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Drilling speed—the relevance of experience

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  • Osmundsen, Petter
  • Roll, Kristin Helen
  • Tveteras, Ragnar

Abstract

Drilling expenses have increased sharply in recent years. The productivity of drilling operations – in terms of meters drilled per day – significantly influences exploration costs. Hence it is important to understand the factors that determine drilling productivity. In this study we analyze the effect of different types of experience or learning on offshore drilling productivity. The econometric analysis employs a large data set on exploration wells from the Norwegian Continental Shelf, covering most of its 45year drilling history. Many other industries have a steep learning curve. A central question here is if learning effects also contribute to increased productivity in petroleum exploration drilling. Furthermore, to what extent do diseconomies associated with reservoir depletion effects and limited acreage counteract learning effects on productivity?

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 3 ()
Pages: 786-794

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:3:p:786-794

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Learning effects; Drilling; Productivity;

References

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  1. Osmundsen, Petter & Toft, Anders & Agnar Dragvik, Kjell, 2006. "Design of drilling contracts--Economic incentives and safety issues," Energy Policy, Elsevier, vol. 34(15), pages 2324-2329, October.
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  14. Managi, Shunsuke & Opaluch, James J. & Jin, Di & Grigalunas, Thomas A., 2006. "Stochastic frontier analysis of total factor productivity in the offshore oil and gas industry," Ecological Economics, Elsevier, vol. 60(1), pages 204-215, November.
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Citations

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Cited by:
  1. Asche, Frank & Dahl, Roy Endre & Oglend, Atle, 2013. "Value-at-Risk: Risk assessment for the portfolio of oil and gas producers," UiS Working Papers in Economics and Finance 2013/3, University of Stavanger.
  2. Osmundsen, Petter & Rosendahl, Knut Einar & Skjerpen, Terje, 2012. "Understanding Rig Rates," UiS Working Papers in Economics and Finance 2012/9, University of Stavanger.
  3. Osmundsen, Petter & Roll, Kristin Helen, 2013. "Concave Drilling Curves," UiS Working Papers in Economics and Finance 2013/1, University of Stavanger.
  4. Lars Lindholt, 2013. "The tug-of-war between resource depletion and technological change in the global oil industry 1981 - 2009," Discussion Papers 732, Research Department of Statistics Norway.

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