W. CANADA BOOM TO OUTSHINE SECOND HALF U.S. DRILLING RISE

July 25, 1994
G. Alan Petzet Exploration Editor Robert J. Beck Economics Editor Drilling in the U.S. will pick up slightly during second half 1994, but the first half to second half increase proportionally will not be as large as in Canada. Operators appear likely to drill nearly half as many wells this year in western Canada as they will drill in the U.S.
G. Alan Petzet
Exploration Editor

Robert J. Beck
Economics Editor

Drilling in the U.S. will pick up slightly during second half 1994, but the first half to second half increase proportionally will not be as large as in Canada.

Operators appear likely to drill nearly half as many wells this year in western Canada as they will drill in the U.S.

Oil & Gas journal estimates that drilling and completion spending will total $9.511 billion in the U.S. this year, up about one third of 1% from spending in 1993. This steady investment is forecast despite a 2.3% drop in expected wellhead revenue to $72.53 billion.

The rig count through July 1 averaged 746 rigs/week in 1994, up 9% from 686 rigs/week in first half 1993.

Here are highlights of OGJ's midyear drilling forecast for 1994:

  • Operators will drill 24,705 wells, compared with the 26,840 OGJ estimated in its early year forecast before the slump in crude oil prices (OGJ, Jan. 31, p. 78).

  • The active rotary rig count will average 810 rigs, 7% higher than in 1993.

  • Operators will drill about 3,684 wildcats, down from the 4,170 that OGJ predicted in January.

  • Surveyed group of major operators will drill 3,091 wells in the U.S., including 246 exploratory wells.

  • Drilling in western Canada will total a year record 11,531 wells, dwarfing the 4,654 wells drilled in 1992.

U.S. DRILLING

The 24,705 U.S. wells predicted will include 139.58 million ft of hole for an average depth of 5,650 ft/well. The 1993 average was 5,514 ft.

The outlook for total drilling of 24,705 wells is still below OGJ's most recent estimate of 25,148 wells completed in 1993. This is down from OGJ's yearend estimate of 25,850 wells in 1993.

The estimate shows that the average 1994 well will cost $385,000 or $68.14/ft, compared with $377,000 or $68.37/ft last year.

THE MAJORS' PLANS

Major oil company responses to the Journal's biannual survey indicated these operators will drill more wells in second half 1994, including more exploratory wells, than in first half.

Individual companies' survey responses are confidential, but several have shared their plans in news releases and through OGJ correspondents.

Oil drilling generally was scaled back early in the year as oil prices brought much uneasiness to U.S. drilling budgets. California heavy oil drilling will pick up in the second half but won't be nearly as robust as it would have been if majors had followed through with their initial plans for the year.

Shell Western E&P Inc. is drilling 70-80 wells this year to tap 10-340 gravity oil from diatomite pay in South and North Belridge oil fields in California.

Majors and independents are ramping up activity aimed at subsalt targets in the Gulf of Mexico.

West Texas is another busy area for the majors. Amoco Production Co. has been busy this spring with development/infill programs in Cedar Lake oil field in Gaines County, while Amoco, Unocal Corp., and Shell Western have multiwell programs in Levelland, Slaughter, and/or Wasson fields.

DRILLING PROGRAMS

As usual, the U.S. onshore is alive with drilling programs.

Michigan's Devonian Antrim shale gas play is contributing several hundred wells a year to U.S. drilling totals.

Texas gas production is at record volumes, and numerous multiwell drilling ventures are adding production capacity. The Val Verde basin in West and West Central Texas is particularly active.

Adams Resources Exploration Corp., Houston, set out to drill 70 horizontal wells during 1994-97 for oil in Upper Cretaceous Austin chalk on lease interests it acquired in Giddings and Brookeland fields of central and eastern Texas.

In the Rocky Mountains, Energx Ltd., Riverton, Wyo., planned to drill as many as 28 wells this year on 300,000 acres held by the Assiniboine and Sioux Indian tribes on the Fort Peck reservation in northeastern Montana. And UMC Petroleum Corp., Houston, has a large multiwell gas drilling program under way in Tiger Ridge field of Hill and Blaine counties, Mont.

Colorado is likely to see a sizzling 2,000 wells drilled this year, partly on the strength of coalbed methane drilling on the western slopes of the Rockies and heavy drilling in the Wattenberg area northeast of Denver.

CANADA BOOMING

Operators are so busy in western Canada that they are threatening to break the record of 11,750 wells drilled in 1985.

Scattered reports of rig and manpower shortages have surfaced, as well as reports of delays at drillsites waiting for service crews strapped to keep up with demand.

OGJ estimates drilling of 9,110 wells in Alberta, 1,702 in Saskatchewan, and 650 in British Columbia, all far above 1993 performance.

Gas development is mainly driving Canada's record drilling pace, but oil drilling is also substantially higher than in 1993.

Horizontal drilling has become a smaller percentage of the total number of wells drilled, but the number of horizontal wells is still increasing year to year.

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