In the fourth quarter of 2008, drilling activity in the US exploration and production industry “continued on a steady climb at twice the rate of activity in the 1990s,” according to the American Petroleum Institute’s (API) fourth-quarter drilling estimates. “Last year was a record year for drilling,” said Hazem Arafa, director of API’s statistics department, “with significant increases in total wells and particularly oil wells, which increased 35 percent over a year ago.” Yet, said Arafa, “We are already seeing the warning signs that the trend toward increased drilling is slowing. For example, for the fourth quarter of 2008 we saw the number of exploratory wells slide 27%, as the economy faltered and oil prices plummeted.” Still, with overall oil well completions for the fourth quarter totaling more than 6,400, it’s the highest estimated oil activity in two decades and a 43% increase from 2007’s fourth quarter. If this rate of activity were to be sustained, it would presage a change of direction for the US domestic oil industry. “If you take into account that we lost about 60 million barrels of oil production due to last year’s hurricanes in the Gulf of Mexico, we did see some increase in overall production. It’s significant in that it’s headed in the right direction for the first time in quite a while,” said John Felmy, chief economist, API. According to API, natural gas continues to be the primary target of US domestic drilling, with estimated natural-gas well completions in the fourth quarter totaling nearly 8,300. This is double the natural-gas drilling activity of a decade ago and a 6% increase over the same quarter the previous year. All told, according to API’s 2008 Quarterly Well Completion Report, an estimated 16,541 oil wells, natural gas wells, and dry holes were completed in the fourth quarter, with a total estimated footage of 114,028,000 drilled, the highest estimated footage drilled ever, and an increase of 61% from 2007’s fourth quarter. This indicates that operators are willing to drill deeper than ever before in their search for results, said Felmy. “If you look at the quarterly numbers for the last two years, in the first quarter of 2007, the average well depth was 6,030 feet. By the fourth quarter of 2008, that had risen to 6,931 feet.” As for immediate future prospects for increased drilling, Felmy said that depends on the companies involved. “The majors are pressing forward with the plans they have in place. However, for the smaller companies credit is very much an issue. It’s going to be a mixed picture and we’re likely to see a relative slowdown, as we have in previous industry cycles.’’ The wildcard will be the incoming Obama administration’s approach to the industry. “We have five-year plans in place that include four offshore lease sales this year. But there is resourcing required to make those things move forward. We think there are significant opportunities here and we’re looking forward to working with the new administration.”