Posted on Thursday, January 12, 2012 2:19:03 PM by thackney
On average, it costs ConocoPhillips $15.48 to produce a barrel of oil in Alaska compared to $12.32 per barrel in Canada, $10.24 per barrel in the Lower 48 and $10.15 per barrel in the North Sea. The company’s production in the Middle East costs $6.98 per barrel, Kah said.
Like I commented, $86 dollars a barrel seems a tad high for Bakken oil.
From the article: The North Dakota Industrial Commission, Department of Mineral Resources, has released a new and higher average cost for drilling and completing Bakken wells in North Dakota.
You are not close to the real cost. Go read an 10-k or annual report. These companies make 6~9% typically. If it was the gold mine you suggest, all the folks with oil stocks in 401ks and mutual funds would be driving Rolls Royce.
The $86 isn't the total cost, it was the economic planning number including profit, etc.
The $55 dollar number is where you would see people deciding it wasn't worth it. And that includes assumptions of expected higher values at a latter date.
Read the next line of the article you quoted (which I posted)
“The figures for operating costs come out of ConocoPhillips’ financial reports and do not include taxes, capital investments or transportation costs.”
That is just what it cost to operate it after you build it. You also have to pay lots and lots of taxes (typically 3 times profit, higher in Alaska) and then pay to move the oil to market.
My guess would be to double your initial number to build all the top ground facilities, then add your quoted number on top. Then you approach cost to get oil at the beginning of the pipeline.