Average US well, footage costs peaked in '99, API says

Nov. 27, 2000
The cost per well and cost per foot of the average completed well in the US set records in 1999.
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The cost per well and cost per foot of the average completed well in the US set records in 1999.

American Petroleum Institute said the costs of all US wells, including dry holes, averaged $856,149/well and $152.02/ft in spite of a 3.3% decline in average footage per well. The 1999 cost per well was 10% higher than the 1998 figure, and the cost per foot was up 14.8% on the year.

The institute's annual Joint Association Survey on Drilling Costs shows that operators drilled 17,419 wells of all types last year at a total cost of $14.9 billion. That 15.2% drop followed increases in each of the previous four year-to-year periods.

API said the 1999 spending decrease occurred because of the lag time between the return to higher, more stable oil prices and the ramping up of drilling activity and because of industry reorganization.

The industry spent more drilling for gas than oil for the 12th straight year. Gas spending took 51% of total expenditures in 1999, oil 24%, and dry holes the rest.

The total-well records in cost per well and cost per foot stemmed from an emphasis on offshore objectives in the 10,000-12,500 ft to 20,000 ft and deeper categories, both exploratory and development, API said.

Drilling and completing wells in steadily deeper waters, operators spent $6.7 billion offshore in 1999. The number of offshore oil wells drilled and their costs rose 28% and 48%, respectively, from 1998. Exploration in the U.S. offshore remained confined almost entirely to the Gulf of Mexico region where drilling and completion activities accounted for nearly 98% of all offshore expenditures in 1999.

Onshore exploratory gas drilling held steady in 1999 largely due to activity concentrated in Central Alabama, North Texas RRC 9, East Texas RRC 3, and those areas of the Rockies-northern New Mexico, Montana, and Wyoming-where drilling in recent years remains increasingly focused on gas, especially coalbed methane work.