The overall US rig count heads into the Memorial Day weekend unchanged compared with the week-ago total, a sign that the US drilling segment could finally be stabilizing.
The Baker Hughes Inc. tally of active units during the week ended May 27 stood at 404, ending 22 consecutive weeks of declines. The count has fallen in 37 of the past 40 weeks, including last week when it posted its smallest decline of the year (OGJ Online, May 20, 2016).
Since the overall drilling dive commenced following the week ended Dec. 5, 2014, the overall count remains down 1,516 units (OGJ Online, Dec. 5, 2014).
Rising crude oil prices may contribute to a shrinking inventory of drilled but uncompleted (DUC) wells in the US, Rystad Energy said this week (OGJ Online, May 25, 2016). The oil and gas consulting firm last week reported that US shale operators have accumulated some 3,900 drilled DUC horizontal oil wells (OGJ Online, May 19, 2016).
“The pace of the DUC inventory contraction is likely to accelerate as we are already at the $45-50/bbl crude oil price level,” explained Artem Abramov, Rystad senior analyst. “DUCs will provide a significant support to the US shale oil production,” he added.
Rystad says the highest commercial DUC backlog resides in Weld County, Colo., the heart of the Denver-Julesburg (DJ) basin. Other counties with favorable economics are Reeves County, Tex., in the Permian’s Delaware basin and McKenzie County, ND, in the Bakken.
Meanwhile, the US Energy Information Administration reported this week that US crude production during the week ended May 20 averaged 8.77 million b/d, down 24,000 b/d compared with the previous week’s average and 800,000 b/d year-over-year (OGJ Online, May 27, 2016).
Oil rigs resume decline
After sitting unchanged last week, the US oil-directed count dropped 2 units this week to 316, down 1,293 since its peak in BHI data on Oct. 10, 2014, and still its lowest level since Oct. 23, 2009. The total remains well-above the 2008-09 downturn’s bottom of 179 oil-directed rigs recorded on June 5, 2009.
Gas-directed rigs offset this week’s loss in oil-directed rigs, gaining 2 units to 87. One rig considered unclassified remains working in the US.
Onshore rigs were down only 1 unit to 374, down 470 year-over-year. Directional drilling rigs gained 2 units for the second straight week, recording a total of 44. The tally of rigs drilling horizontally was unchanged at 314, remaining down 1,058 units since a peak in BHI data on Nov. 21, 2014, and its lowest count since Nov. 22, 2006.
One rig began drilling in inland waters, bringing that total to 6. Offshore rigs were static at 24, with 23 in the Gulf of Mexico and 1 off Alaska.
Freeport-McMoRan Oil & Gas LLC, a unit of Freeport-McMoRan Inc., agreed this week to cancel its third contract this month for a Gulf of Mexico drillship (OGJ Online, May 24, 2016). The Rowan Relentless was scheduled to terminate in June 2017.
Light activity among the major oil- and gas-producing states included a 2-unit increase in Oklahoma to 59, down 150 compared with when it entered 2015. A 1-unit rise in the Arkoma Woodford to 3 was offset by a 1-unit loss in the Cana Woodford to 28.
North Dakota, Alaska, and Kansas each edged down a unit to respective totals of 22, 5, and 2. North Dakota has dropped 181 units since an all-time high during June 1-8, 2012, and remains at its lowest level since Dec. 30, 2005. The Williston also was down 1 unit to 22.
A rare week in which Texas’s overall count was unmoved included a 2-unit gain in the Granite Wash to 6 offset by a 2-unit loss in the Eagle Ford to 29. Down in 7 straight weeks, the South Texas shale region has lost 229 units since a peak on May 25, 2012.
Canada’s rig count inched downward during the week, shedding 1 unit to 43, down 207 since Jan. 22. A 2-unit decline in oil-directed rigs to 14 was halved by a 1-unit rise in gas-directed rigs to 28. One rig considered unclassified remains operating within national boundaries.
Contact Matt Zborowski at email@example.com.