Estimations of exploration and production costs for natural gas and oil deposits in geological basins in Poland

This article describes methods of estimating oil and gas well costs on international markets (mainly in the US and Canada), and presents the application of the selected methods within the context of available data concerning drilling costs in Polish geological basins. The article reviews and evaluates the applicability of these methods for modeling and benchmarking efficiency of upstream activities in Poland. At the level of specific oil and gas firms, benchmarking and cost planning is usually based on a company’s knowhow coming from experiences related to technical and economical optimization processes. This article proposes and describes algorithms for such calculations. The analysis suggests that the usefulness of the drilling cost model based on equation (4) in relation to the deposit depth is lower in Poland compared to the USA, but still quite significant. For external analysis (outside upstream companies) it could be the only tool for evaluating the oil and gas well costs based on the depth of target formations.