Bountiful US Oil Changes Nature Of Game For Producer Apache
West Texas Intermediate oil has fallen almost 11 percent since its peak this year of about $110 a barrel in August as producers pump more crude, so companies are trying to bring down costs to maintain profitability.
Apache's costs on its Barnhart project in the Permian Basin - where it plans to drill about 70 wells into the Wolfcamp shale out of a Permian total of more than 800 wells - have fallen $1 million per well, or about 13 percent, to about $6.8 million in the last year and a half.
Although well costs vary widely depending on how deep and how far drilling reaches, rival Devon Energy Corp said its average cost for a Wolfcamp well in the third quarter was $5.5 million.
Laredo Petroleum Holdings Inc, a much smaller company that drills near Apache's properties, said it is targeting a reduction to $6.8 million per well next year from $7.8 million now.
At Apache's Ketchum Mountain field office in Irion County in the Permian Basin, the company's 450,000 acres atop the Wolfcamp serve as a laboratory where workers are free to experiment.
"We are not a one-trick pony," Apache's Christmann told Reuters. "There are always things that we are testing."
The biggest drop has been on the fracking cost. Apache is self-sourcing its own sand and chemicals. Experimenting with different drill bits - which can cost $50,000 or more - has also yielded faster drilling times, the executive said.
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