What Is Drilling?

1) What are the main steps in land surveying and drilling? 2) What is the overall cost of surveying? 3) Cost of drilling? 4) What is the success rate of drilling?

• In other words, what are the steps needed for a successful drilling (finding oil/gas), and how much does it cost per successful drill?  (I would really appreciate the breakdown of how this is calculated).

• Answer:

  Surveying and drilling costs are going to vary a lot from well to well and tract to tract.  Surveying is comparatively easy.  Just get a metes and bounds description of the property from the deed records and have a surveyor go out to the property where you plan to put the well.  You need the survey to make sure that there hasn't been any adverse possession along the borders of the property, if you're going to drill there, and to make sure the surface owner is in exclusive possession of all of the surface estate, if he owns any of the minerals.  You also need to make damn sure that you're drilling the well on the right piece of property!  If you're dealing with a plated subdivision of a town that never got built, it can be exceedingly easy to put the well on the wrong lot.  The survey probably won't cost more than $1000, unless there's something screwball like a paper subdivision. Drilling involves getting a rig out to the field and putting the drill bit in the ground where you've got a permit to drill (this part will vary depending on regulatory agencies).  This part takes a few weeks, depending on how deep you are drilling.  Because the pressure increases as you get deeper, the rate of drilling changes drastically over the course of the project.  In my experience, you can drill the first 1,000 feet in a few days, but once you're getting into the 4,000 foot range, you're just moving at 10 feet a day.  That's all going to change depending on the density of the rocks.  There are a bunch of tests that people perform while they're drilling and afterward to determine whether a zone will be productive.  This includes porosity tests, swabbing, and watching the drill speed.  If you drill straight and true, you'll eventually get to a total depth and then perform more tests.  If things look good, the well is completed by placing casing in the hole.  If it looks bad, they plug it and walk away-- or they spend months screwing around and probably throwing good money after bad.  They can also frack and acidize a well at this point. Costs of drilling are usually itemized and will change a lot depending on the specific deal.  Leasing costs depend on the area in which you're drilling.  If you're in a really productive area of South Texas, you can expect to pay anywhere in the $25,000 per acre range.  If you're in an unproductive area, bonuses might be $50 per acre.  Acquiring the leases may also be expensive, depending on how many landmen you need to hire.  Good Landmen can run up to $500 a day.  Attorney fees will also vary substantially depending on how sliced up the title is.  A cheap drilling title opinion (telling the oil company who to lease and where to avoid drilling) can cost around $5,000.  Same goes for a cheap division order title opinion (telling the oil company who to pay and who to hold in suspense because of title issues) can run the same.  If the title to the minerals is really bad, the title opinion can be substantially more expensive-- especially if you start running into hundreds of mineral owners, some of whom have disappeared.  The on the ground operations of a well are also going to vary, but I can give you a quick rundown of the big ones.  You need a mud company (tens of thousands of dollars), an electric company (thousands of dollars), a bulldozer to make a flat work station and a welder to put a gate up and keep cattle in (thousands of dollars), cementing and casing (thousands of dollars), a rental frac tank and a permanent tank (thoundands of dollars), a drilling rig and a completion rig (tens of thousands of dollars a day), water hauling (this varies from thousnads to tens of thousands, depending on how much water you produce and it's an ongoing cost), oilfield service companies to fix everything that breaks ($???), and who knows what else.  The cheapest wells you'll encounter cost upwards of $250,000 (shallow, vertical production where nothing goes wrong).  The most expensive will run well into the millions (deep, offshore, or horizontal wells).