology could be best placed and utilised to its best advantage over conventional technology. In establishing criteria for such a system it was assumed that coiled tubing drilling technology can reduce the drilling operative costs. The options considered for the economic of new technology were considered to be involvement in the following :No investment in new technology and continued use of conventional technology using the traditionalists approach. P. 429^

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