The US drilling rig count dropped 9 units to 431 during the week ended Apr. 22, the 18th-straight week in which the count has fallen, according to Baker Hughes Inc. data. Last week’s 3-unit loss was the smallest of the year thus far (OGJ Online, Apr. 15, 2016).
The count has declined in 33 of the last 35 weeks, more than halving since a slight rebound during summer 2015, and is down 1,489 units since the overall drilling dive commenced following the week ended Dec. 5, 2014 (OGJ Online, Dec. 5, 2014).
Eight of the nine units to go offline this week targeted oil. The new total of 343 is down 1,266 units since its peak in BHI data on Oct. 10, 2014, and its lowest point since Nov. 6, 2009. The current count remains well-above the 2008-09 downturn’s nadir of 179 touched on June 5, 2009.
Gas-directed rigs lost a unit to 88, matching their low-point in BHI data last touched 3 weeks ago.
Onshore rigs fell 8 units to 401, down 494 year-over-year. Rigs engaged in horizontal drilling decreased 3 units to 332, down 1,040 since a peak in BHI data on Nov. 21, 2014, and their lowest count since Jan. 26, 2007. Directional drilling rigs also lost 3 units, settling at 48.
After 3 rigs began operations last week offshore Louisiana, 2 went offline this week, bringing the overall US offshore count to 26. The tally of rigs drilling in inland waters added a unit to reach 4.
In Canada, the overall count was unchanged at 40, ending 10 straight weeks of declines. But the oil-directed count gained 2 units for the second consecutive week, bringing its total to 12, still down 122 units since Jan. 22.
Gas-directed rigs in Canada lost 3 units for the second straight week to 27. One rig considered unclassified came online.
Texas anchors US losses
All but two of the units to stop operations in the US were in Texas, which now counts 187 working rigs, down 771 units since a peak in BHI data on Aug. 29, 2008, and the state’s lowest level since the 1990s.
Five of those units were in the Permian and 2 in the Eagle Ford.
The Permian now totals 136, down 432 units since a recent peak on Dec. 5, 2014; the Eagle Ford totals 40, down 219 units since a peak on May 25, 2012.
The Texas Alliance of Energy Producers noted this week in its Texas Petro Index that the state’s official drop below 200 units on Apr. 8 marked its lowest weekly total since June 1999 (OGJ Online, Apr. 19, 2016).
Reflecting the drop in rigs, the Texas Railroad Commission during the first quarter issued 1,594 drilling permits, the lowest first-quarter total in the history of the TPI. Crude oil production in Texas during March totaled an estimated 108.4 million bbl, down 4.1% year-over-year, TAEP reported.
Just two other states recorded movement during the week ended Apr. 22. Down a unit apiece, Louisiana and Ohio now total 47 and 11, respectively. Mirroring its home state, the Utica also dropped a unit to 11. The Cana Woodford was the only other basin to post a loss, edging down a unit to 29.
More US oil output-decline data
The American Petroleum Institute’s monthly statistical report for March, released Apr. 21, showed that US crude production fell 6.8% year-over-year during the month to average just less than 9 million b/d, still the second-highest March production level since 1986 (OGJ Online, Apr. 21, 2016).
Crude stocks ended March at 530.1 million bbl, up 11.6% from the prior year and the highest inventory level for the month since 1930.
Separately, the US Energy Information Administration this week reported that US crude production fell to 8.95 million b/d for the week ended Apr. 15.
EIA last week revised down its forecast US crude output for each of 2016 and 2017 by 100,000 b/d (OGJ Online, Apr. 12, 2016); and projected further oil output declines for US shale (OGJ Online, Apr. 11, 2016).
In a recent report from Deloitte Marketpoint, the professional services firm estimates US tight oil production in 2016 will decline 700,000 b/d, with total US crude output for the year averaging 8.7 million b/d (OGJ Online, Apr. 19, 2016).
The firm projects average 2016 production for the Permian, Bakken, and Eagle Ford to reach 2.1 million b/d, 1 million b/d, and 1 million b/d, respectively. EIA has projected declines from the Eagle Ford and Bakken in every month since April 2015 (OGJ Online, Apr. 11, 2016)
Deloitte cites stripper well production as an additional uncertainty related to future production volumes. As cited by the report, the National Stripper Well Association says there are more than 400,000 stripper wells in the US accounting for an estimated 1 million b/d of production.
With low production volumes, stripper wells require crude oil prices in the low $30s/bbl to cover operating costs.
Contact Matt Zborowski at [email protected].
