API reports 24% drop in US wells completed in 1Q

US oil and gas completions dropped in the first quarter, ending 6 months of growth, the American Petroleum Institute said on Apr. 23.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 26 -- US oil and gas completions dropped in the first quarter, ending 6 months of growth, the American Petroleum Institute said on Apr. 23. The estimated 7,663 oil and gas wells and dry holes that were drilled was 24% lower than 2009’s first 3 months, API said in its latest quarterly report.

“This drop in drilling activity was somewhat unexpected. Looking at the rig activity, we expected first-quarter completions to at least maintain their fourth-quarter 2009 level,” said Hazem Arafa, director of API’s statistics department.

“Upon closer inspection, we noticed that a considerable uptick in permits and rig activity occurred closer to the end of the first quarter. We therefore expect this increased activity to result in an uptick in completions in the second quarter,” Arafa noted.

For 2010’s first quarter, the estimated number of exploratory oil and gas wells fell 16% from the comparable 2009 period to 495 wells, while the estimated number of development wells dropped 25% to 6,375, according to API.

Continuing another trend which started in 2009’s second quarter, there were more oil wells completed (3,654) than gas (3,216) wells, it said. While the estimated number of first-quarter gas well completions fell 36% year-to-year, the estimated number of first-quarter oil well completions dipped just 9%, the report found.

This trend was particularly apparent in the exploratory well completion rate, where first-quarter oil well completions totaled 240 in both years’ first quarters, while gas well completions slipped 27% to 255 in 2010’s first 3 months from 349 for the same quarter of 2009, API said.

It also reported that total estimated footage drilled during the first quarter was 49.93 million ft, 22% lower than a year earlier.

Frederick Lawrence, vice-president of economics and international affairs at the Independent Petroleum Association of America, said that the patterns reflected what he heard from producers making presentations at IPAA’s Oil & Gas Investment Symposium Apr. 12-14 in New York. “More and more companies are getting more involved with liquids plays to complement their natural gas,” he told OGJ.

Lawrence said Baker Hughes Inc.’s US rig activity surveys show where the most growth is occurring: “For oil, it’s the Eagleford, Granite Wash, and Sprayberry trends in Texas, and the Bakken shale in North Dakota. There’s also growth on the gas side in Louisiana with the Haynesville shale and in Pennsylvania with the Marcellus shale. Overall, we’re seeing a greater focus on more economic plays.”

Contact Nick Snow at nicks@pennwell.com.

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