DRILLING INCREASES ANTICIPATED IN U.S. AND WESTERN CANADA

G. Alan Petzet Exploration Editor Robert J. Beck Economics Editor Oil and gas drilling in the U.S. will pick up slightly in second half 1993. Meanwhile, drilling in western Canada is up sharply in response to growing U.S. demand for Canadian natural gas. Oil & Gas Journal estimates overall oil and gas revenues at the wellhead in the U.S. at $82.4 billion this year, up 7.8% from revenues in 1992. The U.S. rig count through first half 1993 averaged 684 rigs/week, 4% higher than the average for

July 26, 1993

5 min read

G. Alan Petzet
Exploration Editor

Robert J. Beck
Economics Editor

Oil and gas drilling in the U.S. will pick up slightly in second half 1993.

Meanwhile, drilling in western Canada is up sharply in response to growing U.S. demand for Canadian natural gas.

Oil & Gas Journal estimates overall oil and gas revenues at the wellhead in the U.S. at $82.4 billion this year, up 7.8% from revenues in 1992. The U.S. rig count through first half 1993 averaged 684 rigs/week, 4% higher than the average for first half 1992.

Here are highlights of OGJ's midyear drilling forecast for 1993:

Operators will drill 26,839 wells this year, compared with the 25,600 OGJ estimated in its early year forecast (OGJ, Jan. 25, p. 76).
The active rotary rig count will average 763, 6.7% higher than in 1992.
Operators will drill about 4,267 wildcats, down from the 4,577 that OGJ predicted in January.
The surveyed group of major operators will drill 2,948 wells in the U.S. this year, including 193 exploratory wells.
Drilling in western Canada will total 6,749 wells, compared with 4,654 in 1992 and the 4,944 predicted in January.

DRILLING UPTICK

OGJ estimates that operators will spend $11.698 billion on U.S. drilling this year, up 11.4% from outlays in 1992.

The outlook for total drilling of 26,839 wells is a 7.9% increase from the Journal's completion estimate for 1992.

Operators will drill an estimated 134,200 ft of hole this year, and the average drilling depth will be 5,000 ft.

The estimate shows that the average well will cost $435,879, or 3.3% more than in 1992.

THE MAJORS' PLANS

Major oil company responses to the Journal's biannual survey indicated steady drilling programs in oil and gas areas this year.

Individual companies' survey responses are confidential, but several operators have issued reports of their drilling plans in various areas.

For instance, California heavy oil field development remains strong, with 880 wells planned for the year. This includes Mobil Exploration & Producing U.S. Inc.'s program to drill 429 wells by yearend in California heavy oil fields. Mobil's drilling mainly involves steamflood expansions in Midway-Sunset, South Belridge, Lost Hills, and San Ardo fields.

Amoco Production Co. is drilling 56 wells this year to step up production in Bravo Dome Carbon Dioxide Gas Unit in Northeast New Mexico. The CO2 is for shipment to West Texas for enhanced oil recovery.

Collectively, the majors plan at least 10 exploratory wells per area in West Texas Dist. 8, Wyoming, and the gas prone areas of South and Offshore Louisiana and Texas Gulf Coast Dists. 3 and 4.

OTHER LARGE PROGRAMS

Multiwell programs are under way in several regions of the U.S. Lower 48.

Various operators plan to have drilled more than 1,000 wells this year in Northeast Colorado's sprawling Wattenberg field compared with about 630 last year. Expiration of a federal tax credit at yearend 1992 has not deterred operators from intense development of the field's low permeability Cretaceous gas formations.

Enserch Corp. is drilling 34 infill wells and working over another 40 this year in six East Texas gas fields it has marked for accelerated development. The fields are Opelika, Tri-Cities, Whelan, Willow Springs, Freestone, and North Lansing.

Union Pacific Resources Corp. plans to continue its 25 rig Upper Cretaceous Austin Chalk drilling program in South and East Texas through 1993 and into 1994. The company has been the busiest operator in the U.S. in recent months with 42 rigs working on UPRC-operated wells, about 6% of active U.S. rigs.

CANADIAN ACTION

A drilling spurt in western Canada has led to predictions that as many as 7,000 wells will be drilled there this year.

A royalty reduction that applied to oil development drilling in Alberta and that was to end July 31 was said to be responsible for a near doubling of well completions in western Canada to 2,220 during first quarter 1993 compared with first quarter 1992.

Horizontal drilling is growing in western Canada. One Canadian study estimated that 10,000 horizontal wells will be drilled there in the next 15 years. That prediction implies an average horizontal drilling rate of twice the current level in the western provinces.

As of yearend 1992 some 741 horizontal wells had been completed there with production at a combined 48,000 b/d. Operators completed about 350 horizontal wells in Canada in 1992, a majority of them in Saskatchewan.

Early in the year Manitoba granted a royalty break that exempts the first 62,900 bbl of oil produced from a new horizontal well from provincial royalties or freehold production taxes.

Among companies with programs concentrating on gas, Shell Canada Ltd. said that Northeast British Columbia will provide the focal point for its exploration activities in western Canada for the next 4-5 years. Shell planned to drill three wildcats per year in the Monkman Pass play, where gross reserves are estimated at 6-7 tcf of gas.

Poco Petroleums Ltd. expanded its 1993 drilling program to 100 wells from 70, citing a successful gas exploration program and forecasts of rising wellhead prices.