Geothermal Well Cost Update 2011

Abstract

Geothermal well construction costs are critical to geothermal development. Before 2004 well construction costs were relatively stable. Since 2004 well construction costs have changed significantly in response to economic changes. Thus, the need to update information on well construction cost drivers and indices that show how costs have changed with time. Starting mid 2004 well construction costs rose 250% in two years. Well construction costs dropped about 20% following the 2008 stock market crash; however, they are again rising. Before 2004 well construction costs were below levels required to sustain a healthy well construction industry. When they rose 250%, some thought that well construction costs had risen too high and would drop back to 2004 levels corrected for inflation, but recent trends suggest that well construction costs will probably not go back down. Factors underlying these changes are discussed. Because the well construction industry is still in flux, no attempt has been made to forecast future well construction costs, rather information is provided on changes in the well construction industry to aid in understanding how and why well construction costs are changing.