The overall US drilling rig count lost 6 units during the week ended Sept. 18 in a fourth straight week of declines, according to data from Baker Hughes Inc. (OGJ Online, Sept. 11, 2015). The new total of 842 is the lowest since the first week of January 2003.
The count has fallen by 43 units since the week ended Aug. 21. The downward shift follows a short-lived summer rebound in which the total lifted to 885 from a previous low for the current downturn of 857. The count is now down 1,089 year-over-year.
This week’s decline was again anchored by oil-directed rigs, which lost 8 units. During the past 3 weeks, that count has fallen by 31 units.
Amid a falling oil-directed rig count, oil production from major US shale plays is projected to continue dropping in October. In its Drilling Productivity Report released this week, the US Energy Information Administration forecast an 80,000-b/d decline during the month to 5.21 million b/d (OGJ Online, Sept. 14, 2015).
Reflecting a dramatic drop in its rig count, the Eagle Ford has represented a bulk of the overall declines since output from the plays began trending downward during the spring. EIA projects October production from the South Texas play to decline 62,000 b/d to 1.42 million b/d. The Bakken is expected to fall 21,000 b/d to 1.18 million b/d, while the Niobrara is expected to fall 19,000 b/d to 380,000 b/d.
Despite losses in the other major oil-producing plays, the Permian has continued its growth over the past few months. Output from the basin is expected to jump 23,000 b/d in October to 2.02 million b/d.
New-well oil production/rig across the seven plays is again projected to increase by a rig-weighted average of only 1 b/d, reaching a total of 449 b/d in October. The Utica leads the way, rising 14 b/d to 353 b/d. It’s followed by the Niobrara at 12 b/d to 572 b/d, Permian at 5 b/d to 370 b/d, Eagle Ford at 3 b/d to 795 b/d, Bakken at 2 b/d to 694 b/d, and Marcellus at 1 b/d to 60 b/d.
Same story for oil, land rigs
Oil-directed rigs now total 644, down 957 year-over-year. Gas-directed rigs, meanwhile, gained 2 units to 198.
Land-based rigs fell 7 units to 806, down 1,050 year-over-year. Rigs engaged in horizontal drilling lost 8 units to 640, down 701 year-over-year. It was also the fourth straight week of declines for the horizontal count, which has given up 37 units during that time. Directional drilling rigs gained 2 units to 83.
Offshore rigs were unchanged at 31, while rigs drilling in inland waters increased to 5, up 1 unit. In another forecast released this week, Moody’s Investor Service anticipates pain for the offshore drilling industry through 2017 (OGJ Online, Sept. 15, 2015).
“Drillers will increasingly contend with diminished backlogs, rig values, fleet sizes, and margins if oil prices do not bounce back to the $70-80/bbl range, which we believe could support an increase in shallow-water as well as deepwater and ultradeepwater drilling,” it said.
Also this week, Seadrill Ltd. canceled its contract for construction of the West Mira semisubmersible drilling unit, which would have operated off Canada and Greenland (OGJ Online, Sept. 15, 2015). According to the contract, the unit was supposed to be delivered by Dec. 31, 2014.
In Canada this week, its overall count declined for a fifth straight week, losing 3 units to settle at a total of 182, down 195 year-over-year. All 3 of those units were gas-directed rigs, which now total 112.
Oil-directed rigs in Canada were unchanged at 70. Last week’s 8-unit drop was part of a 42-unit plunge that has occurred since the peak of a recent rebound on July 31. However, the count remains well above the recent bottom of 15 most recently touched on May 8.
North Dakota, Williston hits recent lows
Louisiana and North Dakota led the major oil- and gas-producing states in declines, each relinquishing 3 units to respective totals of 70 and 67.
For North Dakota, its total is the lowest since the first week of January 2010 and down 122 year-over-year. This week's loss is reflected by a 3-unit decline in the Williston to 68, its lowest total since BHI started tracking major basin activity in February 2011.
Pennsylvania also continues to hit new recent lows, shedding 2 units to 33—the state’s smallest total since July 10, 2009. The Marcellus also dropped 2 units, settling at 49, its lowest count on record.
Texas and Kansas lost only 1 unit each to 365 and 9, respectively. Texas is now down 23 units since a recent peak on Aug. 14 and 535 units year-over-year.
The Eagle Ford continued its gradual slide, dropping 2 units this week to 88, the basin’s lowest total on record and down 117 year-over-year. The Granite Wash also dropped 2 units, settling at 13. The Permian, meanwhile, gained 3 units to 253.
The Mississippian led the major basins with a 5-unit loss to 14, down 64 year-over-year.
Unchanged from a week ago were Oklahoma at 106, Wyoming at 24, West Virginia at 17, California at 14, Alaska at 13, and Arkansas at 4.
Three states reported gains at 1-unit apiece. New Mexico, Ohio, and Utah now have respective totals of 49, 19, and 5.
Contact Matt Zborowski at email@example.com.