YEAR TO YEAR DRILLING PACE LOOKS STEADY IN U.S.

Jan. 26, 1993
G. Alan Petzet Exploration Editor Robert J. Beck Economics Editor Operators in the U.S. are expected to drill approximately the same number of wells this year as they did during 1992. Total drilling for 1992 appears not to have fallen to the abysmal levels predicted, in large part due to a yearend surge as operators pulled out the stops to take advantage of expiring federal tax credits. It is difficult to tell the two years apart in the statistics for many states from Oil and Gas Journal's
G. Alan PetzetExploration Editor

Robert J. BeckEconomics Editor

Operators in the U.S. are expected to drill approximately the same number of wells this year as they did during 1992.

Total drilling for 1992 appears not to have fallen to the abysmal levels predicted, in large part due to a yearend surge as operators pulled out the stops to take advantage of expiring federal tax credits.

It is difficult to tell the two years apart in the statistics for many states from Oil and Gas Journal's view.

The Journal expects overall wellhead revenues to increase in 1993 as higher gas wellhead revenues more than offset a decline in crude oil wellhead revenues. These changes will result from higher natural gas prices and production and lower crude oil prices and production expected this year.

Major oil companies surveyed by the journal indicated that as a group they will drill marginally more wells this year than in 1992. Year to year more of the responding major companies expected increases than declines in the U.S.

Here are highlights of Oil & Gas Journal's early year drilling forecast for 1993:

  • Operators will drill 25,600 wells, compared with an estimated 25,620 wells drilled in 1992.
  • The active rotary rig count will average 730, compared with 717 last year.
  • Operators will drill about 4,577 wildcats, up from an estimated 4,386 in 1992.
  • The surveyed group of major operators will drill 2,857 wells, up from 2,810 last year. But they plan significantly more exploratory drilling this year.
  • Drilling in western Canada will total 4,944 wells, compared with 4,654 in 1992.

STEADY DRILLING

Many forecast statistics for 1993 are changed little from estimated 1992 performance.

The 25,600 wells expected to be drilled in 1993 should be more evenly spread throughout the year, compared with 1992 when a late fourth quarter surge boosted yearend totals.

Nevertheless, first quarter 1993 may be weak for drilling as operators turn efforts toward completing wells drilled to qualify for federal tax credits for gas from tight formations and coalbeds.

Average well depth is likely to be about 5,004 ft in both years. Even with a small increase in the rig count, the number of wells drilled per active rig will fall slightly because of longer rig moves associated with the decline in tax credit drilling.

The Journal estimates that 1993 drilling will require an average of 730 rigs/week, up less than 2% from the 1992 average.

Average cost per well in 1993 is put at $362,000, up less than 5% from 1992. That yields an average cost of $72.34/ft for this year.

MAJORS' PLANS

Major oil companies that responded to the survey plan a 33% increase in wildcat and other exploratory drilling to 360 wells in 1993.

The same group of majors expects a meager 1.7% increase in total drilling in the U.S. to 2,857 wells.

Good exploratory programs are anticipated in Alaska, the Gulf of Mexico off Louisiana, Oklahoma, and South and Lower Gulf Coast Texas.

The majors plan to drill more wells this year in the California heavy oil fields than they did in 1992.

Hugoton gas field infill drilling will decline in southwestern Kansas, but a good increase in total wells is anticipated in Southeast New Mexico.

The group of majors plans to drill fewer wells in the two West Texas Dists. 8 and 8A but will drill 125 total wells in Oklahoma, up from only 72 in 1992.

Major companies also plan to drill exploratory wells this year in Florida, Illinois, Kentucky, Utah, and Washington.

DRILLING REDISTRIBUTION

The expected similarity in total drilling for 1993 vs. 1992 results from an anticipated pickup in drilling in more traditional plays offsetting coalbed and tight formation gas drilling.

Declines in total drilling are expected in Alabama and northwestern New Mexico as Black Warrior and San Juan basin coalbed methane drilling relaxes.

Oil exploration will partly offset the Alabama decline.

Colorado coalbed methane drilling is also predicted to fall, but it is likely to be more than offset by busy programs in Wattenberg and adjacent areas and an oil play along the Las Animas arch.

West Virginia will lose ground to reduced tax credit drilling, while a respectable coalbed methane development program can be expected to continue in Virginia.

Michigan will have a strong year even though Devonian Antrim shale drilling is expected to decline from 1992's pace, which set a drilling record in the state.

CANADIAN OUTLOOK

Drilling incentives are expected to help boost drilling in western Canada this year.

The Journal looks for all operators to drill 3,900 wells in Alberta, up 6.8% from estimated 1992 drilling.

Increased drilling is also forecast in Saskatchewan, British Columbia, and Manitoba.

Several operators have reported encouragement from horizontal drilling and reentry programs in oil fields in Alberta and Saskatchewan.

A Triassic gas play is still going strong in northeastern British Columbia.

Copyright 1993 Oil & Gas Journal. All Rights Reserved.