U.S. ROTARY RIGS

Coming back after 16 years

Starting the year 2000 at an average 775 active U.S. rigs, activity steadily increased after February to three rigs below the 1,100 mark to average 916 for the year. Despite industry claims of crew shortages and lack of equipment due to essentially no newbuilding and parts scavanging, rigs have been put back to work in every significant U.S. producing area.

The major driver is, of course, high oil and gas prices, which boosted budgets of both major and independent operators in second-half 2000, and their expectations for 2001. The percentage of rigs drilling for gas vs. oil remained high, averaging 78.5% during 2000.

Considering World Oil’s forecast of a 15.9% increase in U.S. wells this year, and a judgment call that wells per rig may decline slightly due to more challenging targets, the average active count for this year is expected to be 1,120 rigs, up 22% from 2000. This many U.S. rigs have not been active since 1985. Reed-Hycalog’s 2000 Rig Census indicates rigs are available to meet this expected increase.

Principal contributors to the increase last year were Texas, Louisiana, Oklahoma and New Mexico. Every one of Texas’ 10 districts except one had significant increases, namely gas areas in the far south and East Texas, and the far-west area’s Permian basin, which spills over into southeastern New Mexico.