I remember reading some time ago in one of Patterson's annual reports that when things were bad, they did turnkey drilling - basically completeing the well at a fixed cost. In moderate times, they got paid by the foot, and in really good times, (today) they get paid by the hour (or per unit time). The number of rigs drilling, and wells drilled didn't change much between 1970 and 2004. The depth increased in excess of 20%, and the success rate went through the roof.
It would be very hard to compare the economics of the two times without knowing the terms - completion vice hourly charge during the two times. One would suppose that the E&Ps would be happy given the higher success rate, but unhappy given the greater requisite depth. I would think that the cost of drilling would have dropped with technological improvements - not to be confused with improvements with discovery technology - seismic. Drilling deeper has to be more expensive with greater depth more friction, power, heat, mud, and bit replacement time.
Matt Simmons has an interesting and classic article (circa 1997) on his website detailing how the drillers will make out in the long run. The E&Ps have no choice but to drill, and the pool of drillers is shrinking. The E&Ps may or may not be able to pass on the drilling costs. |
