George G. Leckie
Spanstride Ltd.
Surrey, U.K.
Examination of the statistics on drilling and discoveries for the U.S. 1946-88, as published by Murray in the American Association of Petroleum Geologists 1989 yearbook on World Energy Developments, reveals some puzzling trends. The data for the U.S. are the most comprehensive national statistics of this type covering a prolonged period that embraces changes in technology.
The chart above, almost entirely derived from the AAPG statistics, shows:
- The number of new field wildcats (NFW) drilled annually in 1946-88.
- The percentage per year of NFW wells completed as oil and/or gas producers.
- The percentage of NFW wells which, after a period of at least 6 years, were known to have discovered "significant" fields, i.e. fields greater than 1 million bbl of oil or 6 bcf of gas (this plot necessarily stops in 1982, and values for later years may be subject to further increases).
- Average depth of NFW wells drilled per year.
- Crude oil prices 1946-88 expressed in 1988 dollars per bbl-information from BP Statistical Review of World Energy 1989.
The graph shows a rapid increase in the number of NFW wells drilled in 1946-56, probably reflecting the big increase in demand during the build-up of the economy following World War 11. The number of wells increased during a period when the price of oil remained stable. From a peak of 8,742 wells in 1956, the number of wells drilled declined during a period of generally declining oil prices.
Comparison with Ivanhoe's 1986 graphs of U.S. consumption and production shows that the U.S. was largely self-sufficient to this point, thereafter U.S. onshore production in particular leveled off, and imports then began to play an increasing role in the supply of U.S. oil.
The percentage of wells resulting in production remained relatively constant during 1946-67 regardless of the overall number of wells drilled per year and the fact that, on average, the wells were getting deeper.
The introduction of digital seismic technology from 1964 does not appear to have had an immediate effect on success rates-indeed, 1966-70 were some of the least successful of the entire period-however, this did coincide with a leap in the average depth of wells drilled.
With the coming of the two major hikes in oil prices in 1973 and 1977, the number of wells drilled and their average depth increased. Surprisingly, considering that with the increased value of oil it might be supposed that greater numbers of higher risk prospects would have been drilled, the overall success rate increased dramatically!
This perhaps did reflect improvements in technology.
Note, however, that the percentage of "significant" discoveries showed only a marginal initial improvement, and even with future growth it is unlikely that the percentage will increase substantially.
The decline in the price of crude has resulted in a steep decline in the number of NFW wells drilled since the peak in 1981-82. Although it might be supposed that higher risk prospects would have been dropped from companies' prospect inventories, the decline in drilling (56% from its peak) has been accompanied by a 29% drop in the success rate from 19% to 14%.
The decline in success rates at a time of low drilling levels and with continued improvements in exploration technology is surely a worrying trend.
BIBLIOGRAPHY
Ivanhoe, L.F., 1986, Scavenger Oil Production, reserve ratios: OGJ, May 19, 1986, p. 81.
Murray, T.H. Jr., 1989, North American Drilling Activity in 1988: AAPG Bulletin, Vol. 73, pp. 7-35. British Petroleum Co. plc, 1989 BP Statistical Review of World Energy, London, 36 p.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
