Sam Fletcher
OGJ Senior Writer
HOUSTON, Feb. 7 -- Demand for mobile offshore rigs in the US Gulf of Mexico hit a 45-month low, with four units coming off jobs with no new contracts, officials at ODS-Petrodata, Houston, reported Friday.
However, Baker Hughes Inc. said total US drilling activity improved slightly with 884 rotary rigs working this week. That's 11 more than the previous week and up from 838 during the same period a year ago
The utilization rate among mobile offshore rigs in the gulf dropped to 61.4%, the lowest level since May 1999, with 113 units still contracted out of the 184 available for work.
In European waters, utilization rebounded to 80.2% with 81 mobile offshore rigs under contract, 2 more than the previous week. The rig fleet in those waters increased by 1 unit to 101.
Worldwide, there was no net change, with 520 mobile offshore rigs contracted out of a total fleet of 656, for an utilization rate of 79.3%
The number of US rigs in the actual process of drilling offshore increased by 2 to 108 in the gulf and 112 for the US as a whole, Baker Hughes reported. US land operations added 9 rigs for a total of 754. Drilling operations in US inland waters were unchanged, with 18 units working.
Among the active US rigs, 734 were drilling for natural gas this week, 6 more than the previous week. Oil drilling increased by 4 units to 146. Four rigs were unclassified, 1 more than last week. Directional drilling increased by 1 rig to 237. Horizontal drilling was down 2 to 56.
Oklahoma led this week's increase, up 7 rigs with 108 working. Texas' rig count was up 6 to 388, while Wyoming added 5 for a total of 40. However, Louisiana's rig count was down 5 to 153. New Mexico and California lost 2 rigs each to 56 and 16, respectively. Alaska had 10 rigs working, the same as last week.
There were 548 rotary rigs working in Canada this week, down 4 from the previous week but up from 439 during the same period in 2002.
Analysts at UBS Warburg LLC, New York, said this week that US operators are increasing their spending and drilling plans as a result of increased cash flow from higher commodity prices.
Based on their latest survey of operators at the end of January, UBS Warburg analysts said Thursday, "Drilling plans in North America continued to trend upward as the drilling index rose to 44 from 37 last month. Internationally, the index also rose, reaching 47 this month from 30 last month. The trend with the index in both regions bodes well for increasing rig counts."
Near-month futures prices on the New York Mercantile Exchange currently exceed $33/bbl for oil and are approaching $6/Mcf for natural gas (OGJ Online, Feb. 7, 2002). However, Warburg analysts said respondents to their monthly survey are basing their 2003 budgets on average prices of $22.70/bbl for oil and $3.47/Mcf for gas. "The international oil price in budgets dropped from last month, but that may have to do with the higher number of Latin American responses where crude prices tend to be lower," they said.
With US natural gas storage now well below the 5-year average level and with US and Canadian gas production continuing to decline, analysts said, "It is becoming much more common to hear industry players talking about the sustainability of higher gas prices, which will be the principal driver behind rising North American activity. Since high commodity prices are significantly improving the capacity of oil companies to reinvest in exploration and production, we are really only waiting for customers to increase their propensity to spend.
"If history is any guide, and we believe it is, then the propensity to spend should improve over the coming months," analysts predicted.
Meanwhile, they said, "New budgets appear to be in place, and rising oil company cash flows are starting to impact the decision-making apparatus within the customer base." As a result, they concluded, "Pricing (within the oilfield service industry) should be stable in North America after months of heavy discounting. We believe that if activity tracks to the levels that we expect over the next 3-6 months, price increases are likely. Internationally, pricing should firm."
They added that workover activity is expected to remain at current levels.
Contact Sam Fletcher at [email protected]
