Definitions, Sources and Explanatory Notes

 Category:   Exploration & Reserves
 Topic:   Costs of Crude Oil and Natural Gas Wells Drilled


Key Terms Definition
Crude Oil A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Depending upon the characteristics of the crude stream, it may also include:
  • Small amounts of hydrocarbons that exist in gaseous phase in natural underground reservoirs but are liquid at atmospheric pressure after being recovered from oil well (casinghead) gas in lease separators and are subsequently commingled with the crude stream without being separately measured. Lease condensate recovered as a liquid from natural gas wells in lease or field separation facilities and later mixed into the crude stream is also included;
  • Small amounts of nonhydrocarbons produced with the oil, such as sulfur and various metals;
  • Drip gases, and liquid hydrocarbons produced from tar sands, oil sands, gilsonite, and oil shale.

  • Liquids produced at natural gas processing plants are excluded. Crude oil is refined to produce a wide array of petroleum products, including heating oils; gasoline, diesel and jet fuels; lubricants; asphalt; ethane, propane, and butane; and many other products used for their energy or chemical content.
    Development Well A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.
    Dry Hole An exploratory or development well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.
    Exploratory Well A hole drilled: a) to find and produce oil or gas in an area previously considered unproductive area; b) to find a new reservoir in a known field, i.e., one previously producing oil and gas from another reservoir, or c) to extend the limit of a known oil or gas reservoir.
    Natural Gas A gaseous mixture of hydrocarbon compounds, primarily methane, used as a fuel for electricity generation and in a variety of ways in buildings, and as raw material input and fuel for industrial processes.
    Well A hole drilled in the earth for the purpose of (1) finding or producing crude oil or natural gas; or (2) producing services related to the production of crude or natural gas.

    For definitions of related energy terms, refer to the EIA Energy Glossary.


  • American Petroleum Institute, "Joint Association Survey on Drilling Costs".

  •   Explanatory Notes

  • Real costs are in chained (2000) dollars, calculated by using gross domestic product price deflators.
  • The information reported for 1965 and prior year is not strictly comparable to that in more recent surveys.
  • Average cost is the arithmetic mean and includes all costs for drilling and equipping wells and for surface-producing facilities.
  • Wells drilled include exploratory and development wells; excludes service wells, stratigraphic tests, and core tests.