![]() Included in this factor is the increased use of horizontal and extended reach drilling. The more advanced the technology, the more specialized the resources needed to implement it. Technology: Advanced technology equipment such as improved drilling muds, fluid treatment and monitoring, drill bits, and other elements have helped drill and develop wells optimally, but this technology gain has come at a high price.This counteracts to some degree the drop in day rates with regard to drilling costs, at least for the short term. But, with lower rates comes lower rig utilization and less drilling. However, the recent drop in rig rates would seem to lower well costs. In fact, in the past few years, the day rate reached levels that in certain instances in the Gulf of Mexico spoiled the economics necessary to develop smaller shallow water finds, causing some of these projects to be shelved. This has been one of the major causes of cost increases. Day rates have, until recently, been on the rise. Day rates: Drilling day rates account for between one-third and one-half of the total cost of a well in the Gulf of Mexico, and can vary slightly for other drilling theaters.But, three specific factors have recently taken the lion's share of raising the sticker price of a well. Everything from equipment to catering could be factored into the total cost of a well. Many factors play a role in increasing well costs, far too many to list. This is strictly an empirically speculated number that does not include the myriad of factors that impact well costs. At this inflation rate, drilling costs should approximate an average of $6.3 million/well by the year 2000. This suggests an average increase of about $500,000/well per year, or between 11 and 12% per year for 1994 - 1996. In 1995, this figure was $3.7 million, up from $3.4 million for 1994. In the period from 1988 to 1996, costs showed a fair rate of increase, with costs rising more steeply from 1994 to 1996.įigures listed in the 1996 report state that the average cost per well based on footage drilled (0-20,000+ ft) offshore was just above $4.3 million. According to the survey and a comparison with present drilling costs, offshore well costs are definitely rising. This information is listed by number of wells, total footage, and total cost. The survey gives state-by-state drilling expenditures in the US and includes figures for both exploratory and development drilling offshore as well as sidetrack wells. The survey is published for the year two years prior, the most recent being 1996. A group consisting of the American Petroleum Institute, the Independent Petroleum Association of America, and the Mid-Continent Oil & Gas Association, track drilling costs in a publication called the Joint Association Survey on Drilling Costs. The industry consensus holds that even with the recent drop in rig day rates, drilling costs are continuing to rise. Hence, efficiencies in exploration and development drilling have achieved enough growth to lower drilling costs such that a program would remain economically viable at $12/ bbl oil prices. Most observers believe that with the technological advances the industry has experienced in the past several years, even with low oil prices, drilling would continue at its recent break-neck pace. Drilling programs that once were in the planning stages, are now being set aside to await more prosperous times when costs can be better justified by a higher price of oil. Rigs that were in short supply in the not so recent past, are now being stacked. With low oil prices a continuing presence in the market, oil and gas operators have begun making ready cutbacks in their drilling programs. Estimated costs of drilling and equipping wells, by depth interval- 1996.Wells drilled and wells not completed.Drilling Cost per well for offshore wells.Day rates, technology, manufacturing backlog key factors Marshall DeLuca
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |