Petroleum Imports Rise as U.S. Drilling Activity Falls

Article excerpt

Petroleum imports, which leveled off during the Middle East crisis, are rising again as we see a decline in U.S. drilling activity.

The U.S. rig count last week was 31 percent behind the 1990 level. In Oklahoma, it was down 35 percent from year-ago levels.

For October, petroleum imports were 9.4 percent higher than imports in October 1990. As a percentage of consumption, imports accounted for 42.5 percent, compared with only 39.7 percent in October 1990.

There are numerous contributing factors to why the domestic rig count is depressed: general uncertainty in the oil and gas industry, severely low natural gas prices and the like. Too, consider that drilling costs are on the rise and earnings this year are down for major oil companies despite higher oil prices.

Drilling costs per well for 1990, according to the American Petroleum Institute, were 6 percent above 1989 levels. Average cost-per-foot drilling rose 3.5 percent.

Earnings from upstream domestic operations among 20 leading U.S. oil companies, as surveyed by API, show a 29.3 percent decline, while earnings from worldwide upstream operations fell only 15.3 percent for the first nine months of 1991.

Earnings from downstream domestic operations dropped 3.3 percent, while earnings from downstream worldwide operations rose 38.1 percent, the trade group reported.

That could be a reflection of more intense operations abroad rather than in the United States, a trend that is continuing.

In conjunction with the rise in petroleum imports, demand is beginning to rise after a flat period this year because of the Persian Gulf War and general economic woes. Demand, however, was not rising at as fast a pace as imports.

Demand for petroleum products in October rose only 2 percent, compared with the almost 10 percent rise in imports.

Domestic crude oil production in October, according to the U.S.

Department of Energy, also declined 2 percent compared with October 1990.

Natural gas production was flat for the month. . .

William Scherman, general counsel for the Federal Energy Regulatory Commission, will be in Oklahoma City on Friday to discuss the pending "mega-NOPR" (notice of proposed rule making), courtesy of the Oklahoma Independent Petroleum Association.

The luncheon will be at noon in the Hilton Inn Northwest. For reservations, contact Mickey Thompson, executive vice president of the association.

Scherman has been with FERC since 1987. He will be talking about the impact of the mega-NOPR on Oklahoma independent gas producers. The rule-making deals with natural gas sales and transportation issues and is expected to cause some upheaval in the industry. . .

A course titled "Gas Processing for Engineers" will be offered next month through the University of Oklahoma Continuing Education and Public Service office. …