JAS PINPOINTS COST OF DRILLING U.S. WELLS

G. Alan Petzet Exploration Editor The American Petroleum Institute has included separate data on the cost of drilling and equipping horizontally drilled wells and coalbed methane wells in its Joint Association Survey for the first time. The survey, conducted by API and sponsored by API, Independent Petroleum Association of America, and Mid-Continent Oil and Gas Association, has been made annually since 1954. The full survey is available from API in Washington on paper or magnetic tape, but key

Dec. 30, 1991

5 min read

G. Alan Petzet
Exploration Editor

The American Petroleum Institute has included separate data on the cost of drilling and equipping horizontally drilled wells and coalbed methane wells in its Joint Association Survey for the first time.

The survey, conducted by API and sponsored by API, Independent Petroleum Association of America, and Mid-Continent Oil and Gas Association, has been made annually since 1954.

The full survey is available from API in Washington on paper or magnetic tape, but key points are summarized here.

The cost of drilling and equipping wells in the U.S. in 1990 averaged $76.07/ft, 3.4% higher than in 1989.

The 1990 averages for all wells were $69.17/ft for oil wells, for which the average depth was 4,652 ft/well, $90.73/ft for gas wells, averaging 5,194 ft/well, and $67.49/ft for dry holes, 5,043 ft/well.

API also tracked the effect of price change alone on the JAS drilling expenditures by numerically holding constant the differences in depth, type, and general location of wells drilled, with 1984 as the base year.

Adjusted costs for 1990 wells, compared with 1989 adjusted costs, were 18.6% lower than 1989 for all wells and 14.6% lower per foot, 18.8% lower for all onshore wells and 14.4% lower per foot, and 2.9% lower for all offshore wells and 6.2% lower per foot.

HORIZONTAL WELL COSTS

The cost per foot in 1990 averaged $88.16/ft for horizontally drilled wells, compared with $75.40/ft for wells drilled vertically, the survey showed.

Average measured depth was 9,489 ft/horizontal well vs. 4,916 ft for vertical wells.

Of the 791 horizontal wells of all types drilled in 1990, 72.2% were in Southwest Texas Dist. 1, heart of the upper Cretaceous Austin chalk oil play. The average Dist. 1 horizontal well cost $82.56/ft.

The survey showed the industry drilled 709 horizontal oil wells, six horizontal gas wells, and 76 horizontal dry holes.

The average horizontal oil well was drilled 9,556 ft and cost $89.26/ft. The averages for oil wells not drilled horizontally were 4,329 ft and $66.26/ft.

Averages for the six horizontal gas wells were 9,374 ft and $117.05/ft. Averages for horizontal dry holes were 8,880 ft and $74.71 /ft.

COALBED METHANE DRILLING

The U.S. industry drilled an estimated 1,753 wells in search of coalbed methane in 1990 at an estimated combined cost of more than $418 million.

Of those, 1,680 were completed as gas wells at a combined cost of $408.5 million. The rest were dry holes.

More than half the successfully completed coalbed methane wells were drilled in Alabama. The 843 Alabama coalbed methane completions pushed the number of Alabama gas well completions in 1990 to 936. This ranked the state second behind Texas in total gas wells drilled in the U.S. during 1990.

The industry also drilled 581 gas wells in the upper Cretaceous Fruitland coal seams of western New Mexico and 178 wells to Fruitland and various other coal seams in Colorado.

The Black Warrior basin of Alabama and San Juan basin of New Mexico and Colorado together accounted for 95.4% of U.S. coalbed gas wells in 1990.

Almost all coalbed methane wells were drilled to 200-5,000 ft.

The average coalbed penetration completed as a gas well went to 2,808 ft and cost $86.95/ft. The average cost of all other gas wells drilled in the 200-5,000 ft depth range was $48.29/ft.

API said the increased coalbed activity may have been one reason for the substantial increase in Alabama gas drilling costs in 1990. Total spending on gas wells in the state was almost 400% higher than in 1989.

Most of the wells were shallow coalbed methane wells and relatively expensive to drill, AP[ said.

All Alabama gas wells cost an average $113.03/ft, up 64.2%. That was almost 25% higher than the national average.

Total drilling costs for gas wells in western New Mexico and Colorado increased 76.4% and 31%, respectively, but average costs per well and per foot stayed the same or decreased.

OVERALL FIGURES

The combined cost of drilling all oil and gas wells and dry holes in 1990 was about $11 billion, up 13.1% from 1989.

The number of wells drilled was 6.8% higher than 1989, and footage rose 9.4% on the year.

The average cost per well was $383,596, up 5.9%.

The amount spent for drilling offshore wells in 1990 was $2.2 billion, down 8.1%. The number of offshore wells drilled was down 6.8% from 1989.

The first JAS was conducted in 1954, and the survey has been issued annually since 1959.

The survey lists, by depth range, the cost of drilling and equipping wells through the wellhead, tank battery, or plugging.

API also has published the companion Survey on Oil & Gas Expenditures annually since 1959. That survey contains estimates of exploratory, development, and production expenditures in more than 40 categories, including acquiring undeveloped acreage, lease equipment, and direct and indirect operating costs.