Drilling in the US in 2000 is only slowly bouncing back from a low level in 1999.
Meanwhile, Canada is likely to enjoy a robust year with increase from 1999 in both gas and oil drilling.
For most of the rest of the world, first half 2000 drilling failed to keep pace with the anemic levels of first half 1999 when measured by the number of rigs at work. The only meaningful gains came in Argentina and Colombia.
Wellhead revenues from the sale of US oil and gas production should come back to producers in a big way this year after two meager years. However, OGJ estimates that many companies have adopted a cautious schedule for reinvestment.
After spending $18-20 billion/year on US well drilling and completion spending in 1997-98, operators shelled out less than $15 billion in 1999. OGJ reckons this spending could rebound to $22.8 billion this year, which would be the highest level since the early 1980s.
Here are highlights of OGJ's midyear drilling forecast for 2000:
- Operators will drill 27,840 wells in the US this year, far above an estimated 19,940 wells drilled in 1999 (OGJ, Jan. 31, 2000, p. 65).
- All operators will drill 3,883 exploratory wells of all types, a sharp gain from an estimated 2,138 such wells drilled last year.
- The count of surveyed rotary rigs compiled by Baker Hughes Inc. will average 870/week this year versus 623/week in 1999.
- Operators will drill more than 15,000 wells in western Canada, up from an estimated 12,005 drilled there last year.
Investment in the US
Even if overall drilling and completion outlays reach $22.8 billion for the year, the ratio of spending to wellhead revenues will remain modest.
OGJ reckons that that ratio would be just under 20%, the lowest since 1996.
The calculation involves prices at the wellhead averaging $25.20/bbl of oil and $3.10/Mcf of gas and production averaging 5.85 million b/d of crude and condensate and 19.72 tcf of gas.
Other pertinent projections include average penetration of 5,500 ft/well and an overall average completed-well cost of $149.21/ft in the US. This equates to a 9% increase from 1999 in drilling and completion costs.
US drilling
Texas could claim almost 7,000 of the US wells expected to be drilled this year as year-to-year increases are expected in almost every state and area.
Momentum has been slow to build. Baker Hughes reports active rotary rig information for 47 states or districts in the Lower 48 states and Alaska. As of the first week in June, the average rig count for 12 of these 47 areas for 2000 still trailed the count for the same period of 1999.
The laggard areas were Alaska, South Louisiana inland waters, Virginia and West Virginia, Texas Dists. 1 (Southwest) and 7B (West Central), Alabama, Arkansas, Michigan, New York, Ohio, and Oregon.
For sheer numbers of wells, Wyoming's Cretaceous coalbed methane play in the Powder River basin could see more than 4,200 wells drilled this year, OGJ estimates.
Figures compiled by the Wyoming Oil & Gas Conservation Commission show that more than 2,000 wells were reported to have been spudded statewide in first half 2000, for an average of 11 per day. The first-half high was 38 wells spudded in a single day.
Activity in Canada
Operators in western Canada drilled an average 1,200 wells/month in first half 2000 in spite of personnel and equipment constraints.
OGJ's estimate of 15,047 wells on the year implies a busier-than-average year but not record activity.
The number of permits to drill filed exceeded actual drilling substantially, an indication of a possible backlog that could result in an expansion of activity during the second half.
Click here to view Oil and Gas Journal well forecast for 2000
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