MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, DECEMBER 5, 1997 (3)
December 5, 1997
Canada Rig Count Up 4 to 477
The number of rigs exploring for oil and natural gas in the United States stood at 1,014 as of Dec. 5, up nine from the prior week, and 158 above the year-ago total of 856, Baker Hughes Inc. reported Friday.
The number of rigs drilling on land rose by six to 861, while rigs working offshore fell by one to 128. The number of rigs active in inland waters rose by three to 25.
Among the individual states, the biggest changes occurred in Wyoming, down by nine, Texas, down by seven, Oklahoma, up by seven, and Kansas, up by six.
The Gulf of Mexico rig count rose fell by one to 126.
A total of 365 rigs were exploring for crude oil, down six from last week. The number of rigs searching for gas rose by 15 to 645, while the number of miscellaneous drilling projects remained at four.
There were 221 rigs drilling directionally, 63 drilling horizontally and 730 drilling vertically.
In Canada, the number of working rigs rose by four to 477, versus 373 one year ago.
The weekly rig count reflects the number of rigs exploring for oil and gas, not those producing oil and gas.
Separately, there were 170 rigs under contract in the Gulf of Mexico as of Nov. 28, unchanged from the previous week, Offshore Data Services said.
The utilization rate for rigs working in the Gulf of Mexico, based on a total fleet of 176, was 96.6 percent.
The number of working rigs in the European-Mediterranean area remained at 107 rigs under contract out of a total fleet of 111, a utilization rate of 96.4 percent.
The worldwide rig count was unchanged at 581 out of a total fleet of 606, with a utilization rate of 95.9 percent.
Warmer Weather Raising Concerns About Winter Drilling
Although the quasi-official exodus of rigs to the northern region doesn't begin until the middle of this month, there is some concern about what the milder weather might bring for exploration and drilling efforts for the 1997-98 winter.
The warmer autumn weather hasn't affected Renaissance Energy Ltd., but colder temperatures are needed soon, a company official said.
"Right now, we definitely need colder weather for some of the northern programs, but we normally don't get going up there to mid-December to the first of January anyway," said Terry Sharkey, vice-president of drilling and completions.
He said the lack of snow cover has allowed the ground to freeze quick- er than last year even though temperatures are about six degrees above normal. However, he said Renaissance needs about twice as much frost to start its far northern drilling.
"But we're confident we'll get that before the end of the year," Sharkey said. "The second thing is we do need some snow in some areas for the creek crossings."
The lack of snow for ice or snow bridges is also a primary concern for Tony Sabelli, drilling completion manager for Canadian Natural Resources Limited.
"We rely a lot on two feet of snow to push into the creeks and create an ice bridge," he said. "That's environmental friendly because there's no dirt moving."
At this point, Canadian Natural has 27 to 31 wells left to sink for the 1997 drilling program, including about 20 shallow gas wells in the muskeg of the Slave Lake area.
"Instead of building snow bridges, we will rent steel bridges and put them over the creeks,"
Sabelli explained. "It's a bit more expensive with the rental and transport of the bridge and then returning it versus just pushing a couple blades of snow in the water."
Canadian Natural's drilling completion manager echoed the comments of
Renaissance's Sharkey that the cold weather is driving the frost down into the muskeg in the north.
Canadian Natural plans to kick off its 1998 program on Dec. 28 as usual using its normal fleet of 32 rigs. The firm expects to drill 350 to 400 wells in the first quarter, said Sabelli.
"I'm praying very hard that by the 10th of December this nonsense will stop," he added. "If the warm weather continues on through January, however, and frost starts coming out of the ground March 1, then I think El Nino is very much evident."
PanCanadian Petroleum Limited is experiencing some minor delays to its drilling program but has no grave concerns at present.
"In southern Alberta, the company is getting delayed moving onto some irrigated land because the land isn't frozen yet," spokesman Alan Boras explained. "And in the north, in northeast British Columbia, we have a couple of locations where it hasn't frozen up sufficient yet to get into."
However, Boras said PanCanadian's annual drilling plan, which calls for 1,600 wells, is still on-track. And the company is not concerned about equipment because it has long-term arrangements.
Over at Anderson Exploration Ltd., an official in the drilling depart- ment said the company has had trouble, from a construction point of view, moving equipment.
Anderson usually constructs through the month of December and moves rigs in during the second week of December, said the source, who did not want to be identified.
