U.S. Drilling Expenditures Shatter Previous Record

For those who don’t think U.S. oil companies are spending enough to find new oil:

US drilling outlays soar to $226.4 billion in 2007

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.

I guess for those who would argue that they aren’t spending enough, how much should they spend? Part of this was due to much higher costs for drilling rigs – driven by high demand, but companies also drilling more wells:

“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.

I think it’s a safe bet, though, that drilling outlays will fall substantially in 2008.

8 thoughts on “U.S. Drilling Expenditures Shatter Previous Record”

  1. More than half the rigs in operation are drilling in the US. If there’s a drop to be found,I’m sure they’ll find it.

    A Saudi official just said the financial crisis could cut demand for oil by as much as 45%. I doubt even Benny expects a demand crunch like that. If demand fell 45%,OPEC could stop production altogether,and there’d still be a glut.

  2. To me it makes a big difference if the cost increases are do to more wells or increases in costs.

    If the cost increases are due to lack of equipment, then that shows a lack of long term planning to make sure adequate equipment is available.

    But if they are drilling more wells or increasing output of wells then I would be much more impressed by the increased spending.

  3. Albert Einstein once said “We cannot solve problems with the state of mind that created them.” he was a pretty smart guy, and to take his insight to heart, I would say that realistically, we are not using the oil that we do have as efficiently as we could and should. The human race is pathetically wasteful with this critical commodity plain and simple. We are abusing the privilege of this resource and now more than ever we need to make the most of the oil we have left. I have found a biodegradable fuel additive that reduces toxic fuel emissions by 40+% and increases fuel economy by 7-19%. I realize it sounds too good to be true, but this stuff has been tested and proven by the EPA and the California Air Resuources Board. I’ve tried t myself and it is the real deal. The fact is there are energy solutions out there that are available NOW. The public and the corporations just need to be willing to make a little extra effort to save a lot for the sake of our planet and our future. Info on this fuel reformulator can be reviewed at http://www.omstar.com.

  4. Do you believe if countries such as Saudi Arabia, Iran, Venezuela and others were engaged in this mass drilling, that we would discover much more oil than was ever thought existed in these places?

  5. Jimmy,

    We have already discovered a lot more oil than was originally believed to be in place. In 1982, U.S. reserves were 27.858 billion barrels. In 2005, U.S. reserves were 21.757 billion barrels. So the U.S. drew down reserves by 6 billion barrels. But what would you guess the cumulative production was, given that reserves were drawn down by 6 billion barrels? It may come as a surprise, but oil production from these reserves since 1982 totals 56.9 billion barrels. Thus, in the past 24 years the U.S. has produced 57 billion barrels of oil and pulled reserves down by only 6 billion barrels. The reason is that there were discoveries that took place over the past 24 years.

    Cheers, RR

  6. Venezuela is said to have 1 trillion barrels of heavy sour crude, cheap to get out.
    In the USA we drill far more wells than Saudi Aarabia. They are hardly trying.
    Even so, I advocate $4 ags tax in the USA, and a strong move the PHEVs.
    I anticipate a 10-15 percent decrease in crude demand, due to conservation and aletrnative fuel efforts coming to fruition, and the global recession.
    That puts 8-11 mbd on world market with no home. Already, sea borne oil tankers are filling up with oil. Oil producers are storing it, hoping to higher prices later. Contango. Later, they will have to sell all the oil that is in storage, even while fresh supplies swamp the market.
    There will be the Mother of all Gluts somewhere in 2009-10, and $10 oil. MOAG
    Then, buy your oil stocks (Shell, COP), earn the divvie, and wait. It could be a long wai, but you are collecting your divvie.
    That’s how it works out on paper anyway. Real life has a way of gumming up the works.

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