Onshore Project Models
Executive Summary
Key Takeaways
- ✓ Onshore developments are typically shaped by land access and surface rights, and by well pad-level economics across a larger well count than a comparable offshore development.
- ✓ Takeaway capacity, whether produced volumes move by pipeline or by truck ahead of pipeline connection, is a distinct commercial and cost variable in onshore modelling with no direct offshore parallel.
- ✓ Onshore per-well development cost is typically materially lower than offshore, but the larger well count onshore programmes often require means aggregate capital intensity is not automatically lower.
- ✓ Surface access and right-of-way costs, and the pace at which they are secured, can constrain the drilling schedule independently of rig availability, an onshore-specific development risk.
Objective¶
This guide sets out how onshore oil and gas project models are structured, within Oil & Gas Financial Modelling.
Land Access and Well Pad Economics¶
Onshore developments are shaped first by land access and surface rights, and then by well pad-level economics across what is typically a larger well count than a comparable offshore development, building on the well-level detail addressed in Exploration & Production Models. Per-well development cost onshore is typically materially lower than offshore, but the larger well count many onshore programmes require means aggregate capital intensity does not automatically follow per-well cost alone; the model should test the interaction between well count and per-well cost together.
Takeaway Capacity¶
Produced onshore volumes move to market either by pipeline, where capacity is available, or by truck ahead of pipeline connection. Truck takeaway is typically more expensive per unit and can constrain realized netback until pipeline capacity becomes available, a distinct commercial variable specific to onshore modelling with no direct offshore parallel, and one the model should represent explicitly where truck takeaway is expected for any portion of the production profile.
Land Access as a Schedule Constraint¶
Securing surface access and right-of-way agreements can take time independently of rig availability, meaning an onshore drilling schedule can be constrained by the pace of land access as much as by the number of contracted rigs, addressed alongside the drilling schedule mechanics in Exploration & Production Models. Where land access pace is a material risk to the development timeline, the model should represent it as an explicit constraint rather than assume rig availability is the only limiting factor.
Common Structuring Pitfalls¶
- Assuming aggregate capital intensity is automatically lower onshore simply because per-well cost is lower, without testing the effect of a larger required well count.
- Omitting truck takeaway cost and its effect on realized netback during the period before pipeline connection is available.
- Modelling the drilling schedule as constrained only by rig count, without representing land access pace as an independent constraint where material.
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Frequently Asked Questions
What distinguishes onshore project economics from offshore?
Onshore developments are shaped by land access and surface rights and typically involve a larger well count at lower per-well cost, while offshore developments are shaped by facility type choice (platform, FPSO, or subsea tieback) and carry materially higher per-well or per-unit development cost, addressed in Offshore Project Models.
What is takeaway capacity, and why does it matter onshore?
The means by which produced volumes are moved from the wellhead to market, by pipeline where available or by truck ahead of pipeline connection. Truck takeaway is typically more expensive per unit and can constrain realized netback until pipeline capacity becomes available, a distinct commercial variable with no direct offshore parallel.
Does a lower per-well cost mean onshore developments have lower aggregate capital intensity than offshore?
Not necessarily. Onshore developments often require a larger number of wells to develop an equivalent resource, so aggregate capital intensity depends on the interaction between well count and per-well cost, not on per-well cost alone.
How can land access affect the drilling schedule?
Securing surface access and right-of-way agreements can take time independently of rig availability, meaning an onshore drilling schedule can be constrained by land access pace as much as by the number of rigs contracted, a risk factor the model should represent explicitly where material.
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