BHI: US rig count decline shrinks to 6 this week, settles at 888
The trend of shrinking declines in the US drilling rig count continued during the week ended May 15.
Just 6 units were laid down to settle at a total of 888 rigs working, representing the smallest drop in the 23 consecutive weeks in which the count has dived, easily surpassing last week’s 11 that went offline, according to data from Baker Hughes Inc. (OGJ Online, May 8, 2015). Since Dec. 5, 1,032 units have now gone offline (OGJ Online, Dec. 5, 2014).
The total of 888 is still higher than the nadir of 876 during the 2008-09 downturn but is 973 fewer units compared with this week a year ago.
In an energy update early this week, Raymond James & Associates noted that weekly well permits, a primary indicator of rig count activity, “have been relatively stable as of late” despite data usually being “very lumpy.”
Last week 863 new permits were issued, bringing the 4-week average to 870. “It now seems clear that weekly permits issued have bottomed a couple of months ago; however, the lack of a real upswing seems indicative of what we believe should be a slow recovery in rig activity,” RJA indicated.
Shale oil output still falling
Total crude oil production from seven major US shale plays—the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica—is expected to continue its decline in June, shedding 86,000 b/d in output compared with May to 5.6 million b/d, about even with where the total stood in March, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR) (OGJ Online, May 12, 2015).
As with the previous 2 months, declines are expected in the Eagle Ford, down 47,000 b/d to 1.6 million b/d; Bakken, down 31,000 b/d to 1.3 million b/d; and Niobrara, down 16,000 b/d to 411,000 b/d.
The Permian, meanwhile, has maintained production growth over the past few months, albeit at a shrinking rate. Output from the basin in June is expected to rise just 7,000 b/d—a third of total growth for April—to 2.1 million b/d.
The DPR noted that new-well oil production/rig will continue to rise across all seven plays in June, with the Permian up 26 b/d to 296 b/d, Bakken up 21 b/d to 631 b/d, Eagle Ford up 20 b/d to 720 b/d, and Niobrara up 17 b/d to 497 b/d.
In its latest Short-Term Energy Outlook (STEO), the EIA also forecasts overall US crude production to average 9.2 million b/d in both 2015 and 2016, down 40,000 b/d and 100,000 b/d from last month’s STEO, respectively (OGJ Online, May 12, 2015). Declines are expected to continue from June through September before growth resumes.
“The reduction in the crude oil production forecast reflects a reduced WTI price forecast for 2016 in this STEO and a sustained drop in rig counts beyond what EIA had initially expected,” EIA explained. “Oil-directed rigs declined to the lowest level in almost 5 years as of early May.”
This week’s rig movement
Oil-directed rigs continued their slide this week, shedding 8 units to 660, down 871 year-over-year and 949 since a recent peak on Oct. 10. The total of 660 is the lowest since Aug. 20, 2010. Gas-directed rigs, meanwhile, gained 2 units to 223.
Land rigs also lost 8 units, settling at 850, down 941 year-over-year. Rigs engaged in horizontal drilling dropped 7 units for the second straight week to 685. Since an all-time high on Nov. 21, 687 horizontal units have gone offline. Rigs drilling directionally edged up a unit to 89.
Rigs drilling in inland waters doubled to 4, while offshore rigs were unchanged for the third straight week at 34.
Canada’s overall rig count gained 2 units to 77, down 76 year-over-year and 363 since a recent peak on Jan. 16. Rigs targeting oil increased 5 units to 21, the country’s biggest rise since February, while rigs targeting gas shed 3 units to 56.
Texas leads losses, Kansas shoots upward
Texas reclaimed the top spot in losses among the major oil- and gas-producing states, losing 6 units during the week to settle at 373, down 518 year-over-year and 533 since a recent peak on Nov. 21. The Permian dropped 4 units to 233, down 313 year-over-year. But that loss was partially offset by a 3-unit rise in the Eagle Ford to 108, representing the South Texas shale play’s first gain of the year.
Beyond Texas the losses were modest. Wyoming declined 2 units to 22. North Dakota, Pennsylvania, Alaska, and Arkansas each edged down a unit to respective totals of 79, 46, 9, and 6.
Unchanged from a week ago were New Mexico at 44, Colorado at 39, Ohio at 24, and California at 13.
Five states reported gains this week, headlined by Kansas’s 4-unit jump to 14 and Louisiana’s 3-unit rise to 73. Oklahoma, West Virginia, and Utah each edged up a unit to respective totals of 103, 21, and 7.
Contact Matt Zborowski at [email protected].
