API: Industry Spends Twice as Much on Gas Drilling
Following a four-year upswing in spending between 1995 and 1998,
domestic oil and natural gas industry expenditures for drilling in
the U.S. fell 15.2% in 1999, the American Petroleum Institute (API)
reported last week.
Overall, the industry spent an estimated $14.9 billion on
drilling for oil and gas last year, down from $17.6 billion for
1998, according to API's Joint Association Survey on Drilling
The industry exhausted 51% of its total U.S. drilling budget on
looking for natural gas last year, more than double the amount
(24%) it spent on searching for oil, the survey said. Last year
marked the 12th consecutive year that the industry spent more on
drilling for gas than oil, it noted.
The survey further revealed the industry spent $6.7 billion ---
or nearly half of its total U.S. budget --- on drilling and
completing wells in steadily deeper waters. The number of offshore
wells drilled last year and their costs rose 28% and 48%,
respectively, from 1998, it said.
Not surprisingly, the API survey found that most of the drilling
and completion activities in the U.S. offshore were confined almost
entirely to the Gulf of Mexico. It estimated the Gulf accounted for
nearly 98% of all offshore expenditures.
Onshore, gas exploration kept a steady pace in 1999 largely due
to activity concentrated in Central Alabama, North Texas RRC 9,
East Texas RRC 3 and several areas in the Rockies - northern New
Mexico, Montana and Wyoming - where drilling in recent years
remains increasingly focused on natural gas, particularly coalbed
methane work, the survey said.
Production of methane gas from coal seams has become an
important source of pipeline quality gas, the API said. In 1999, it
reported 908 coalbed methane gas wells were completed at a total
drilling cost of $66.1 million.
In addition, horizontal drilling of wells is becoming a more
viable option for field development, it noted. Operators spent $795
million to drill 4.9 million feet of hole for 576 horizontal wells
in 1999, according to the survey.
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