EIA Report: Trends in U.S. Oil and Natural Gas Upstream Costs

Our favorite government agency, the U.S. Energy Information Administration, has just published a new report detailing trends and costs in upstream (i.e. drilling) for U.S. oil and natural gas. The report is titled “Trends in U.S. Oil and Natural Gas Upstream Costs” (full copy below). It is a GREAT report. Among some of the highlights: The average well drilling and completion costs in five onshore areas in 2015 were between 25% and 30% below their 2012 level–when costs per well were at their highest point over the past decade. Based on expectations of continuing oversupply of global oil in 2016, the report predicts a continued downward trajectory in costs as drilling activity declines. For example, the report expects rig rates to fall by 5%-10% in 2016 with increases of 5% in 2017 and 2018. The report also expects additional efficiencies in drilling rates, lateral lengths, proppant use, multi-well pads, and number of stages that will further drive down costs measured in terms of dollars per barrel of oil-equivalent ($/boe) by 7%-22% over this period. Below is a summary of the report, followed by a full copy of the report. Take time to read it!…

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