Rigs

A jump in oil and natural gas drilling, which required more rigs, which in turn created a tight supply market, has caused upstream costs to more than double in the past eight years, according to a report by IHS and Cambridge Energy Research Associates (CERA). In just the last six months, upstream costs rose 5%, but as the financial crisis bears down on business, prices have begun to moderate.

Producers are laying down natural gas rigs in some of the most prolific basins in the United States, but it’s not coming fast enough to eliminate reserves growth, which could lead to an all-time inventory high by this time next year, according to Barclays Capital.

A shortage of rigs will force Nexen Inc. and its partners to delay drilling the deepest of deepwater wells in the Gulf of Mexico (GOM) until 2009 — three years later than originally planned.

As of Thursday morning, all the platforms and rigs in the Gulf of Mexico that were evacuated because of Hurricane Dennis were remanned, the Minerals Management Service (MMS) said. MMS puts the total gas production still shut in at 268.29 MMcf/d as of 11: 30 a.m. CDT Thursday.

While some Gulf of Mexico producers were evacuating rigs and shutting in oil and natural gas production in preparation for Tropical Storm Arlene, natural gas futures traders seemed unshaken Friday as July natural gas settled at $6.932, down 11.3 cents on the day, but 5.2 cents up for the week.

With record levels of natural gas rigs in the ground, it’s about time the industry started showing results. Canadian Hunter Exploration Ltd. is doing just that, as the company announced last Tuesday an increase in gas production to 523 MMcf/d during the first quarter 2001, a jump of 36% over the similar time period a year ago, and a 7% rise from the fourth quarter 2000. As a result, the Calgary-based producer posted a 485% increase in net income to C$145.1 million, or C$2.38 per fully diluted share for the first quarter 2001.

Natural gas supply can be adequate for the expected demand in the future from power generators as well as LDCs, as long as rigs remain in the ground and the industry pays attention to indicators, according to Bruce Henning, director of Energy and Environmental Analysis Inc. (EEA) at the Energy Bar Association’s 55th meeting in Washington, D.C. last week

With record levels of natural gas rigs in the ground, it’s about time the industry started showing results. Canadian Hunter Exploration Ltd. is doing just that, as the company announced on Tuesday an increase in gas production to 523 MMcf/d during the first quarter 2001, a jump of 36% over the similar time period a year ago, and a 7% rise from the fourth quarter 2000. As a result, the Calgary-based producer posted a 485% increase in net income to C$145.1 million, or C$2.38 per fully diluted share for the first quarter 2001.

If government predictions are correct, Gulf of Mexico producerscould be shutting in more rigs and shuttling more workers to safetythis hurricane season than last.