BHI: US oil rig count rises for first time in 11 weeks
The US drilling rig count dropped 4 units to 767 rigs working during the week ended Nov. 13, marking the 11th time in 12 weeks it has fallen and remaining its lowest since Apr. 26, 2002, according to data from Baker Hughes Inc. (OGJ Online, Nov. 6, 2015). However, the US oil-directed count posted its first increase—albeit modestly—in 11 weeks.
Adding 2 units this week to reach 574, the oil-directed total is still down 101 units since Aug. 28 and 1,578 units year-over-year.
Since Aug. 21, the overall count has fallen 118 units after a short-lived summer rebound. Compared with this week a year ago, the count has lost 1,161 units.
US oil flow slowing
The US Energy Information Administration reported this week in its Short-Term Energy Outlook that it expects US crude oil production in 2015 to rise to 9.3 million b/d—up from an average of 8.7 million b/d in 2014—and then decrease to 8.8 million b/d in 2016 (OGJ Online, Nov. 10, 2015).
Forecast crude production in 2016 is 100,000 b/d lower than in last month’s STEO, reflecting lower projections for crude oil prices and rig counts in 2016.
EIA notes that monthly production started to decrease in this year’s second quarter, led by Lower 48 onshore production. From March through October, Lower 48 onshore output fell from more than 7.6 million b/d to about 7.1 million b/d, according to survey-based production estimates.
The agency estimates total production declined almost 500,000 b/d since April, averaging 9.1 million b/d in October. EIA expects production declines to continue through September 2016, when it’s forecast to average 8.5 million b/d.
In its Drilling Productivity Report also released this week, EIA forecast crude production in December from seven major US shale plays to plunge 118,000 b/d to 4.95 million b/d (OGJ Online, Nov. 9, 2015).
Eagle Ford production, which has represented a bulk of the overall declines since they began in spring, is expected to fall 78,000 b/d to 1.28 million b/d. The Bakken is projected to drop 27,000 b/d to 1.11 million b/d, and the Niobrara is expected to fall 22,000 b/d to 356,000 b/d.
While output from other plays has continuously fallen since spring, the Permian has maintained its growth. The West Texas basin’s December production is expected to increase 11,000 b/d to 2.02 million b/d.
New-well oil production/rig across the seven plays is expected to rise by a rig-weighted average of 7 b/d in December to 473 b/d. The Niobrara is again seen leading the way with an 18-b/d jump to 652.
“Continued declines in US drilling activity suggest steeper drops in US LTO output lie ahead,” EIA said this week. Producers pulled another 36 rigs out of service in October, to 578, while the number of new wells completed dropped to 800, the lowest rate since the start of 2011. As a result, EIA forecasts US LTO production to drop 600,000 b/d next year compared with declines of 400,000 b/d expected previously.
US Gulf of Mexico became the largest source of supply growth in August as onshore production gains eroded, according to the latest EIA statistics.
In the International Energy Agency’s 2015 World Energy Outlook, meanwhile, it predicts that rising costs will ultimately constrain US tight oil’s rise, as operators deplete the “sweet spots” and move to less-productive acreage (OGJ Online, Nov. 10, 2015). US tight oil output will reach a plateau in the early 2020s just above 5 million b/d before starting a gradual decline, IEA says.
US land rigs continue slide
During the week, gas-directed rigs weighed down the overall US count, losing 6 units to 193.
Land-based rigs dropped 3 units in their 12th straight week of declines, settling at 731, down 1,863 year-over-year. Rigs engaged in horizontal drilling increased for the third time in 4 weeks, rising 2 units to 587, still down 1,369 year-over-year. Directional drilling rigs plunged 9 units to 72.
One rig went online offshore Texas, bringing the overall US offshore count to 33. Rigs drilling in inland waters lost 2 units to 3.
Canada’s rig count, meanwhile, dropped 9 units to 176, down 226 year-over-year. Oil-directed rigs fell 11 units to 68, while gas-directed rigs gained 2 units to 108.
Texas resumes decline
Texas and California led the major oil-and gas-producing states in losses, each giving up 2 units to respective totals of 338 and 10. For Texas, its total is down 564 year-over-year and the state’s lowest since July 10, 2009. The Permian dropped 3 units this week to 229, down 339 year-over-year.
In its Texas Petro Index released this week, the Texas Alliance of Energy Producers noted that September crude production in Texas totaled 104.9 million bbl, up 10.5% year-over-year (OGJ Online, Nov. 13, 2015). With crude oil prices averaging $45.50/bbl, the value of Texas-produced crude totaled about $4.77 billion, down 43.9% from September 2014.
Louisiana, North Dakota, and Colorado each edged down a unit to 69, 62, and 32. Unchanged from a week ago were Pennsylvania at 28, Wyoming at 24, Ohio at 20, West Virginia at 16, Alaska at 13, Utah at 5, and Arkansas at 4.
A week after hitting its lowest level since June 19, 2009, New Mexico’s count edged up a unit to 38. Oklahoma led the states with a 2-unit gain to 85.
Contact Matt Zborowski at [email protected].
