US drilling outlays soar to $226.4 billion in 2007
US oil and gas drilling expenditures soared to a record $226.4 billion in 2007, more than doubling the previous record of $109.8 billion a year earlier, according to API.
WASHINGTON, DC, Jan. 5 -- US oil and gas drilling expenditures soared to a record $226.4 billion in 2007, more than doubling the previous record of $109.8 billion a year earlier, the American Petroleum Institute said on Jan. 5.
API said the Joint Association Survey of Drilling Costs for 2007, the latest year for which figures are available, showed that records also were set in average costs per well and per foot.
Average costs per US oil well grew 82% to $4 million in 2007 from $2.2 million, while per foot costs climbed 78% year-to-year to an average of $717 from $412, according to API. It said that average costs per domestic natural gas well rose 105% to $3.9 million in 2007 from $1.9 million in 2006 as average costs per foot grew 74% year-to-year to $604 from $348.
Total oil well expenditures jumped 94% to $72.3 billion in 2007 from $37.3 billion in 2006, while gas well expenditures grew by nearly 101% to $119.1 billion from $59.3 billion, API said.
Hazem Arafa, director of API's statistics department, said strong demand and historically high prices increased competition for labor, services, and equipment, which pushed drilling costs higher along with record-high steel costs.
"But despite a doubling of the cost to drill and develop wells, we also witnessed a rise in both the number of wells drilled, which increased 4% from 2006, and the average depth of those wells, which increased 9%," he continued.
API said the latest numbers showed more spending for gas wells (53%) in the US in 2007 than for oil wells (32%) for a 20th consecutive year despite exceptionally strong oil exploration. Dry holes represented the remaining 15% of the total, it indicated.
Contact Nick Snow at email@example.com.