The overall US drilling rig count shed 3 units—all targeting oil—during the week ended Apr. 15 to settle at 440 rigs working, representing its smallest decline of the year thus far, according to data compiled by Baker Hughes Inc.
Still trending downward, the overall count has now fallen in 32 of the last 34 weeks, and is down 1,480 units since the overall drilling dive commenced following the week ended Dec. 5, 2014 (OGJ Online, Dec. 5, 2014).
The US oil-directed rig count is now 351, down 1,258 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 remain at 89, a unit above their low-point in BHI data reached 2 weeks ago.
Onshore rigs lost 5 units to 409, down more than half year-over-year. Rigs engaged in horizontal drilling lost 6 units to 335, down 1,037 since a peak in BHI data on Nov. 21, 2014, and their lowest count since Jan. 26, 2007. Directional drilling rigs dropped a unit to 51.
Three rigs started operations offshore Louisiana, bringing the total US offshore count to 28. One unit remains working offshore Alaska. With 1 rig drilling in inland waters going down, that count is now 3.
Canada’s overall count fell for the 10th-consecutive week, but it was the smallest of that period. Down 1 unit, it now totals 40, the latest of decades-long lows reached in recent weeks. The count is now down 210 units since Jan. 22.
Oil-directed rigs in Canada, however, posted their first increase in 10 weeks, gaining 2 units to 10. Until this week, they’ve mostly anchored the overall count's recent weekly declines. Gas-directed rigs dropped 3 units to 30.
More of the same for Texas
More often than not, rig activity in Texas has paralleled that of the entire US. The hub of the US oil and gas industry also shed 3 units this week, settling at 194, down 764 units since a peak in BHI data on Aug. 29, 2008, and the state’s lowest level since the 1990s.
The Permian and Eagle Ford each declined a unit to 141 and 42, respectively. The Permian is down 427 units since a recent peak on Dec. 5, 2014, while the Eagle Ford is down 216 units since a peak on May 25, 2012. The Barnett was the only basin to post an increase this week, adding a unit to reach 5.
North Dakota’s count is down 177 units since an all-time high during June 1-8, 2012, and at its lowest since May 5-12, 2006. The birthplace of the US oil and gas industry, Pennsylvania’s count is down 100 units since a recent peak in BHI data reached multiple times during 2011 and early 2012.
In an operations update released this week, Denver-based shale gas producer Antero Resources Corp. reported that it’s currently operating 7 rigs and 4 completion crews in the Marcellus, and 1 rig and one completion crew in the Utica.
Other basins reporting losses were the Cana Woodford, down 2 to 30; Ardmore Woodford, down 1 to 3; and Mississippian, down 1 to 4.
Three states reported increases this week, led by New Mexico’s fourth-consecutive weekly rise in which it gained 2 units to 19. Louisiana and Kansas were each up a unit to 48 and 6, respectively.
Fewer oil rigs, less oil
According to the US Energy Information Administration’s Short-Term Energy Outlook for April released this week, total US crude oil production is projected to decrease from 9.4 million b/d in 2015 to 8.6 million b/d in 2016 and 8 million b/d in 2017, which are both 100,000 b/d lower than forecast in last month’s report (OGJ Online, Apr. 12, 2016).
EIA estimates total crude output has fallen 700,000 b/d since April 2015 to an average in March 2016 of 9.0 million b/d, down 90,000 b/d from the February level. The entire production decline came from Lower 48 onshore.
Lower onshore investment is expected to reduce the count of oil-directed rigs and well completions in 2016 and 2017. The decline in rig counts continues to reduce EIA's forecast of future drilling and production throughout the forecast period.
EIA expects total crude output to decline from 9.1 million b/d in first-quarter 2016 to 7.9 million b/d in third-quarter 2017. Production of 7.9 million b/d would be 1.8 million b/d below the April 2015 level, which was the highest monthly production since April 1971.
Production is expected to begin increasing modestly in fourth-quarter 2017, reflecting productivity improvements, lower breakeven costs, and anticipated oil-price increases.
Meanwhile, in its latest Drilling Productivity Report, EIA also projected this week for crude output from the seven major US shale regions to fall 114,000 b/d in May from the April average to 4.84 million b/d (OGJ Online, Apr. 11, 2016).
More than half of the total decline is expected to come from the Eagle Ford, which is forecast to fall 62,000 b/d to 1.18 million b/d. The Bakken is projected to drop 31,000 b/d to 1.05 million b/d. For the second straight month, EIA anticipates a decline in the Permian. With a forecast drop of 4,000 b/d, output from the West Texas basin is to total 2.03 million b/d.
New-well oil production/rig in May across the seven regions is expected to fall by a rig-weighted average of 9 b/d to 532 b/d.
Contact Matt Zborowski at email@example.com.