As the director of statistics at the American Petroleum Institute, I read with great interest the recent articles about estimating drilling costs (OGJ, Aug. 6, 2007, p. 39; Aug. 13, p. 46; Aug. 27, p. 39). I was surprised that the authors, writing about API’s Joint Association Survey on Drilling Costs (JAS), did not take the time to talk with us. Had they done so, they would have learned that API’s models are extremely accurate in predicting well costs, with R2 usually ranging from 0.81 to 0.94. In fact, in the Gulf of Mexico, where the authors did their in-depth study, API’s 2005 model has an R2 of 0.89 with an error of only 2%.
For over half a century, API has relied on publicly available data, as well as actual well costs provided by hundreds of operators, to estimate drilling costs for the entire US. As a result, the JAS contains drilling costs by area where data is tabulated per well type and well class, breaking out horizontal, sidetrack, CBM, and offshore wells.
While we always welcome new and creative methodologies, the JAS’s track record and thorough reporting remain unmatched.
Hazem Arafa
Director, Statistics Department
American Petroleum Institute
Washington, DC
