While the Energy Information Administration (EIA) is bullish ongas production capacity, at least one analyst group holds a morereserved view. And 1997 year-end production data released last weekby two independents, while up, isn’t enough information to predictfuture production trends.

Enron Oil & Gas (EOG) reported a 1997 North American wellheadgas production increase of 7%, 758 MMcf/d, up from 706 MMcf/dduring 1996. Fourth quarter North American gas production was 766MMcf/d in 1997, up from 738 MMcf/d in Q4 1996. “In the fourthquarter of 1997, we achieved record worldwide production for bothnatural gas and crude oil, condensate and natural gas liquidsdeliveries, with [total] natural gas at 912 MMcf/d and crude oil,condensate and liquids at 26.2 thousand barrels per day.” saidForrest E. Hoglund, EOG CEO. “For the period 1989, when EOGcompleted its initial public offering, through 1997, we have growntotal annual equivalent production at a compound rate of 13% andNorth America annual equivalent production at a compound rate of10%.”

EOG’s exploration and development expenditures were $701.2million for 1997 and are expected to be about the same this year.”We will continue strong investment in North America operationswhile layering on investments in our now significant internationalprojects that will add value to the EOG portfolio.” EOG NorthAmerican operations had record reserves replacement of 220% in1997.

Burlington Resources, however, said its gas sales averaged 1,624MMcf/d during Q4 1997, down from 1,685 MMcf/d Q4 1996. However, Q41996 volumes included about 100 MMcf/d of gas from propertiesdivested during 1997. Adjusting for the divestiture yields a netincrease of 39 MMcf/d. Year-end operating statistics were notavailable from Burlington.

A third independent, Anadarko Petroleum, said it expects 1997operating and financial results to be the best ever in its 29years. Production of oil and gas exceeded the 1997 goal of 44million energy equivalent barrels (EEBs), an increase of more than17%. Growth came from a significant increase in U.S. explorationand development drilling, the company said. Anadarko said itsfive-year average costs of finding new reserves should remain closeto $3.25/EEB, and reserve replacement should exceed 300% ofproduction. Anadarko’s plans for 1998 include an increased capitalinvestment program that will exceed $700 million. Oil and gasproduction is expected to increase by about 20%, compared to 1997,to more than 53 million EEBs. Anadarko said it will releaseoperating and earnings data at the end of the month.

A recent report by the EIA projects what analyst group Wefa Inc.calls “tremendous increases in productive capacity in both 1997 and1998.” In EIA’s low case scenario, productive capacity is projectedto increase by 8.4% in 1997 and 7.4% between 1997 and 1998 witheven greater increases projected in the base and high cases. “Wecannot reconcile even the 1997 projections with available 1997production and price data. It is difficult to believe thatbottlenecks have constrained capacity to such an extent,” Wefa saidin its January Natural Gas Monthly. One problem with the EIAfigures, Wefa said, is even the low case assumes nearly 35,000 wellcompletions during 1997 and 1998 combined. “We estimate wellcompletions for 1997 to be 10,500.”

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