How much does petroleum cost to produce?

Answer 1

The means of production vary so much that an "average cost" is not available, nor would it be meaningful. There is a low end and a high end for operating costs. I have attached some estimates of operating platform and well costs, for a range of producing environments.

The very lowest well cost I could find was the 10 shallow wells opcost of $160,000 per year or $16,000 per year per well. This would translate into $45/ day. This explains why very low onshore producers in the US can continue to be profitable in the stripper category (less than 10 bbls/day).

At the high end, the cost of deep water 12 slot platform, estimated in 2002 to have an annual cost of 4,769,000 or a daily cost of $13,000 per day. The cost of a 600 feet deep platform in the Gulf of Mexico, has an estimated annual operating cost of 6.2 million.

The Gulf of Mexico has extensive infrastructure in place to support offshore operations. I would expect that operating costs are much higher than 6.2 million for remote areas in deep water, where production is from subsea completions to a floating production storage and offloading vessel (FPSO). See related links.

I will also note, that the onshore low operating cost in the US has not risen much in the last 20 years per the attached link. However, newly discovered oil is increasingly in the high operating cost category (deep water, remote locations without infrastructure) so this is a factor in the general increase of crude in the last 20 years.