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API: Drop in First Quarter Gas Drilling Worst in Decade

First quarter domestic oil and natural gas drilling activity dropped to levels not seen since 2004, marking the end of six consecutive years of first quarter growth, the American Petroleum Institute (API) said in a report released last Wednesday.

The API, which represents major producers, reported that an estimated 11,071 oil wells, gas wells and dry holes were completed in the first quarter of the year, down 22% from the year-ago period and 35% below the fourth quarter of 2008.

Natural gas continued to be the primary target for domestic drilling during the first quarter, with an estimated 5,735 gas wells completed. But this was 23% lower than the first quarter in 2008, and represented the most severe quarterly decline for natural gas plays in this decade, the producer group said.

The resurgence in oil well completion activity that began earlier in the decade subsided in the first quarter, with total estimated oil well completions falling 23% from the same quarter a year ago to 4,060 wells, according to API. Overall oil well completions' share of total drilling activity in the first quarter was 36%, down from 40% in the year-ago period.

"The lower U.S. drilling activity indicates that the exploration and production sector is not immune to the current economic downturn, and that they, like most industries, are facing tough business choices," said Hazem Arafa, director of API's statistics department.

The estimated number of new exploratory wells -- drilling for the purpose of discovering new reserves in unproven areas -- fell 11% from the first quarter of 2008, while the estimated number of deep wells (15,000 feet or deeper) and shallow wells slipped 13% and 36%, respectively, from last year's first quarter, he said.

API also reported that the total estimated footage drilled in the first quarter was 64.5 million feet, down 30% from the first quarter of 2008. Estimated development oil well footage drilled fell 22% from the first quarter of last year, while estimated gas well footage drilled plunged 42%, it said.

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