Oil rig shortage hampers energy industry growth
Thursday, August 25th 2005, 1:58 pm
By: News On 6
OKLAHOMA CITY (AP) _ At a time when oil is fetching record prices, state producers are hampered by a lack of drilling rigs and crews to operate them, industry experts say.
``The competition for rigs is fierce throughout the nation's midsection production areas, including Texas and Oklahoma, and drilling prospects are simply spread out over a longer period of time,'' said Mickey Thompson, president of the Oklahoma Independent Petroleum Association.
The state's highest rig count this year was 163 for the week ended Aug. 12. The state's lowest weekly rig count this year was 146 for five different weeks.
Thompson does not expect the state's rig count to increase quickly.
``Solving the industry's shortage of both equipment and labor is no short-term process, and the rig count will increase very slowly as a result,'' he said.
An association report released Wednesday showed higher oil and natural gas prices accelerated the value of the state's energy production and elevated the Oklahoma Energy Index to a record high. June's index was 177.1, up from 175.9 in May and up 14.6 percent from 154.6 for June 2004. The index tracks industry growth rates, compared to a base line of 100 established in January 1995.
The value of the state oil production in June totaled $300.2 million, up 47 percent from $204.2 million for June 2004.
The value of the state's natural gas production in June totaled $860.9 million, up 3.8 percent from a year earlier.
Strong demand for drilling rigs is pushing rental rates higher.
Tulsa-based Unit Corp.'s drilling rig rates for the second quarter averaged $11,298 per day, up 29 percent from the second quarter of 2004.
Panhandle Royalty Co. of Oklahoma saw the cost of drilling and completing a well rise 20 percent in the second quarter from a year earlier because of the shortage of rigs and personnel, said H.W. Peace II, president and CEO.
``Potential production increases have been restricted by the shortage of drilling rigs and qualified personnel to operate them, in Oklahoma in particular,'' Peace said.