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Vol. 12, No. 3 Week of January 21, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

U.S. 2006 drilling hits 21-year high

Kristen Nelson

Petroleum News

U.S. oil and natural gas drilling activity “remains robust with nearly twice the level of activity recorded during the lows of the early to mid-1990s,” the American Petroleum Institute said Jan. 16.

API said its fourth quarter 2006 well completion report shows a 21-year high, with an estimated 49,375 oil wells, natural gas wells and dry holes completed in the United States in 2006.

It said an estimated 12,439 completions in the fourth quarter was the highest since the first quarter of 1986.

Since this was a nationwide estimate, specifics weren’t available for states.

“Basically, drilling is about the same in Alaska as it has been for the decade — around 200 wells annually favoring oil wells,” API analyst Jeff Obermiller told Petroleum News.

Alaska Oil and Gas Conservation Commission records show, as of mid-January, 148 wells completed in 2006, vs. 198 wells in 2005 and 260 wells in 2004, an average of 202 per year. This compares to an average of 189 wells per year for a three-year period 10 years ago, 1994-96.

Natural gas remains the main driver of the U.S. E&P industry, API said, with an estimated all-time high of 29,356 natural gas wells completed in 2006, an estimated 7,482 of those in the fourth quarter, “an all-time quarter high for natural gas drilling activity in the U.S.”

API said its estimates show that “the resurgence in oil well completion activity that began in 2000 continued into 2006.” It estimates 15,345 oil wells were completed in 2006, an activity level that exceeds “every year in this decade and every year in the 1990s.”

2006 also saw the fourth straight year of rising numbers of exploratory oil wells, with 932 a 20-year high. “The fourth quarter estimate of 301 wells was the highest since first quarter 1986.”

Total estimated footage drilled in 2006 “was the highest in more than two decades,” API said. It estimates some 289,959,000 feet was drilled in 2006 — 74,439,000 feet in the fourth quarter alone.

API is a national trade association that represents all aspects of America’s oil and natural gas industry, including producers, refiners, suppliers, pipeline operators, marine transporters and service and supply companies.

The API Quarterly Well Completion Report is available from API as an annual subscription.

On the Net: www.api.org/Publications/.

Looking at drilling in Alaska over the period since the early 1990s, there are fewer grassroots wells being drilled — wells with an original well bore — and more sidetracks and laterals, where drilling begins from an existing central well bore.

Over a three-year period 10 years ago, 1994-96, grassroots wells represented 72 percent of wells drilled (1994), 61 percent (1995) and 59 percent (1996).

In 2004, only 48 percent of the wells drilled in Alaska were grassroots wells, 33 percent were sidetracks and 19 percent were laterals. Thereafter the number of grassroots wells dropped, to 42 percent in 2005 and 43 percent in 2006, with sidetracks staying about the same proportion — 32 percent in 2005 and 33 percent in 2006 — but laterals growing to 26 percent in 2005 and 24 percent in 2006.

The type of well permitted in Alaska — development, exploration, service — has also been shifting.

In 1994-96, about 85 percent of permits were for development wells and about 5 percent for exploration wells and some 10 percent for service or injection wells.

In the 2004-06 period, however, permits were up for both exploration and service wells, and down for development wells, which have been averaging some 65 percent of the permit mix, with exploration wells just under 10 percent and service wells at about 25 percent.



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