Gas demand helps spark drilling activity in US

A strong US gas market signals sustained drilling for gas through first quarter 1994, laying the groundwork for continued growth in the gas industry. Seven solid years of growing gas consumption, coupled with dwindling US deliverability, have brought US gas supply and demand into a precarious balance. At a time when low oil prices are prompting many producers to trim oil directed capital and exploration spending, almost 4 years of consistently higher US gas prices -- except for first quarter 1992 spot prices -- are sparking a modest gas industry recovery. Most noticeable has been the drilling response. Figures show US operators during the past decade, counting addition form all sources, have roughly maintained gas reserve volumes. When only reserves added by exploratory well discoveries are counted, however, additions fall far short of replacing yearly production. As a result, doubt persists among producers and consumers about how effectively the mix and locations of new gas supplies will be able to serve US markets. The paper discusses US gas demand, gas drilling activities, profitability criteria, gas well completions, reserve additions, and gas drilling outlook