Up in 14 of the last 17 weeks, the overall count has now added 107 units since the week ended May 27 (OGJ Online, Sept. 16, 2016). Compared with the week ended Dec. 5, 2014, after which began a steep dive in US drilling activity, the count is still down 1,409 units.
The recent drilling rebound has been characterized by steady increases devoid of major rig and equipment constraints. With the overall count expected to continue to rise over the next 2 years, however, analysts at financial services firm Raymond James & Associates Inc. foresee “meaningful bottlenecks” emerging due to low spending on oil field infrastructure during the downturn.
The primary culprit is expected to be the beleaguered pressure pumping industry, whose readily workable US frac fleet is forecast to be down 35-50% by 2017 compared with 2014 levels, the analysts said in an industry brief this week. Some 3-4 million hp has been removed permanently during the downturn while another 3-4 million hp will require major investment to be refurbished into working condition.
“With modest attrition on the nearly 2,000 rigs running in 2014, the market should be able to supply additional drilling rigs—of varying qualities—beyond 1,000 active rigs,” they said. “The problem will be, if wells cannot be completed, why drill them?”
RJA believes the industry’s initial bottleneck point will be reached next year at 800 rigs working. The average overall US rig count for 2017 is also expected at 800 units, rising to 1,100 in 2018, even though the firm projects industry cash flows will likely justify higher counts.
Oil-rig streak holds steady
US oil-directed rigs have now risen in 15 of the last 17 weeks, adding 102 units over that time to total 418 rigs working, down 1,191 units since their peak on Oct. 10, 2014. Gas-directed rigs now total 92, and have stayed within a range of 81-97 units since the beginning of March.
The overall increase comprised onshore units, which are up 6 to 488. Rigs engaged in horizontal drilling gained 8 units to 402, a rise of 88 units since May 27 but down 970 since their peak on Nov. 21, 2014. Directional drilling rigs edged up a unit to 49.
Several of the major oil-and gas-producing states made either a modest increase or modest decrease. Texas and Oklahoma led the way in increases, each gaining 2 units to 246 and 67, respectively. Texas is now up 72 units since May 13 but down 712 since a peak on Aug. 29, 2008.
The Cana Woodford and Mississippian each added a unit to hit respective totals of 33 and 3. The Eagle Ford was down a unit, settling at 37. Down 1 unit to 201, the Permian declined for just the second time in 19 weeks.
In news of yet another firm banking on the West Texas and southeastern New Mexico basin, Calgary-based Encana Corp. this week completed a public offering to raise $1 billion, a portion of which will go toward boosting its Permian rig count and doubling its number of producing wells in the play during 2017 vs. the 2016 total.
North Dakota, Pennsylvania, Alaska, and California each rose a unit to 28, 22, 6, and 6, respectively. As with its home state, the Williston was up 1 to 28, while the Marcellus also increased a unit to reach 30.
Louisiana, New Mexico, and West Virginia each lost a unit to respective totals of 40, 27, and 9.
One rig drilling in inland waters was idled, bringing that tally to 3. The tally of active offshore rigs was static at 20.
Canada topped the US with a 6-rig rise to 138, up 102 units since May 6. Gas-directed units increased by 5 to 61 while oil-directed units gained 2 to 77, up 69 units since Apr. 8. The country’s only unclassified rig halted operations this week.
Contact Matt Zborowski at email@example.com.