In the U.S., where there has been economic relief, the number of drilling rigs has increased from 860 in 1971 to 1,400 in December, 1973. (6) CAPITAL REQUIREMENTS FOR THE FUTURE (7) A. Capital needed for exploration phase to meet energy requirements Billion by 1985--- Available from industry sources.. -$140 -85 Deficit Deficit -55 B. Based on the record of the Independents in finding new reserves and in order to establish a continued growth in domestic exploration and to provide the capital as shown according to the Chase Manhattan study, we recommend the following incentives: 1. Maintain Intangible Drilling Costs. 2. Maintain or increase depletion allowance. 3. Institute Investment Tax Credits. 4. Place an embargo on exports of oilfield materials being sold in foreign markets to dodge United States price controls and, if possible, decontrol completely all oilfield steel. 5. Define excess profits and impose a tax on all such excess profits not plowed back into exploration and development, if such profits do indeed exist. 6. Deregulation of all gas and oil at the wellhead and allow prices to seek market demand level. 7. Federal lands onshore and offshore including United States Naval Reservations should be assigned on a work commitment basis to free capital from tremendous expense involved in bonus bidding. Government would recoup bonuses through graduated royalty payments when production is established. This would give the independents a shot at these areas. 8. Encourage construction of small topping plants and gas stripping plants in the field to ease local shortages of fuel. SOURCES (1) Energy Information—A subsidiary of A. C. Nielson, Vol. 2, No. 33, August 1, 1973. (2) Resources Programs, Inc., 521 Fifth Avenue, New York, New York 10017. (3) The best estimates of reliable sources in the industry. (4) Energy Information-A subsidiary of A. C. Nielson, August 1, 1973. (5) Oil and Gas Journal-July 2, 1973. (6) Petroleum Outlook-John S. Harold, Inc., Greenwich, Conn. December, 1973. (7) Outlook for Energy in the United States to 1985, report of Chase Manhattan Bank dated June, 1972. ENERGY INFORMATION PETROLEUM INFORMATION CORPORATION A Subsidiary of A. C. Nielsen Company For every dollar spent by larger companies for drilling in the U.S. during 1972, smaller operators spent almost two dollars. Half the "big" company money went into South Louisiana and Louisiana Offshore. Other operators spread their activity throughout the country. SEE PAGE 3 Vol. 2 No 33 Aug. 15, 1973 in Energy Information Exclusive 6% OF '72 DRILLING EXPENDITURES PREAD THROUGHOUT THE COUNTRY BY SMALLER" OIL OPERATORS A total of $2,730,624,000 was spent on Irilling wells for oil and gas in the United States luring 1972. This estimate results from the appliation of regional drilling costs assembled by the joint Association Survey in 1971 to Petroleum Information's count of wells drilled. Depth factors were averaged for each JAS area and allowance for inflation was ground in to arrive at estimates for 1972. The estimate is for drilling only and does not nclude expenditures other than those for making. ole and equipping producers "through the christ nas tree". The estimate of $2.73 billion is $2.37 billion in 1971. up from On an operator-of-record basis, members of he Chase Manhattan Group of "large" companies pent $919.6 million. All other operators spent Imost precisely twice as much, or $1.81 billion. The Chase Manhattan Group drilled 4,833 wells with an average depth of 6,331 feet. Other operators drilled 22,782 wells, but the average depth Aug 15, 1973 was 4,654 feet. The per-well drilling cost for operators not included in the Chase Group was considerably lower. Distribution of drilling expenditures was decidedly different for the two operator categories. Nearly 51 per cent of the monies used for drilling by the Chase Group was spent in South Louisiana and Louisiana Offshore. All other operators spent only 12.5 per cent of their total drilling money in these arcas. Texas attracted a higher percentage of "inde pendent operator" drilling money than any other state. These operators spent 25.23 per cent of their total there. The distinction between the Chase Group and independent operaters is not precise. The Chase Group does not include all companies who might he considered as within the "major" category. The group is used because it has been widely cited as a "large company" category based on the fact that companies in the group account for a major portion * of all petroleum activity worldwide. ENCICY INFORMATION *Reprinted with permission 56-674 - 75 38 Total for the Chase Group: 4,833 wells, drilling expenditures