OUTLOOK 2004: United States
Producing Gas Wells

Strong markets favor gas wells

Total US producing gas wells in 2003 increased nearly across the board by 5.2%, or 19,474 wells. Data from state agencies and World Oil estimates indicate only seven states showed declines – of these, only Arkansas, Utah and California have significant well numbers. The top ten gas-well states, representing 85% of total US gas wells, increased 4.9%, or 15,716 wells, to 333,722 gas wells.

Among the top-10, Texas leads number two Pennsylvania by 20,000 wells, with a total 66,315, paced by District 4 in the southern tip with 10,617 wells. The area is actively drilling to supply both US and Mexico gas demands. District 10 in the Panhandle, with 10,331 wells, follows a 9.9% drop last year with a 14% hike in 2003. Districts 7C in the west central area, jumped by 4.8% to 9,899; and District 6 in the northeast rose 5.4% to 8,839 wells. In the same type of gas play, neighboring North Louisiana showed a 760-well increase to 13,564 wells. Texas alone drilled over 8,000 wells last year, with 80% likely for gas.

Among northeast-US gas-strong states, Pennsylvania added over 2,000 wells for a 46,397 total; West Virginia, the No. 3 state, added 1.5%, for 40,186 wells; and Ohio added 400 wells to boost its total to 33,780. In the established gas-well states of Oklahoma and Kansas which, combined, drill some 3,000 oil/gas wells yearly, the two areas boosted their well counts by 3.6% and 3.8%, to 34,283 and 18,639 wells, respectively. Oklahoma and Pennsylvania will drill nearly 5,000 wells total this year.

Farther west, coalbed methane drilling is a significant contributor to gas-well counts. This activity has increased North/West New Mexico's already active gas play by 13.7% to 29,827 producers. Wyoming's CBM activity in Campbell County has added several thousand wells in the last few years for an estimated 23,217 total. And Colorado added 6.3%, or 1,113 wells for a total 18,774. With gas prices in the $4 to $5/Mcf range holding reasonably steady, most other domestic sources showing rapid reserve declines, and LNG import projects still a few years away, CBM wells remain attractive alternatives.

For gas prospects in known producing areas of the lower 48 states and shallow Gulf of Mexico waters, gas can be marketed quickly, but rapid declines are limiting such drilling. The US Minerals Management Service is offering royalty relief for drilling deep gas wells, below 15,000 ft, in shallow Gulf water (less than 656 ft); but such wells will not be cheap, and the total drilled will not likely affect producing well counts significantly.