Houston gas prices

IADC urges industry stability in tough times. Although oil and gas prices might dip further before improvement is seen, the drilling industry should stabilize employment as much as possible to preserve its strength long term, said C. Stedman Garber, Jr., 2002 chairman of the International Association of Drilling contractors and president/CEO of the newly merged GlobalSantaFe Corp. Garber's remarks were made during a Houston Chapter meeting in January.

"Given the current level of gas in storage, I'm afraid winter would have to last into the summer to have any substantial impact on gas prices through the first half of the year," Garber said. "My hope is that we will have enough cold weather to draw enough gas out of storage so that a combination of an upturn in economic activity, along with the continuing production decline, can create enough price pressure in the second half to increase drilling activity at home."

Regardless of the cycle, Garber called hiring, developing and retaining people "the most critical issue" facing the drilling industry today. "We must find a way to provide rewarding career paths to young people who are just starting out. We must be willing to retain people during downturns and use the time for rigorous training and other development activities. Creating a safe working environment requires a cadre of well-trained people. I believe a person who sees this industry as a career opportunity rather than simply a job is more likely to have a positive and constructive attitude toward safety," he said.

A special IADC task force published its cargo-handling guidelines in November, he noted, that should reduce accidents involving rig crews aboard work boats. These accidents accounted for about 7% of all lost-time injuries in the U.s. Gulf. IADC also has been working closely with API to design a system to share threat and security information on industry facilities; and it is working to maintain offshore security.

Garber expects further consolidation in the drilling industry to better serve larger customers, and also to acquire equipment at attractive prices. As major customers have consolidated, they are seeking efficiencies in their procurement, including drilling services.

On other issues, Garber touted IADC's active involvement in the opening of Lease Sale 181 in the Eastern Gulf, but expressed frustration in the size of the final lease area offered. He called IADC's work a success in offsetting protectionism in the U.S. steel industry, which has lobbied to limit imports on drill pipe. Now that five years of anti-dumping duties have ended on drill pipe from Argentina and Mexico, these countries are free to add capacity and competition for the U.S. drilling market, he noted.

IADC is dedicated to enhancing the interests of oil, gas and geothermal drilling contractors worldwide. Its membership comprises nearly 1,000 companies, including contract-drilling and well-servicing firms, oil/gas producers, and manufacturers/suppliers of oilfield equipment/services. Its contract-drilling members own most of the world's land/offshore drilling units and drill most of the wells.

Founded in 1940, it strives to securc responsible standards, practices, legislation and regulations that provide for safe. efficient and environmentally sound drilling operations worldwide. IADC is headquartered in Houston; it also has offices in Washington D.C., the UK, the Netherlands and the Middle East, as well as chapters in the UK, Venezuela, Brazil, Australasia, South Central Asia, Southeast Asia, the Middle East and across the U.S. For more information, visit the web at http://www.iadc.org.