June 1998 Vol. 219 No. 6  Drilling

J. John Grow,  Engineering Editor

Offshore drilling markets steady in March

According to Houston-based offshore drilling contractor Global Marine, SCORE, for March 1998, rose 0.3% from February 1998, to 72.6% as dayrates remained largely unchanged in most reporting regions for both jackups and semisubmersibles. Worldwide March 1998 SCORE is up 17.5% from March 1997 and shows a 121.8% improvement from five years ago.

SCORE reflects current offshore mobile drilling rig dayrates, as a percentage of estimated dayrates contractors would need to justify speculative new construction. New construction dayrates are calculated as the sum of daily cash operating costs plus a capital recovery factor of $700 per day per million dollars invested. A separate SCORE is calculated for various types of rigs and regions to indicate the relative rig-market condition.

GRI study documents producer success in adding to U.S. O&G reserves. U.S. oil and natural gas producers have been far more successful at adding to reserves in existing fields than most observers thought possible, according to a study released by the Gas Research Institute.

The study, Assessment and Characterization of Lower-48 Oil and Gas Reserve Growth, concludes that during the past decade, producers have replaced production with new reserve additions. Most reserve growth has come from existing fields rather than new discoveries, a trend that is likely to continue.

Conducted for GRI by Energy and Environmental Analysis Inc., Arlington, Va., the study: used traditional growth curve analysis along with database growth analysis, evaluated trends in lower-48 reserve growth, and compared recent national growth assessments. In addition, the new reserve assessment incorporates an analysis of vast amounts of historical oil and gas production and completion data from public and commercial databases.

The study produced new, revised estimates of reserve growth for use in the GRI Hydrocarbon Model, an essential component of the annual GRI Baseline Projection. The result is that crude oil reserve growth potential from existing fields in the continental U.S. is estimated to be 29.9 billion bbl, while natural gas reserve growth potential in existing fields is estimated to be 433.8 Tcf (385.7 Tcf from non-associated gas and 48.1 Tcf from associated gas). Growth in natural gas liquids reserves in existing fields is estimated to be 20.7 billion bbl. The gas estimate is about 32% higher than that of the 1995-96 U.S. Geological Survey/Minerals Management Service assessment, which is evaluated in GRI's study along with estimates from several other organizations.

Anadarko announces 240% reserve replacement thus far for 1998. Annual production volumes of about 53 million energy equivalent barrels (EEB) marks the 17th consecutive year that Anadarko has more than replaced production with new reserves of crude oil, condensate and natural gas.

Proved reserves of 127 million EEB were added during the first quarter of 1998; about 70% came from successful exploration and development drilling projects equally split between the U.S. and Algeria; and about 40 million EEB were from acquisitions of producing properties in Oklahoma and Texas. With proved reserves of 708 million EEB ending 1997, total reserves will increase by at least 10% during this year.

IOGCC says federal petroleum R&D funds "critical." Petroleum research and development (R&D) is "critically needed," and the U.S. Department of Energy (DOE) must be fully funded to carry out its R&D role.

Christine Hansen, executive director of the Interstate Oil and Gas Compact Commission (IOGCC), testified March 4 before the House Interior Appropriations Subcommittee (which is debating the fiscal 1999 budget appropriations for the U.S. Department of the Interior and related agencies, including DOE research).

"Petroleum imports could go as high as 65% of total consumption within the next five years," Hansen said. "Yet properly focused and funded research would greatly increase domestic recovery levels." She also testified that the nation's dependence on imported petroleum could have dangerous future ramifications.

She called upon the federal government to do more to focus on domestic production, increase efficiency in petroleum use, and develop a common sense approach to regulation that "encourages conservation without hamstringing production."

"There are few things, besides raising taxes, the federal government undertakes that can increase revenues," Hansen noted. "There are few programs the federal government administers that pay for themselves, oil and gas R&D is the exception."

IOGCC is a 62-year-old state government organization whose mission is the conservation and efficient recovery of domestic oil and gas while protecting health, safety and our environment.

Health, safety & environmental training / compliance for industry. INFOSAFE, Inc., Lafayette, has entered an agreement with The Offshore Energy Center, Houston, to provide offshore roustabout and production operator entry-level-training onboard the Ocean Star Rig Museum, Galveston (five-day training program) to drilling and production companies. In addition, an agreement has been reached with the International Petroleum Museum and Exposition's Mr. Charlie Rig Museum, Morgan City, by which five- and twelve-day training programs will be offered. These training programs were developed and implemented to help accommodate demand for qualified personnel during this time of increased activity in our industry.

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