IC 8561 Engineering Cost Study Of Development Wells And Profitability Analysis Of Crude Oil Production

This report presents a more extensive perspective of the calculated profitability of developing and producing crude oil and associated natural gas by primary methods from selected onshore areas of the United States. Estimates were made for cost of drilling, completing, equipping, and producing oil wells at four depths in seven onshore producing areas. A computer program was developed for calculating the discounted cash flow rate of return for the 64 different models in each area resulting from varying the oil-producing rate and production decline rate. The results of these calculations provide data that vividly illustrate the change in rate of return to changes in well depth, initial producing rate, and production decline rate, as well as to variations in development cost and operating expense. Cost per barrel of oil produced in terms of annual cost and total cost is also discussed. Included in the report are explanations of the method of determining costs and the procedure used for profitability analysis. Summaries of all cost estimates and results of profitability analyses are presented in the appendix in tabular form for each of the seven producing areas.