Geothermal Well Cost Update 2010

Abstract

Geothermal well construction costs are critical to future geothermal development including both hydrothermal and Engineered Geothermal Systems (EGS). In 2008 geothermal well construction costs were investigated and reported to the Geothermal Resources Council. Before 2004 well construction costs were relatively stable. Since 2004 well construction costs have changed significantly in response to the economy. Thus, there has been the need for regular updating of well construction cost drivers and indices. From mid 2006 to mid 2008 well construction costs fluctuated, as if they were trying to stabilize, until the global economy faltered and oil prices crashed. After the crash well construction costs dropped at an unsustainable rate until July 2009 when in response to rising oil prices, well construction costs stopped dropping. Rig count, rig day rate, and utilization are again rising. Thus it may be that well construction costs are again trying to stabilize. Because the drilling industry is currently in flux, no attempt has been made in this update to forecast future well construction costs, rather information is provided on changes in the drilling industry.