"The concern is that we'd typically be moving in rigs just before Christmas and we won't get them in before Christmas and we probably won't get them in the first week of January," the Anderson employee said. If it's the middle of January before rigs can get into
areas and it's a mild winter, then the company will have to move out rigs earlier than normal, the source said.
"So now, instead of an 80- to 9- day season, you may be looking at a 50-day season -- that's a big concern," the Anderson source noted. "We need it to turn cold; we definitely need it to turn cold."
But drilling contractors are finding activity has not been hampered so far.
"The rig count has been maintained considering the weather," said Hugh Strain, senior vice-president of operations at Precision Drilling Corporation. "For many of the areas that are in the north ... if the rigs cannot get into those areas it's going to have an impact.
"Traditionally, the significant move into the north is mid-December," he said. "If they are delayed past mid-December we could see an impact."
However, Strain noted the rig count is very strong, with 510 out of a fleet of 535 rigs in some phase of activity, considering the warm weather.
Another factor which has come into play is the lack of snow in the northern regions of Alberta and British Columbia, he noted. "One blessing is there is not a heavy snow cover."
Duane Mather, president of Nabors Drilling Limited, couldn't agree more. "Right now we are in two far north locations where we would not normally be this time of year."
He said the combination of a heavy rain fall, recent night tempera- tures reaching the minus 15-degree Celsius range and a light snow cover have provided near ideal access conditions in areas north of Peace River.
"The (condition) has driven the frost down pretty good," Mather said. "We haven't seen the warm days we've seen south of Red Deer."
Nabors got rigs into the northeastern B.C. areas of Tommy Lakes and Hamburg last week, he said. "We would not normally be there until at least the middle of December ... it's (mainly) because of the lack of snow."
For many junior and intermediate companies, the impact of warmer weather has yet to fully hit their drilling activities.
At Newport Petroleum Corporation, the lack of snow has not hurt plans so far, according to Wayne Repchuk, drilling and completions manager. "We're still able to freeze most of our locations in, but we haven't been into the heavy muskeg areas yet, so we don't know how that'll affect us."
To date the weather this year has not been helpful, Repchuk noted, with the rain in Grande Prairie and Fort St. John last month slowing things down considerably.
The company hopes to get into the heavier muskeg areas sometime in De- cember, and optimistically would like to see temperatures get down to -15 degrees Celsius for a couple of days, he said.
Compared to last year, the impact of weather is not particularly worse, Repchuk said, although conditions are at opposite ends of the thermometer. "It's about the same as last winter, when there was too much snow at first and then the ground froze. So if it's not one thing it's another it seems," he added.
Beau Canada Exploration Ltd. experiences its most hyper drilling sea- son during the first quarter, said Mike Gelleny, the company's drilling superintendent.
The warm weather is definitely slowing things down, with concerns over additional costs and access issues. But, with many jobs up north timed with rigs moving from one location to the next, right now the company is not that far behind, he said.
"A lot of our stuff is up north at Helmut and Chinchaga. We'll have to see what weather does to us, the potential for delay is certainly there," Gelleny said.
Getting equipment in and out of those areas has been the main problem, he said. "The best we can do so far is just get a snow cat in there and pound some frost in, what little bit there is."
Don Myers, the drilling manager for Canadian Hunter Exploration Ltd. is not quite sure yet as to what impact the warmer days will have. "So far we're charging ahead. We haven't really been derailed or delayed yet," he said.
However, Myers agreed it's starting to get close and if the weather remains too warm, particularly up north, then some delays could emerge.
"The way the game goes up there, early in the season in November you do not want snow because you want the frost to penetrate the ground. But then later, when you actually get into building roads, you do need some snow to build snow bridges," Myers explained.
He is starting to get a little nervous about the impending winter sea- son, but is also still hopeful drilling plans will work out. Traditionally Christmas to late March is the busiest period for drilling.
"We're hopeful like everybody that we can get some of the areas going a little sooner than Christmas, like middle December," added Myers. Canadian Hunter is currently focused on the Ring-Border area northeast of Fort St. John.
The weather hasn't had any negative impact so far, said Frank Koch, a salesman with CenAlta Well Services Inc. "We're still just as busy, but the areas where we would be at this time of year, we haven't got there on quite a few of them," he said. "I don't think it affects us as much as the drilling folk."
Some rigs, said Koch, are waiting but they're doing other things in the meantime. If the warm weather continues into 1998, it could begin to have an effect.
"Traditionally, a lot of the stuff in northeast B.C. we don't get in until after Christmas but we're not quite as far north as we would be in some instances," he said. |
