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To: Smokin' Joe
Hmmm. I'd assumed the production and drilling costs were the same. I can see where that could be wrong.

I couldn't find the source I had for the $6/barrel worldwide average cost for oil production. However, this link shows the production cost for Saudi Arabia at $1.50/barrel.

91 posted on 09/05/2005 10:55:36 AM PDT by Dave Olson
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To: Dave Olson
I am on a land rig in the US. When we are done, this well will have cost between $150.00 and $200.00 per foot to drill.

Note that does not include preliminary expenses (title searches, leases, permits, reclamation bond, archaeological, rare plant, paleontological, rare animal or raptor surveys), nor does it include the cost of well stimulation, production equipment, pipeline or other operating costs.

Just earthwork, moving the rig in, drilling the well, running production casing and liners, and moving the rig out.

This is over nearly 20,000 feet, and only 40% of that will be productive, thanks to this being a horizontal well.

In a vertical well, you are fortunate to get 300 ft. of good pay.

Drilling costs offshore are far, far higher, and when you go somewhere like Saudi, workers live in company compounds to reduce problems with the local culture.

More expensive yet, but offset in part by the use of cheaper foreign labor in some of the grnt jobs.

Lift costs (the $1.50/bbl is Saudi) are just the cost of getting the oil out once the rest of this is in place.

They vary depending on the field, and often from well to well. Six dollars per barrel on average, sounds about right, but only factors in what it costs to get that barrel out of the ground (to operate the well as a producer), not everything required to put the well there in the first place.

In the last 5 years, the company I have been working for has spent over 100 million just drilling wells, (not counting preliminary costs or infrastructure/production investments).

My take over those 5 years? .00375, roughly, of the total drilling cost, paid as a day rate. Keep in mind that when I went back to work after the late '90s price crash, we all worked more cheaply than today (1995 rates), and day rates have gone up some, too (but not as far or fast as oil prices).

118 posted on 09/05/2005 11:48:43 PM PDT by Smokin' Joe (If you are not part of the solution, you are part of the problem.)
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