U.S. DRILLING HEADS FOR ABYSMAL YEAR

G. Alan Petzet
Exploration Editor

Robert J. Beck
Economics Editor

Well completions in the U.S. will fall to a modern record low during 1992.

In fact, languishing U.S. oil and gas basins may see fewer wells drilled than in any year since 1945.

A continuing move by U.S. operators to drill more non-U.S. prospects and fewer domestic ones is one factor in the decline.

Another warmer than normal winter has so far held back gas prices from much of a seasonal surge, and expectations are that crude oil might flood the market during 1992 as several countries return to production.

Several major oil companies have scheduled substantially lower budgets for U.S. exploration and production this year.

One respondent to Oil and Gas journal's survey of major oil companies said it based its estimate for onshore drilling for 1992 on its 1991 drilling "due to possible budget cuts in 1992." The company said a more detailed account of expected 1992 onshore drilling was not available when the survey was taken in mid-December.

Here are highlights of Oil & Gas Journal's early year drilling forecast for 1992:

The active rotary rig count will average 810, compared with 860 in 1991.
Operators will drill 24,920 wells, compared with an estimated 27,400 wells drilled in 1991.
They will drill about 4,612 wildcats, compared with nearly 5,000 in 1991.
They will drill more than 121 million ft of hole, and well depth will average 4,845 ft.
A surveyed group of major operators will drift 2,521 wells, down 25.6% from 1991.
Drilling in western Canada will total 5,218 wells in 1992, compared with 5,490 completions in 1991.

DECLINES EXPECTED

Drilling in the U.S. will continue a multiyear decline in 1992.

The forecast 24,920 completions will be the lowest since the 24,482 completions reported to API in 1945.

At an average of 810 units/week, the active rotary rig count will be the lowest since 775 in 1942.

Never are all locations permitted during a year drilled, but the disparity between permits and completions was especially, high in 1990.

OGJ believes the disparity is due to thousands of permitted but undrilled locations primarily in coalbed methane areas.

The number of permits to drill issued in the U.S. far exceeded 40, 000 in 1990, vet only about 29,500 completions are expected ultimately to be reported for that year.

With the coalbed methane drilling boom subsiding as pressures to take advantage of the tax credit ease, permits to drill in 1991 numbered about 33,000, and only an estimated 28,000 wells were completed.

OGJ believes that most of the coalbed methane well locations permitted in 1990 but not drilled during that year were not drilled in 1991. Those locations cannot be expected to be drilled in 1992, either.

Major oil companies that responded to OGJ's survey indicated they will drill 50% fewer heavy oil wells in California this year than in 1991. The California land drilling forecast for all operators is for 1,138 wells, down 40%.

COALBED METHANE DROP

The number of well completions plunged the farthest last year in areas noted for coalbed methane drilling.

The American Petroleum Institute estimated that during 1990 about 759 coalbed methane wells were drilled in New Mexico and Colorado, 843 in Alabama, 35 in Wyoming, and 24 in Kansas.

The Wyoming and Kansas totals are believed to have been higher in 1991 and will rise even more in 1992, although precise completion totals are not predicted here.

Coalbed methane drilling is still increasing in Colorado basins but is diminishing in Northwest New Mexico.

Coalbed methane drilling is increasing in several other states, but not at rates similar to those experienced in the late 1980s in the San Juan and Black Warrior basins.

STEADY AREAS

A few states and areas will experience steady to higher drilling this year.

Southeast New Mexico's multiple plays are expected to result in slightly higher drilling.

Utah is expected to have a good year owing mainly to a hot horizontal oil play, tight sands gas development drilling, and San Juan basin oil exploration.

Steady Arkoma basin development and infill drilling and active exploration plays along the Stateline graben trend will buoy drilling in Arkansas.

Nebraska's west side Paleozoic play is likely to keep drilling from declining there.

Nevada should have a marginally higher year if economics allow companies to test overthrust and other theories formed in several years of non-drilling exploratory studies.

Little decline is forecast in Colorado. Main factors are a multiyear Pennsylvanian Morrow play along the Las Animas arch, tight sands and coalbed methane drilling, and cautious horizontal drilling efforts.

Coalbed methane and conventional gas drilling are likely to result in an increase in Virginia drilling this year.

HORIZONTAL DRILLING

An overall decline can be expected in horizontal drilling in the U.S. in 1992.

Texas issued an estimated 900 horizontal drilling permits during 1991, down about 15% from 1990.

Some 75% or more of U.S. horizontal drilling has occurred in Texas year to year, and Texas is likely to maintain this ratio at least through 1992.

Williston basin horizontal drilling will continue strong, and several plays seem to be developing in Oklahoma.

Horizontal drilling will maintain a strong pace in New Mexico, mostly for oil objectives in fractured formations of the San Juan basin.

Oil plays in Utah and Colorado are expected to result in more horizontal wells in 1992 than 1991 in those states.

Louisiana horizontal drilling probably will grow this year, due partly to more short radius oil activity in shallow northern fields and medium radius oil attempts along trends running east from Texas.