API: US oil, gas drilling costs reach all-time high

The cost of drilling and equipping oil and gas wells in the US reached an all-time high in 2006, the American Petroleum Institute reported.

May 8th, 2008

By OGJ editors
HOUSTON, May 8 -- The cost of drilling and equipping oil and gas wells in the US reached an all-time high in 2006, the American Petroleum Institute reported.

Up 44% from the previous year, spending in 2006 totaled nearly $110 billion, according to the most recent Joint Association Survey on Drilling Costs (JAS). Increases in the number of wells and total footage drilled pushed the average cost per well and per foot to their highest levels ever. The 2006 average cost for oil wells, gas wells, and dry holes surged 22% to $2.1 million.

For the 19th consecutive year, drilling outlays for gas exceeded those for oil. In 2006, expenditures to drill 30,610 gas wells accounted for 54% of the total drilling spending, up from 51% a year earlier. Oil drilling expenditures, for 16,670 wells, dropped to 34% of the total, down from 35% of total drilling costs. Dry holes accounted for the remaining 12% of outlays.

In 2006, spending for exploration wells was $14.7 billion, up 19% from a year earlier, while development well expenditures jumped 47% to $93.8 billion, according to the JAS. The survey also shows that the average depth of oil wells drilled in 2006 declined 9%, but the average depth of gas wells drilled climbed almost 4%.

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