R-Squared Energy Blog

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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.

January 9, 2009 Posted by | deepwater drilling, gas wells, oil companies, oil wells | 16 Comments

Shell Goes Deep

After spending most of my week on Coskata (and actually working at my real job) the energy news has piling up on me. While I still need to clean up some loose ends on Coskata, I also need to clear out some of these other stories.

I have an informative guest post on ocean thermal energy conversion (an under-rated energy option, in my opinion), CNN says that expensive oil is here to stay (regular readers will know that this is my mantra as well), Christina Laun gives us 100 tips and tools on how to enjoy a greener career – Number 31 may save your life someday 😉 – and Shell has gone ultra-deep with their new Perdido platform. I will lead off with Shell, since it has been in my in-box the longest.

I got the following information second-hand from Ignacio Gonzalez, who is a Communication Specialist for Shell. Their new Perdido platform will be the deepest water platform in the world.


The Shell-operated Perdido Regional Development Spar has arrived in the ultra deepwaters of the Gulf of Mexico and is currently being secured to the seafloor in about 8,000 feet of water. Once completed, the Perdido spar will be nearly as tall as the Eiffel Tower and weigh as much as 10,000 cars. Perdido will be the deepest oil development in the world, the deepest drilling and production platform in the world and have the deepest subsea well in the world.

Positioning the spar into place required carefully-orchestrated maneuvers. Here is a link to a YouTube video of the process, which you may embed as you wish.

Perdido will be a fully functional oil and gas platform with a drilling rig and direct vertical access wells, full oil and gas processing and remote subsea wells. The facility is designed to produce 100,000 barrels of oil per day and 200 million standard cubic feet of gas. The production from these fields will be transported via new and existing pipelines to US refineries.

The Perdido Spar will bring in production from three fields: Great White, Silvertip and Tobago. These fields are located in 10 Outer Continental Shelf blocks in Alaminos Canyon, approximately 200 miles south of Freeport, TX. This development will provide the first Gulf of Mexico commercial production from a Paleogene reservoir. All three fields have been granted production units from the Minerals Management Service and the accumulations are completely in US waters, some eight miles north of Mexico international borders. First production from Perdido is expected around the turn of the decade.

Shell has more info about the project area, as well as maps, here.

And you can follow the progress of Perdido here.

August 22, 2008 Posted by | deepwater drilling, oil production, Shell | 18 Comments