?The oil and gas industry more than doubled its spending on drilling and equipping wells in 2007, according to the American Petroleum Institute’s (API) annual joint-association survey on drilling costs.
Expenditures in the U.S. rose from $109.8 billion in 2006 to a record $226.4 billion in 2007.


“Strong demand and historically high prices spurred increased competition for limited material and labor, and—combined with record-high costs for steel—pushed up drilling costs,” says Hazem Arafa, API director of statistics.


“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%. This demonstrates the industry’s commitment to developing our oil and natural gas resources.”


Records were set for average cost per well and average cost per foot, according to API’s findings. Costs per oil well increased 82% to $4 million in 2007—the most recent year for which data was available—versus $2.2 million per well that was spent a year earlier, and a per-foot spending average of $717, compared with $402 in 2006.


Gas-well spending also saw an increase—105%—to $3.9 million per well from $1.9 million in 2006. Per-foot spending for gas wells averaged $604 in 2007, up from $348 in 2006.


Total oil-well expenditures jumped 94% from 2006 to $72.3 billion from $37.3 billion, while gas-well expenditures more than doubled to $119.1 billion, compared with 2006’s $59.3 billion.


Although oil exploration was strong in 2007, API expects more money was spent on drilling gas than oil, a trend that continued for the 20th straight year.

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