For oil prospectors, these are good old days
Oil storage tanks are brimming and energy demand is slack, but those whose business it is to find oil and natural gas still are scrambling to find all they can. Higher energy prices are providing the incentive.
Independent drillers in the United States are busier and at least as optimistic as during the halcyon days of energy prospecting in the 1950s.
And in Canada, where there has been squabbling between the federal government and the provinces over energy pricing, drilling activity so far this year has continued undampened.Rig activity there for the first eight months of 1980 is up 28 percent, following three years of sizable growth.
The rest of the noncommunist world is churning along with a significant 14 percent jump in drilling activity so far in 1980.
"There is plenty of romance in the business again," assessed Ed McGhee, executive vice-president of the International Association of Drilling Contractors. Members of that trade association do over 90 percent of the oil and gas drilling worldwide, often under contract with the major multinational energy companies.
Mr. McGhee reports that the drilling industry itself has exploded, adding nearly 100 new firms in the past year, bringing the total worldwide to about 800 companies.
Most energy analysts credit higher prices for the worldwide drilling boom. Higher oil and natural gas prices have dangled a carrot in front of businesses looking to increase profits, and held a stick over the many nations hit with ballooning trade deficits from the cost of importing fuel.
Indeed, the World Bank, which provides technical and financial help to poor countries, has suggested the need for a new "energy bank" to spur more oil and gas exploration in the third world. The World Bank will provide about $13 billion over the next five years to encourage more energy projects in developing countries, but it considers that amount "inadequate." The bank would like to raise its assistance total to some $25 billion.
The World Bank projects that the oil-importing developing countries will have a combined trade deficit in 1980 of some $60 billion, compared with $27 billion in 1978. Much of the deficit increase is attributed to higher oil prices.
The average price for a barrel of OPEC (Organization of Petroleum Exporting Countries) oil is 129 percent higher now than in January 1979. In the US, the phased decontrol of oil begun in June 1979 has helped boost domestic petroleum prices by 65 percent. Natural gas prices also are increasing in the US under a decontrol schedule.
The relatively dormant state of energy exploration in many developing countries underscores the fact that there are vast regions of the world that have not been exploited for their energy potential. Of an estimated 4,400 drilling rigs active in the noncommunist world right now, more than 3,000 of them are working in the United States.
"There are tremendous land areas in Africa and South America that have not been explored," for example, points out Robert E. Harris, president of the drilling equipment division of National Supply Company in Houston. That firm claims to be the largest manufacturer of oil-field drilling and production equipment in the world.
Mr. Harris recently forecast that world oil drilling, measured by the number of active rigs, will increase by nearly 30 percent by 1985. He sees particularly strong growth in Canada, Argentina, Brazil, and in offshore drilling in the North Sea. Drilling activity in the United States will cool slightly from its current hot pace, he predicts, but will continue expanding at over 6 percent yearly.
The US oil industry already has earmarked an estimated $50 billion for domestic capital and exploration spending in 1980 -- about one-fourth greater than last year.
US rig activity has increased 35 percent in the first eight months of 1980. With rig activity usually reaching a peak at the end of the year, I. C. Kerridge , an economist with Hughes Tool Company, expects the number of wells drilled in the United States to reach an all-time high this year.