G. Alan Petzet
Exploration EditorRobert J. Beck
Associate Managing Editor-Economics
The low level of U.S. drilling evident in 1995 is likely to continue into 1996.
Anticipated increases in the average prices of crude oil and natural gas will sustain only about a 2% increase in the number of wells drilled year to year in the U.S.
A second year of decline can be expected in Canada from 1993's historic high, but total drilling will remain above the average of well counts for the past 10 years.
Here are the main points of OGJ's early year drilling forecast for 1996:
- Operators will drill 21,800 wells, compared with the 21,300 OGJ estimates they drilled during 1995.
- The active rotary rig count will average 750, up 14% from 1995.
- Operators will drill 3,300 exploratory wells of all types, up from 3,119 last year.
- A surveyed group of major operators will drill 2,551 wells during the year, down from the 2,920 wells the same group operated in 1995. The 1996 figure includes 245 exploratory wells of all types, up from 219 last year.
Meanwhile, drilling in western Canada will total 9,375 wells, down 12% from 1995 but still a healthy number historically.
U.S. outlook
OGJ estimates that drilling and completion spending will total $10.1 billion in the U.S. this year, up from an estimated $9.6 billion spent in 1995.
This is based on an estimated $70.2 billion in wellhead revenues to operators, up from $68.4 billion last year. This amount would be generated by production of 6.4 million b/d of crude oil and lease condensate at an average price of $15/bbl and 20.1 tcf of gas at an average price of $1.75/Mcf.
These prices compare with an estimated $14.66/bbl and $1.68/Mcf last year.
Operators, at this spending level, should drill about 2.3% more wells this year than in 1995. Footage drilled is likely to increase 3% to 127.5 million ft of hole.
The economic figures also result in a likely average depth of 5,850 ft and drilling-completion costs of $464,000/well and $79.31/ft in the U.S., both slight increases from 1995.
U.S. activity
The number of wells being drilled year to year belies the existence of a surprising number of active exploratory plays in the U.S.
Operators chalked up numerous exploratory successes last year in a salt dome-related play for oil in Jurassic and Cretaceous zones in the Southeast U.S., mainly in Mississippi. OGJ estimates operators will drill as many as 190 wells in the state this year, up from 165 in 1995.
Drilling is taking a breather in North Dakota's hot Mississippian Lodgepole mound play but may pick up again later in the year after operators digest expansive 3D seismic data acquired during 1995.
Horizontal drilling in several formations is likely to sustain Williston basin activity in North Dakota, and Ordovician Red River horizontal action should provide a rare boost in South Dakota.
Elsewhere in the western U.S., coalbed methane drilling will boost Utah completions and claim a good share of Colorado drilling. OGJ predicts 32 wells will be drilled in Nevada, most of them exploratory.
Midcontinent hot spots include an active horizontal drilling play for oil in Mississippian Sycamore in southern Oklahoma and a vertical-directional play for shallow and intermediate depth gas in the Buffalo Mountain area of far southern Latimer County along the Arkoma-Ouachita frontal zone.
Coalbed methane and other unconventional gas plays will continue to buoy drilling in Michigan and most Appalachian states.
The majors' plans
Major oil company responses to OGJ's biannual survey indicated that as of mid-December 1995 these companies planned to drill about 2,551 U.S. wells in 1996.
The Gulf of Mexico is to be the site of 318 wells by the responding majors, including 75 exploratory tests, up from 261 total wells and only 46 exploratory completions last year.
The majors also planned to hike overall land drilling this year in California, Colorado, and Mississippi.
They planned 587 total wells in Texas, down 19% from 1995, and a sharp percentage cut in drilling off California.
Canadian outlook
A second year of decline is forecast in overall drilling in western Canada.
OGJ's forecast of 9,375 wells remains above the region's average of 7,700 wells/year the past 10 years.
Canada's rig count averaged about 228 rigs during 1995, down from 259 in 1994 as measured by Baker Hughes. The Canadian Association of Oilwell Drilling Contractors said fleet utilization was 62% in 1995, compared with 77% in 1994.
Major companies responding to OGJ's survey plan to drill 791 wells this year in Alberta, down from 885 in 1995.
Horizontal drilling's growth continues in western Canada, but the rate has diminished.
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
