OFFSHORE DRILLING

U.S. Gulf paces increase

Based primarily on survey returns, World Oil estimates that response in 2000 to economic stimulation by higher crude/gas prices will supply incentives and equipment to generate a 15% offshore-well increase in 2001 to 3,362 wells. The U.S. Gulf of Mexico, with 35% of the world’s total, will pace this increase with a 14% well jump.

U.S. Gulf of Mexico. The ODS-Petrodata Group (ODS) reported 1,019 wells drilled in state and federal waters in 2000. This year, World Oil expects a 14% increase to 1,162 wells. While deepwater drilling continues strong, most wells are drilled on the gas-prone shelf areas of Texas and Louisiana, with an infrastructure of platforms for processing, and pipelines to shore for marketing.

During 2000, an average 155 mobile rigs worked in the GOM, plus an estimated 42 platform rigs. In January, that number had increased to 174 mobile rigs, at 84% utilization, comprising 135 jackups. With the strong push to increase U.S. gas reserves, and price incentives in effect, operators should continue to drill farmouts and stepouts, and sidetrack wells to new formations.

Many jackups were reactivated and several were brought in from other areas last year. The available fleet appears capable of drilling the projected increase.

Western Europe. In the North Sea/Northwest Europe area, ODS reported about 70 jackups and semis working throughout 2000 at 80 – 90% utilization. This activity level was fairly steady throughout 2000, following a significant drop from near-100% utilization of 90 rigs in late 1998, to 57 units working in late 1999. UK activity reflects this trend with an expected 12% increase this year to 300 wells. Norway expects a slight increase to 205 wells and – except for Italy’s expected drop of 22 wells – other smaller countries will maintain drilling levels. Higher crude prices have been the incentive to pursue field satellite drilling in several established fields.

Other areas. The Far East will likely see a 16% increase to 697 wells, paced by Indonesia’s 20% jump to 231 and Thailand’s 13% increase to 175. Malaysia will boost its contribution by 20%, to 90 wells, and China, India and Viet Nam will maintain offshore drilling programs. With economic conditions improving in the Far East, attention is turning back to several big offshore gas developments to supply energy to power-generation projects.

Higher crude prices from recent declines will give exporting countries more incentive, and help generate international oil company participation. ODS data show a sharp jump in mobile rig supply and demand of over 60% at year-end 1999. Utilization of 44 to 46 rigs in the SE Asia/Far East/Australia region, of some 58 competitive-fleet units, continued through 2000.

   Africa could see a 23% increase to 326 wells, with every country expecting gains. Egypt’s big increase of 63%, to 106 wells is significant. And Angola and Nigeria continue their offshore developments with noticeable increases. ODS notes 45 to 48 active rig levels at near 100% utilization at year-end in Mediterranean/West Africa regions – rig types include about 30 jackups, 15 semis and four drillships.

Offshore drilling in the Middle East will see about 40 jackups working to increase drilling by 8%, to 110 wells. Iran, Qatar, and the UAE will contribute most of the drilling. The competitive fleet in the area is about 75% utilized.

In South America, Brazil’s deepwater drilling will account for most of the area’s 34% increase to 193 wells. Petrobras expects a 56% increase in 2001 to 140 wells. The country had 21 semis, 13 drillships and four jackups working in late 2000. The other important contributor is Trinidad & Tobago, which will see a small increase of one well to a total 43 this year. Venezuela drills principally in Lake Maracaibo, which is not considered "offshore" in the accompanying table.