1 Drilling Productivity on the Norwegian Continental Shelf 1 by Petter Osmundsen*, Kristin Helen Roll** and Ragnar Tveterås** * University of Stavanger / Norwegian School of Economics and Bus. Adm. ** University of Stavanger / International Research Institute of Stavanger Lead author: Petter Osmundsen, Professor, Department of industrial economics and risk management, University of Stavanger, NO-4036 Stavanger, Norway. Email: Petter.Osmundsen@uis.no . Tel: +47 51 83 15 68. Mobile: +47 99 62 51 43. Home page: http://www5.uis.no/kompetansekatalog/visCV.aspx?ID=08643&sprak=BOKMAL Abstract Recently, we have seen falling oil prices combined with sticky costs at a high level in the petroleum industry. This cause cost cuts and project postponements, thus challenging reserve replacement of oil companies and security of supply for consumers. Costs are particularly high for drilling. High rig rates are obviously important. In new contracts for high-spec semi rigs on the Norwegian Continental Shelf (NCS), e.g., the day rate has increased from 147,500 USD per day in July 2004 to 530,820 USD in September 2008, i.e., an increase of 260 per cent in four years. In addition we experience a dramatic fall in drilling productivity. This paper analyses the development in drilling productivity in exploration wells at the Norwegian continental shelf. We analyse a complete panel data set from the Norwegian Petroleum Directorate (NPD) with detailed information on all exploration wells drilled on the NCS from 1966 to 2008. The article also draws on a number of meetings, presentations and 1 We would express our thanks for rewarding conversations with and comments on the article itself from a number of key specialists in oil the Norwegian Petroleum Directorate, oil companies, rig contractors and oil service enterprises.