Short term, the U.S. oil and gas industry does not have a lot
to be excited about, but long term _ three or four years down the
road _ the outlook will improve, buoyed chiefly by natural gas, an
industry expert said Thursday.
Vagaries of the oil and gas industry are not a revelation to
those in the industry, though. That is the nature of the business.
"I wish I had an exciting forecast for this year. I don't,"
said Ike Kerridge, vice president of Baker Hughes Inc. of Houston,
guest speaker at the Central Oklahoma Chapter of the American
"We are negative for a couple of reasons. Natural gas remains
in a condition of oversupply and low prices. Secondly, there's the
lack of oil field elephants in the United States." But, by 1995,
Kerridge surmised, impacts of the Clean Air Act will kick in and
boost demand for natural gas. By the turn of the century, he added,
natural gas should get another shot in the arm due to increased use
of compressed natural gas in the transportation sector.
The trend of domestic oil companies _confined to the majors and
large independents _ curtailing operations at home and doing more
drilling overseas will continue, Kerridge speculated. Other experts
For example, a recent Salomon Brothers survey of 82 large oil
and gas firms showed that foreign exploration and production
operations are expected to rise by 23 percent for 1991 while
domestic operations are projected to edge up only 2.1 percent.
"If you follow our rig count, you will suspect that (2.1
percent increase in domestic drilling activity) is too high,"
Kerridge said. Baker Hughes, a major tool supply company, has
tracked the rig count since 1940.
Any uptick in the domestic rig count will be spurred by
drilling for natural gas, he said. Baker Hughes forecasts the rig
count for 1992 to be flat and only a slight improvement for 1993.
Factors driving the exodus from U.S. oil exploration, Kerridge
said, are the reality that most of the oil reserves in the United
States have been found and that those reserves worth going after
are off limits due to environmental barriers.
Moreover, environmental costs associated with the oil and gas
industry will hamper earnings abilities, he said. Increasingly, the
industry is improving its earning power, he said, through
technological advances, such as three- dimensional seismic studies
and horizontal drilling, that lower drilling costs. …