of $919,617,000. Total for all other operators:-22,872 wells, drilling expenditures of $1,011,007,000. ENERGY INFORMATION EDITORIAL DRILLING STATISTICS ......... AND HOW THEY ARE COMPILED. In this issue, Energy Information presents the basic results of a review of operator-of-record data for U.S. drilling during 1972. Statistics were accumulated with respect to the sole or first-listed operator only. Thus, other working interests in specific wells are not represented, nor is non-operating economic support visible in the many cases to which it applies, But operator-of-record identification reaches to the limits of established industry statistical practice. To measure with absolute accuracy the amount of drilling activity for which a specific category of operators is economically responsible would require application of exact working, interest to the wells in which each operator within the category participated. The cum of the net wells thus calculated for all oper ators would then be equal to total drilling. This degree of statistical refinement is not available. The operator -of-record analysis is the most significant appraisal of activity by operator cate. gories. It is an acceptable statistical criterion since the industry leans heavily on joint ventures in which companies may be operator-of-record about as often as they are non-operating working interest participants so that statistical aberrations tend to be compensating. And, current and timely operator-of-record statistics are available only through timely coverage of all U.S. drilling activity, a function unique to PetroIcum Information. An Energy Information Exclusive NEW STUDY SHOWS "SMALL" COMPANIES An operator-of-record survey of 1972 drilling in the United States shows that the larger conpanies in the petroleum industry were operators on only 17.50 per cent of United States drilling in 1972. Smaller companies were operators of record on 82.50 per cent of all 1972 wells. These figures einerged at the completion of a study by Petroleum Information of all domestic drilling during 1972. Earlier this year... on Junc 6... Energy Information published operator of record analysis of about 60 per cent of domestic drilling. The study has been extended to cover the arcas not included in the carlier study, notably most of Texas, Louisiana and the souilicastern United States. Operators were classified according to their inclusion in the Chase Manhattan Bank's 30 com pany group of "larger operators". Members of this group accounted for 17.50 per cent of drilling. All oliers accounted for 82.50 per cent. Figures for the entire United States did not differ materially from the partial study completed.in June. While some of the areas not then surveyed are prone to deep drilling and would be expected to show a preponderance of large company activity, there has been a steady growth in activity by coinĮ Aug 1, 1973 г panies not members of the Chase Group. In addition, inclusion of several active, shallow areas tended. to weight statistics in the direction of smaller oper ators. However, it should be noted that in terms of footage drilled, the Chase Manhattan Group accounted for 22.39 per cent while all other operators accounted for 77.61 per cent. This points up the involvement of the larger companies in the deeper drilling in many parts of the country. Such involve ment, of course, reduces the number of wells com. pleted in a given period of time. Nevertheless, the extent of dominance of domcstic drilling by operators of record not members of the Chase Manhattan Group is, perhaps, surprising. A substantial portion of the funding of companics not members of the Chase Group was attract ed from non-oil-related sources. The statistics of drilling point up the importance of incentives as a incans of attracting the capital responsible for so large a portion of total domestic drilling. The study shows that the smaller companies drilled more discoveries of both oil and gas... and far moic dry holes... than members of the Chase Group. ENERGY INFORMATION But, there was surprisingly little difference locations of obviously lower risk. The Chase Group successfully completed 3,328 development wells of a total of 3,833 drilled. The success ratio is 87.08 per cent. All other companics drilled 14,758 development wells, completed 72.70 per cent, or 10,730 wells, as producers. The statistics are set out below. Totals include drilling offshore Louisiana and Texas. The Chase Manhattan Group accounted for 398 of 628 wells drilled off Louisiana. Others completed 230. Of 40 wells drilled offshore Texas, the Chase Group completed 23, olier companies, 17. |