NEW YORK The outlook for
domestic drilling remains tepid, with little to spur short-term
optimism, market sources told AMM.
"Its still declining,
still softening. Im looking for something that will make
the drilling activity turn around, and there is nothing. Right
now theres no big thing that people can hang their hat on
thats going to change that," a southern distributor
His concern was particularly the
declining number of horizontal wells as increasingly "shallow,
small, inexpensive oil wells (are) being drilled."
Horizontal drill rigs totaled
1,099 in the latest count by Houston-based oilfield services
firm Baker Hughes Inc., down one from a week earlier, while the
number of vertical rigs increased by 11 to 443 in the same
comparison. The number of drill rigs operating in the United
States totaled 1,748, up two from the previous week but down
231 from 1,979 rigs a year earlier (
amm.com, April 1).
The tepid rig count comes even
as economic activity is generally said to be improving.
"Overall, the American economy
seems to be kind of wanting to get active," the distributor
source said, adding however that there is "so much capacity in
oil, gas and steel that every increase in consumption is easy
An analyst agreed with the
assessment on natural gas. "We see production continuing to
rise this year," Justin Carlson, manager of energy analysis at
Evergreen, Colo.-based Bentek Energy LLC, told AMM.
Therefore, significant price spikes are unlikely, with Bentek
Energy pegging the long-term price range for natural gas at
between $3 and $5 per million British thermal units
Market sources have said that
prices above $6 per mmBtu are necessary for new drilling to
"really" kick off (
amm.com, March 28).