BHI: Permian basin rig count up 101 since May 13

The most attractive oil region in the US and perhaps the world has added more than 100 active rigs since last spring.

The Permian basin of West Texas and southeastern New Mexico has provided much of the upward lift for the recent US rig-count rebound, and the trend continued during the week ended Dec. 2 as the country’s overall tally increased by 4 to 597, according to data gathered by Baker Hughes Inc.

The Permian gained 7 units to 235, an increase of 101 since May 13. The overall US count is now up 193 units since hitting a nadir during May 20-27. During a shortened Thanksgiving holiday week, the count gained 5 units (OGJ Online, Nov. 23, 2016).

US oil-directed rigs represented 3 of the units to begin operations this week, bringing their total to 477, up 161 since May 27. Natural gas-targeting rigs gained 1 unit to 119, up 36 since Aug. 26. One rig considered unclassified remains active.

The onshore rig count increased 6 units to 574, lifted by a 10-unit jump in horizontal rigs to 485, up 171 since May 27. Directional drilling rigs dropped 6 units to 46. Both rigs drilling offshore and in inland waters declined a unit to 22 and 1, respectively.

A quick drilling recovery by US exploration and production firms, many of which have sharpened their focus on Permian oil, may have contributed to this week’s decision by members of the Organization of Petroleum Exporting Countries to curtail their production in an effort to rebalance the oil market. OPEC’s desired outcome of higher crude oil prices, however, may stimulate even more drilling and production in the US.

The US in September did its part in contributing to a future rebalancing, at least, when its crude oil production recorded a year-over-year decline of 8.9% to 8.58 million b/d, the US Energy Information Administration reported this week. Compared with its August average, it was down 1.9% despite more than 100 active rigs having started operations since May.

Gulf of Mexico output largely weighed on the lower September average, falling 8.9% month-over-month to 1.507 million b/d, possibly impacted by shut-ins due to the threat of Tropical Storm and Hurricane Hermine. September output was down 9.3% year-over-year compared with an increase of 1% year-over-year in August.

Total shut-in oil production in the gulf exited August at 300,000 b/d, or more than 20% of total gulf output, and averaged 200,000 b/d into Sept. 2 as operators moved to restore flow, the US Bureau of Safety and Environmental Enforcement reported at the time (OGJ Online, Sept. 2, 2016).

In the Lower 48, meanwhile, Texas recorded its first increase since January, edging up 0.2% in September from its August average to 3.163 million b/d, down 7.4% year-over-year. The state’s year-over-year decline was 7.4% compared with its May drop of 9.4%. New Mexico was up 2.1% month-over-month to 395,000 b/d. At the time, the Permian accounted for about two thirds of all US rig count increases dating back to May 27.

Texas drilling is expected to continue to ramp up over the coming months, according to data obtained by the Texas Alliance of Energy Producers. The industry group this week said the number of original drilling permits issued in the state during October totaled 855, up 4% from the October 2015 total (OGJ Online, Dec. 1, 2016).

Texas towers above all

Thanks to the Permian, Texas, also up 7, led the major oil- and gas-producing states in gains this week. At 286 rigs working, the state has added 113 units since May 27. The Eagle Ford, which has struggled to pull out of its drilling rut, rose 2 to 40. The Barnett also added 2 units, doubling its count.

The Haynesville increased 3 units to 26 and has doubled its count since Sept. 30 as gas drillers become more active.

Wyoming jumped 4 units to 17. Oklahoma increased 2 units to 81, up 27 since June 24. The Cana Woodford collected a unit to 39.

Utah lost a unit to 4. North Dakota and Colorado each dropped 2 units to 31 and 20, respectively. Providing the downward movement in those states, the Williston and DJ-Niobrara also decreased 2 units each to respective totals of 31 and 20.

Due in part to the offshore and inland waters losses, Louisiana led all with a 4-unit decline to 48.

Canada, meanwhile, surged to 200 rigs working this week with a 26-unit jump, the country’s largest increase since the beginning of the year. Gas-directed rigs spurred the rise, gaining 20 units to 98. Oil-directed rigs rose 6 units to 100. Two rigs considered unclassified remain active.

Contact Matt Zborowski at

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