The Consequences of Rising Well Costs

摘要

What's the biggest generational shift in the oil and gas industry? You wouldn't be wrong in saying hydraulic fracturing, horizontal drilling, or drilling multiple wells from the same location (pad drilling). Other impressive answers could include Asian investment and rising production from the oil sands. But where the bit hits the ground hardest, the biggest change has been the capital cost of drilling a well. On average, a well in western Canada today costs three times as much to drill and complete as it did half-a-dozen years ago (Fig. 1). The big ramp up in the transition period between 2004 and 2010-from $1.3 million to $3.6 million per well-was not because of regular inflation, but rather the quick migration into the capital-intense world of unconventional plays [e.g., shale gas and light, tight oil (LTO)].