Alan Petzet
Chief Editor-Exploration
Drilling should maintain its recent upward trajectory in 2011 in the US and Canada.
Drilling in oil-prone areas and gas fields with liquids components will continue to lead the way as horizontal drilling captures a growing share of the market.
After a weak first quarter, drilling rebounded nicely with strong gains in several US states and districts, far more than offsetting the decline in offshore drilling since the April 20, 2010, Macondo incident in the Gulf of Mexico.
An example of the see-saw nature of US drilling the past few years is in Oklahoma, which issued 6,220 drilling permits in 2008 and fell to 2,500 in 2009 before a strong rebound in 2010. Operators don't appear to have finished holding leases in the major shale gas plays as drilling persists there despite low gas prices. Here are highlights of OGJ's early year drilling forecast for 2011:
- Operators will drill 44,714 wells in the US, up from an estimated 43,038 wells in 2010.
- All operators will drill 2,159 exploratory wells of all types, up from an estimated 2,063 last year.
- The Baker Hughes Inc. count of active US rotary rigs will average 1,620 rigs/week this year, up from 1,515 in 2010 and 1,087 in 2009.
- Operators will drill 11,360 wells in western Canada, up from an estimated 11,020 wells in 2010.
Gulf of Mexico
The Gulf of Mexico is one of the few areas of the US where drilling fell in 2010. With the deepwater moratorium that followed Macondo in effect, the Bureau of Ocean Energy Management, Regulations, and Enforcement as of Nov. 22 had approved 16 new shallow-water drilling permit applications and 48 revised applications for permits for existing wells submitted since June 8 (OGJ Online, Nov. 29, 2010).
What's more, new emphasis from the bureau may become a drag on Gulf of Mexico exploration and development budgets. The agency is pushing operators to plug and abandon nonproducing wells and decommission idle platforms (OGJ Online, Dec. 6, 2010).
That demand on capital kicks in just as operators were reallocating capital from gulf drilling programs to onshore unconventional plays in the US.
US onshore
Rebounded oil prices and persistently low gas prices resulted in a large but incomplete shift of drilling to plays that involve oil and natural gas liquids in the US.
The rig count began 2010 at 1,189 and ended the year at 1,687, 953 of which were considered to be drilling for gas.
Texas averaged 647 rigs/week in 2010, up from 430 in 2009, as the Eagle Ford, Haynesville, Fort Worth Barnett, and several Permian basin plays dominated activity.
The rig count in Texas Dist. 8, heart of the Permian and Delaware basins, averaged 148 rigs in 2010 and had risen by the end of the year to 182, eclipsing Louisiana's yearend count and higher than the number of rigs running in North Dakota, where the Bakken oil play dominates.
Upward reserve revisions and spirited drilling the last 3 years led Texas to surpass North Dakota as contributors to a 9% increase in US crude oil and condensate reserves in 2009. Shale plays drove US gas reserves to the highest since 1971 (OGJ Online, Dec. 1, 2010).
OGJ expects further swelling of rig counts in 2011 in Texas Dists. 1, 2, and 4 from the Eagle Ford play and Dist. 8 from the numerous Permian basin plays.
New Mexico's yearend rig count was above its 2010 average of 61, which was nearly 50% higher than the 2009 average, owing to the same Permian basin plays.
North Dakota averaged 110 rigs in 2010 versus 49 in 2009 and ended the year at 141, with no sign of a slackening in Bakken drilling in 2011.
Pennsylvania averaged 82 rigs/week in 2010, more than double the 2009 count, fueled by drilling to the Marcellus and other Devonian shales. The count topped 100 in November 2010.
Giant Wattenberg field, the Piceance basin, and the emerging Niobrara shale oil play are the main drilling drivers in Colorado.
Utah drilling in 2010 included 375 wells in Monument Butte oil field, 200 wells in Greater Natural Buttes gas-liquids field, 25 wells in the Blacktail Ridge area, and 20 at West Tavaputs, all in the Uinta basin.
Alabama operators permitted more than 250 wells in 2010, including horizontal coalbed methane wells in Oak Grove and Brookwood Coal Degasification fields.
Canada's outlook
The shift towards liquids drilling projects has also occurred in Canada, noted the Canadian Association of Oilwell Drilling Contractors, which expects the trend to continue in 2011.
No real change is expected in the size of the Canadian fleet, although a number of rigs will be replaced with more sophisticated equipment, the association said. Horizontal drilling is also on the rise in Canada. The group, in a forecast released in October 2010, predicted an increase of less than 2% in the number of wells to be drilled in Canada in 2011.
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