GAIN EXPECTED IN 1990 U.S. WELL COMPLETIONS

G. Alan Petzet
Exploration Editor

U.S. well completions in 1990 will reach their highest level since 1987 unless balky crude prices or some unseen factor undermine second half spending.

Operators are expected to realize $70.566 billion in wellhead revenues this year, down 4.1% from the 1989 estimate. That's based on, among other things, crude oil prices averaging $15/bbl, gas prices averaging $1.70/Mcf, and production averaging 7.25 million b/d of crude and condensate and 18.16 tcf/year of gas. With less than half the year remaining, here is Oil & Gas Journal's updated look at 1990 for the U.S.:

The rotary rig count will average 1,000 active rigs, up from last year's average of 869.
Operators will drill about 34,320 oil wells, gas wells, and dry holes vs. the 31,700 wells forecast in January.
Exploratory drilling will decline to an estimated 5,964 wildcats.
Total footage drilled will be 157.87 million ft of hole; average well depth is expected to be about 4,600 ft.
Thirteen major operators now plan to drill 3,136 U.S. wells in 1990, compared with 2,452 in the first half.

Meanwhile, drilling in western Canada will likely see 6,283 wells completed in 1990. This compares with 5,620 wells predicted last winter.

BEHIND THE INCREASE

OGJ's forecast 34,320 wells is 8.3% more than its estimate for 1990 in January and 10.8% more than the 30,981 wells OGJ estimates were drilled in 1989 (OGJ, Jan. 29, p. 66). Several assumptions were used in constructing the forecast.

Drilling costs are expected to rise slightly as the number of wells drilled increases.

Average well depth is expected to increase as the percentage of gas wells to total wells rises, and each rig will drill fewer wells per year because of the greater depths. The forecast is also based on the active rig count reaching 1,150 by yearend.

OGJ's estimated average rig count of 1,000 tracks closely with Baker Hughes Inc.'s most recent prognosis.

Baker Hughes expects the active rig count to average 1,005 in 1990. It estimates that 31,094 wells will be drilled for a combined 149.8 million ft of hole.

WHERE IT'S HAPPENING

The largest concentrations of U.S. wells being drilled this year are for heavy oil in California; coalbed methane, Devonian shale, and other tax credit supported gas; and oil and gas in the Gulf of Mexico (Table 1).

About 1,640 land wells are planned in California, a majority of which will be in steamfloods.

Coalbed methane drillers are expanding operations in the San Juan basin of New Mexico and Colorado and the Black Warrior basin of Alabama.

Estimated 1990 well counts are 898 in western New Mexico, 1,100 in Alabama, and 1,310 in Colorado.

Colorado also hosts growing coalbed methane drilling in the Piceance, Raton, and Sand Wash basins and an active Pennsylvanian Morrow oil play in Cheyenne County and adjacent counties.

Increases in the 1990 well count due to coalbed/Devonian/tight sands drilling are also evident in Kansas, Michigan, Ohio, Pennsylvania, Utah, West Virginia, and Wyoming.

Gulf of Mexico operators drilled an estimated 517 wells off Louisiana and Texas in first half 1990 and are expected to drill 1,031 wells off the two states during the full year.

Minerals Management Service figures show operators drilled 463 wildcats and 477 development wells in the entire gulf during July 16, 1989-May 1, 1990 (see table, OGJ, July 2, p. 20).

OTHER HOT SPOTS

Other drilling stories find their impetus in technology as well as geology.

Horizontal drilling is still growing in the Texas Austin chalk and North Dakota Williston basin and is being used increasingly in other states.

OGJ estimates operators will drill 1,001 wells this year in Texas Dist. 1, the heart of Austin chalk country, and permits for horizontal drilling to Austin and Saratoga chalks are popping up in Texas Dist. 3 and North Louisiana.

The forecast is for drilling of 227 wells in North Dakota, more than one third of them horizontal holes to Mississippian Bakken shale (OGJ, Feb. 26, p. 53).

Drilling is far above the 1989 level in Texas Dist. 7-C, partly due to multiwell programs in Ozona and Sawyer fields and the Spraberry Trend.

West Texas infill drilling continues strong, with 1,529 wells to be drilled in Dist. 8 and 849 in Dist. 8-A this year.

Arkoma basin gas exploration and infill work are boosting drilling. OGJ forecasts 3,676 wells will be drilled in Oklahoma and 479 in Arkansas.

SURVEY OF MAJORS

Responses from major oil companies to an OGJ survey collectively show that the large companies plan decisively more drilling in the second half than in the first half.

Individual company data are confidential but show that several companies drilled a majority of their wells early in the year, perhaps opting for quick cash flow and reserve additions.

States and areas with the largest second half increase compared with first half drilling by the majors are Alabama, California land, Colorado, Kansas, and Louisiana and Texas offshore.

CANADA'S OUTLOOK

Canadian drilling by all operators is expected to increase from the 1989 level, the worst since 1976.

Six major companies responding with Western Canadian figures for the first and second halves indicated a modest collective drilling increase can be expected.

Exploration is surging in British Columbia, but total drilling in the province will not likely reach 10% of drilling in Alberta.

In Alberta, May was the first month in 1990 in which more drilling permits were issued than in the same month in 1989.

Drilling in Saskatchewan, extremely light by the majors in the first half, is expected to pick up substantially in the second half.