How much does it cost to drill a well?

"How much does it cost to drill a well?" is one of the most-asked questions in oil and gas, and the honest answer is: it depends — a lot. The same question covers a shallow onshore well and an ultra-deepwater discovery whose costs differ by more than an order of magnitude. What stays constant is the set of cost drivers underneath the number. Once you understand those, any headline figure makes sense. For context on the operation itself, start with how oil drilling works.

What a well actually costs

Start with the broad ranges, keeping in mind these are approximate and move with the commodity and service-cost cycle:

The gap between a $6–10 million shale well and a $100 million-plus deepwater well comes almost entirely from the operating environment. Offshore deepwater multiplies every input: the rig itself commands a far higher day rate, the subsea equipment is enormously expensive, and the wells take much longer to drill — and time is the master variable in well cost. Treat all of these as starting points to be checked against live benchmarks, not fixed quotes.

The cost drivers behind the number

Whatever the well, the budget is built from the same levers. The big ones:

• Rig day rate. What the operator pays per day to have the rig on contract. A land rig and a deepwater drillship are worlds apart here. See rig day rates for the breakdown.
• Spread rate. The total daily burn of everything running concurrently — rig, plus mud, cement, directional, logging, rental tools, fuel, and the rest. The spread rate, not the rig rate alone, is what each day of drilling actually costs, which is why non-productive time is so damaging.
• Lateral length. In shale, a longer horizontal lateral means more footage to drill and more stages to complete — a primary lever on total cost.
• Depth. Deeper wells take longer, need more casing, and stress equipment harder. Vertical depth and total measured depth both push cost up.
• Completion / frac intensity. Number of stages, proppant and fluid volumes, and horsepower on location. In a modern shale well this is often the single largest cost — frequently larger than the drilling itself.
• Casing and cement. The steel pipe and cement that line and isolate the wellbore — material-heavy and a meaningful line item, especially in deep or complex wells.
• Non-productive time (NPT). Every idle or troubleshooting day still burns the full spread rate. Stuck pipe, equipment failures, and weather can move a budget by millions.

Drilling cost vs. completion cost vs. all-in

One reason quoted figures seem to disagree is that people mean different things by "well cost." It's worth separating three layers:

• Drilling cost (D). Just getting the hole down and cased — the rig, the drilling spread, casing and cement. This is what older "cost to drill" figures often referred to.
• Completion cost (C). Turning that hole into a producer — perforating, fracturing, and installing production equipment. In shale this is frequently the bigger half.
• All-in (D&C). Drilling plus completion combined — the most useful number for "what does the well cost," and the basis of the ~$6–10 million shale range above. It typically excludes land, infrastructure, and tie-in to gathering systems.

So when someone says a Permian well costs "about $9 million," they almost always mean the all-in D&C figure, with the completion making up a large share of it. Strip out completion and the drilling-only number is much lower; add land and surface facilities and the fully loaded number is higher. Because pad drilling and other efficiencies keep reshaping these economics, see pad drilling for how operators drive per-well cost down — and again, verify any figure against current AFE benchmarks before you rely on it.

Common questions