By OGJ editors
HOUSTON, May 5 -- US drilling activity rebounded with 1,001 rotary rigs working last week, 15 more than the previous week and up from 776 during the same period a year ago, officials at Baker Hughes Inc. reported Friday.
It marked the first time the US count has exceeded 1,000 active rigs since early November 2001.
Land operations accounted for most of that increase, up 14 units with 875 rotary rigs working last week. Activity in inland waters declined by 1 unit with 15 rigs still active. Offshore drilling increased by 2 rigs to 106 in the US sector of the Gulf of Mexico and 111 for the US as a whole.
Canada's rig count increased by 12 to 110 last week, up from 88 a year ago.
Among US rigs, the number drilling for natural gas increased by 21 to 825. Those drilling for oil were down 5 to 174. Two were unclassified. Directional drilling increased by 13 to 264 rigs. Horizontal drilling decreased by 2 to 65.
Texas led the rebound, up 16 rotary rigs to 455 units working last week. Rig counts in Louisiana and Wyoming increased by 2 each to 155 and 39, respectively. California added 1 rig for a total of 18. New Mexico's rig count, which had been on the rise in recent weeks, declined by 5 to 70 last week. Oklahoma was down 3 rigs to 120 working. Alaska lost 2 to 9.
ODS-Petrodata, Houston, reported the utilization rate among mobile offshore rigs in the US sector of the Gulf of Mexico remained unchanged at 67.6% last week with 123 units under contract out of the 182 available for work.
"Despite firm natural gas prices above $5/Mcf, drilling activity in the Gulf of Mexico has remained surprisingly soft during the past few months," officials at Jefferies & Co. Inc. reported.
They noted that several rigs have mobilized to international markets "for attractive term-contracts" and predicted "additional rig mobilizations to Trinidad and Mexico" in response to Petroleos Mexicanos SA's stepped drilling program to develop natural gas for that market. The expected shift of rigs to Mexican and Caribbean waters should balance the supply and demand for US mobile offshore rigs in the second half of this year, Jefferies analysts said.
"In fact, assuming 10 jack ups leave for Mexico and Trinidad during the next 12 months and 15 rigs remain cold stacked (in US waters), the effective marketed utilization would increase to 84% without an increase in demand," they said. "If jack up demand increased by seven rigs, utilization would exceed 90% and would likely put upward pressure on day rates."
Jefferies analysts said in their report, "After several months of firm natural gas prices. . ., we believe that the Gulf of Mexico jack-up market is poised for a recovery, as strong natural gas fundamentals and higher-than-projected cash flow should prompt E&P companies to increase their drilling budgets by the second half of 2003."
The resulting increased demand, coupled with the exodus of rigs, should push up rig day rates in the gulf.
Meanwhile, Jefferies analysts said, "Jack up markets in the North Sea and West Africa will experience some moderate near-term weakness due to several rigs becoming available over a short time frame, as well as political unrest in Nigeria.
On Thursday, the Nigerian navy evacuated some 100 foreign workers from four offshore rigs working for Shell Petroleum Development Co. of Nigeria. News reports said the foreigners were believed to have been held hostage aboard the rigs by about 500 local workers, who also were removed by the Navy.
However, Elija Okugbgo, deputy secretary of the National Union of Petroleum and Natural Gas in Nigeria, claimed it was "an industrial action" by striking workers and not a hostage situation. Apparently workers had gone on strike about 12 days earlier to protest the dismissal of five workers and to push for improvement in working conditions and especially in the crew changeover procedure. About 50 UK and 20 US citizens were among those aboard the four rigs.
The number of mobile offshore rigs under contract in European waters increased by 1 to 86 out of the 100 units available for work in that market, said ODS-Petrodata. That boosted utilization to 86% in those waters. Worldwide, there was a net gain of 2 rigs under contract, boosting the number of employed mobile offshore rigs to 533 out of a total fleet of 659 for 80.9% utilization.
