Low commodity prices erode US drilling activity

By the OGJ Online Staff

HOUSTON, Oct. 5 -- US drilling activity continued to erode this week, both on land and offshore, two industry groups reported Friday.

Utilization rates among mobile offshore rigs in the Gulf of Mexico plummeted to 62.7%, the lowest level since May 1999, as six more units came off jobs with no contracts in prospect, said officials at ODS-Petrodata Group, Houston. Of the 209 rigs available for work in the gulf, 78 are now without contracts.

Baker Hughes Inc., Houston, reported a total of 1,141 rotary rigs working in the US and its waters this week. That's 27 fewer than the previous week but up from 1,035 a year ago.

The count included 128 rigs that were actually drilling in the Gulf of Mexico at some point during the week, seven fewer than last week, said Baker Hughes officials. The number of working land rigs was down by 20 to 985.

With flagging market prices for both oil and natural gas, no one seems to expect much improvement in upstream operations through the rest of this year.

"Rig activity will fall to yearend. We [producers] will drop another 200 rigs, with the Gulf of Mexico shelf proportionately hard hit compared to land rig activity. In our opinion, the remaining prospects on the gulf shelf absolutely do not work [at prices] below $3.25/Mcf," said Mark Papa, chairman and CEO of EOG Resources Inc., at the annual meeting of the International Association of Drilling Contractors in New Orleans last week (OGJ Online, Oct. 2, 2001).

There were 936 rigs drilling for gas in the US this week, 17 fewer than last week. The number of rigs drilling for oil was down 10 to 205. Of the wells being drilled, 279 were directional, 10 fewer than the previous week; and 83 were horizontal, up one.

Louisiana led this week's decline, down 10 rigs to 201. There were 450 rotary rigs working in Texas, seven fewer than the previous week. Wyoming's rig count was down four to 60, while Oklahoma had 122 rigs making hole, down three. New Mexico and California were down one rig each to 64 and 36 respectively.

Baker Hughes reported 316 rotary rigs working in Canada this week, up 12 from the previous week but down from 356 a year ago.

Utilization of mobile offshore rigs in European waters was unchanged at 95.1% for the third consecutive week, said officials at ODS-Petrodata. But the decline in the Gulf of Mexico pushed down worldwide utilization nearly a full point to 81.9%, with 535 mobile offshore rigs under contract out of a total fleet of 653.

Baker Hughes also reported Friday that 766 rotary rigs were working in international markets during September, up 10 from August and up 52 from a year ago.

The company also counted 1,246 workover rigs active in the US during some part of September. That was down from 1,303 during August but up from 1,034 a year ago, officials said.

The number of workover rigs in Canada totaled 345, down from 355 in August but up marginally from 344 a year ago.

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