US, Canada drilling to post increases in 2004

July 5, 2004
Drilling in the US and Canada is on course for gains in 2004.

Drilling in the US and Canada is on course for gains in 2004.

Continued high oil and gas prices have buoyed the number of working rigs and caused some operators to pad early-year capital spending budgets.

The number of rigs active in the US on average was 18.5% larger in the first 5 months of 2004 than in the same period of 2003. Texas District 4, a 14-county area between Corpus Christi and the Rio Grande, was the only Texas area besides state waters to show a year-to-year decline in the period.

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In Canada, the Petroleum Services Association of Canada boosted its 2004 well forecast to 21,660 wells at the end of April.

Baker Hughes Inc. reported that the average number of active rigs in the world excluding the US and Canada was almost 8% higher at 812 rigs/month in the first 5 months of 2004.

Here are highlights of OGJ's midyear drilling forecast for 2004:

Operators will drill 36,321 wells in the US this year, 4.7% more than OGJ's estimate early this year of 2003 drilling (OGJ, Jan. 26, 2004, p. 46).

All operators will drill 3,648 exploratory wells of all types, up slightly from the 2003 estimate.

The count of surveyed rotary rigs compiled by Baker Hughes will average 1,140/week this year vs. 1,030/week in 2003.

Operators will drill nearly 21,000 wells in western Canada, up from an estimated 2003 total of more than 20,000.

US situation

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The US offshore rig count fell to 96 rigs/week in the first 5 months of 2004 from 109 in the same period of 2003, with declines apparent off Texas, Louisiana, and California.

Powder River basin coalbed methane remains the largest single drilling play in the US. Some 56 rigs were drilling CBM wells in the northeastern Wyoming part of the basin in late June by count of the Wyoming oil and gas supervisor. This figure is the highest since July 2002 but still far below the 130 rigs that were working in July 2001.

The supervisor estimates that 2,500 CBM wells will be drilled in Wyoming in 2004, which would be 18% more than in 2003. The peak was 4,502 wells in 2000. Operators have drilled 18,900 CBM wells in the basin, or 37% of the 51,400 wells envisioned in the Powder River basin environmental impact statement that was approved on Apr. 30, 2003.

While the Barnett shale play permeates greater portions of the Fort Worth basin as Texas' largest gas field, Jurassic gas formations have become hot items in North Louisiana.

Outlook in Canada

Baker Hughes figures show an average of 372 active rigs in Canada in January through May 2004, a slight increase from the same 2003 period.

Bad news has dominated the Atlantic offshore scene as of late. A number of important exploratory wells proved unsuccessful. Companies have continued acquiring license blocks, but Nova Scotia postponed its June call for bids for too few nominations.

The Canada-Newfoundland Offshore Petroleum Board cut estimated ultimate recovery at Terra Nova field 13% to 354 million bbl. Cumulative production is 87 million bbl.

The board slashed the Terra Nova gas estimate 83% to 44.9 bcf and the natural gas liquids estimate 77% to 3.2 million bbl, although neither is produced at present.

Coalbed methane drilling in Canada appeared to make up only about 2% of total drilling, but the year-to-year pace was definitely increasing.

Manitoba improved and extended its drilling incentive program until Jan. 1, 2009, and numerous operators have benefited from incentives in British Columbia.

Rest of world

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Gains in Venezuela and Mexico were the only major year-to-year changes in the international rig count that excludes the US and Canada.

The Baker Hughes figures showed Latin America up almost 24% to 280 rigs in the first 5 months of 2004.

Mexico gained 34% to 110 rigs/ month, and Venezuela drilling was up 85% to 52 rigs/month.

Argentina bounced back almost 10% to 67 rigs/ month.

The Middle East and Asia-Pacific showed marginal gains while Africa and Europe showed minimal losses.

Among individual countries, Kuwait doubled to 8 rigs/month, Pakistan was down 33% to 10 rigs/month, and India gained 10% to 65 rigs/month.

Baker Hughes does not report rig activity in Russia or onshore China.