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Horizontal Oil and Gas Wells: The Engineering and Economic Nexus

Horizontal oil and gas well drilling is booming while, overall, development drilling is declining. The engineering parameters and how they affect the economics of horizontal drilling compared to vertical drilling are examined here. As a new applied technology, horizontal drilling can promise economic advantages over vertical drilling but with incremental risks that must be weighed carefully. In the long term, horizontal drilling will merge into the ever-growing inventory of technologies that create the economics that extend the lives of and yield more reserves from, oil and gas fields that would otherwise decline. The result is the persisting pattern of fields yielding more production than early estimates even as it remains impossible to count which particular new technology gave rise to so much more production.

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Energy Specializations: Petroleum – Exploration and Production; Natural Gas – Exploration and Production

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

Keywords: Horizontal drilling, Oil and gas wells, Oil production, EOR technology

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No3-4

Published in Volume 12, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.