G. Alan Petzet
Exploration Editor
Steady oil prices raise hopes for a second half recovery from record low drilling levels in the U.S. earlier in the year.
Natural gas prices firmed this spring after a dismal low in February and were strong in July. Gas drilling is picking up in anticipation of expiration at yearend of federal tax credits for production from low permeability reservoirs.
Oil & Gas Journal reckons wellhead revenues will total $77.8 billion for the year, 5% more than in 1991. But operators may reinvest only 10.5% of that, down from an estimated 13.5% in 1991.
Here is OGJ's updated look at 1992 U.S. drilling with less than half the year remaining:
- Operators will drill 23,630 oil wells, gas wells, and dry holes, down from an estimated 28,778 drilled in 1991.
- Exploratory drilling will drop to 4,896 wildcats.
- The rotary rig count will average 695, down 19% from the 1991 average.
- Total footage drilled will exceed 152 million ft of hole, and well depth will average 4,950 ft.
BEHIND THE STATISTICS
OGJ calculations indicate drilling costs remain low in the U.S.
Estimates for 1992 are for average costs of $340,000/well, down from about $349,000 in 1991, and $68.69/ft of hole drilled, down from $70.54/ft in 1991.
Nevertheless, there is an undeniable trend toward non-U.S. exploration/development by U.S. companies. One survey found that investment in non-U.S. projects in 1991 accounted for 60% of combined E&D spending by 30 of the largest U.S. oil and gas companies (OGJ, June 15, p. 19).
OGJ estimated drilling based on average prices at the wellhead of $17.40/bbl of oil, up from $16.50[bbl in 1991, and $1.70/Mcf for gas, up from $1.59/Mcf last year.
U.S. production is expected to average 7.245 million b/d of oil and condensate, down slightly from 1991, and gas production is expected to total 18.71 tcf for the year, up marginally.
Total wellhead revenues are estimated at $77.8 billion, up about 5% on the year.
WHERE IT'S HAPPENING
Drilling is not the top priority for many companies as many move to assimilate properties and take advantage of opportunities left by companies turning their attention overseas.
OGJ looks for operators to drill 6,963 wells this year in Texas, compared with an estimated 3,205 first half completions.
Oklahoma activity has relaxed. OGJ expects 3,229 wells to be drilled in the state this year, only slightly more than 3,003 in Kansas.
The Louisiana estimate is 940 wells for the year, but a few more horizontal drilling successes in North Louisiana in Cretaceous Austin chalk or other formations could stimulate activity there.
Several basins and large fields in Colorado are experiencing heavy drilling, and OGJ sees 862 wells being drilled in the state in 1992.
Large multiwell programs are under way in Spindle and Wattenberg fields. Colorado drillers are also busy with coalbed methane and tight sands programs on the western slope of the Rockies, and the Pennsylvanian Morrow sand oil play along the Las Animas arch is still sparking exploration and discoveries.
Utah is hosting an oil play spurred by horizontal drilling successes in the Paradox basin and tight sands gas drilling in the Uinta basin. Coalbed methane discoveries there will also cause drilling to expand.
A measured resurgence in coalbed methane drilling is occurring as expiration approaches for the federal unconventional fuels tax credit.
Congress seems likely to extend the credit beyond the end of the year.
SURVEY OF MAJORS
Major oil companies responding to an OGJ survey generally indicated they had drilled about half of their planned 1992 wells by midyear, although one company was expecting a significant increase in the number of wells drilled in the second half compared with the first half.
The largest single concentration of drilling by the majors during the year will be in the California heavy oil fields. There they plan a combined 844 wells this year, having drilled 479 during the first half.
Texas is next with 646 wells in all districts, including 174 and 160 in West Texas Dists. 8 and 8A oil areas, respectively, and 134 in far South Texas Gulf Coast Dist. 4 gas plays.
The majors indicated they collectively will have drilled 45 wildcats in Louisiana this year, the majority offshore, and 45 wildcats in Upper Texas Coast Dist. 3.
CANADIAN OUTLOOK
OGJ also looks for Canadian oil and gas drilling to pick up in the second half.
The forecast is for modestly more drilling than is estimated to have occurred during the first half.
OGJ estimates that operators will end the year having drilled 4,243 wells in western Canada, compared with approximately 1,916 drilled during the first half. These are the area's lowest figures in many years.
Some 3,530 of the wells will be drilled in Alberta, where an estimated 1,625 were drilled during the first half.
Several wells have been drilled offshore this year to develop Panuke oil field off Nova Scotia, and small numbers of additional wells will be drilled during the next 2 years to develop Cohasset and Balmoral oil fields in the same area.
The Canadian Association of Oilwell Drilling Contractors has estimated that operators will drill 4,100 wells in Canada this year and that the active rig count will average 99.
Caodc originally forecast 4,900 wells and 125 rigs for the year and later raised that to 5,300 wells and 134 rigs.
Only one in seven of about 703 available rigs is running in early summer in western Canada, association figures show (OGJ, July 6, p. 32).
The Rig Locator service of Nickle's Daily Oil Bulletin, Calgary, tallied only 186 rigs or 34% of Canada's rig fleet active in first quarter 1992, the busiest part of the year. During spring breakup in late March only 58 rigs were working.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
