The US drilling rig count began the new year with its eighth consecutive weekly rise and 28th increase of the past 32 weeks that comprise the recent drilling rebound.
Baker Hughes Inc.’s tally rose 7 units to 665 during the week ended Jan. 6. The count is up 261 units from a nadir of 404 touched during the weeks of May 20-27, the low point of the drilling downturn and in BHI data that dates back decades.
It entered 2016 at 664 rigs working and exited the year having almost fully recovered to that total at 658 (OGJ Online, Dec. 30, 2016).
Raymond James & Associates Inc. said in a research note this week that it expects the overall count to continue trending upward through 2017. However, the financial services firm believes the tally will be constrained to around 800 during the year before climbing to about 1,100 in 2018.
RJA continues to foresee an equipment bottleneck limiting rig deployment in the near term as demand continues to rise. “Given the pain that has been felt in the sector, the oil service industry may have difficulty keeping pace with [exploration and production] development plans as the recovery cycle develops, particularly in pressure pumping,” it said.
“The market could be wholly out of horsepower at 1,000 without a level of newbuilds and refurbished equipment, which may take time to enter the market,” RJA explained.
Oil rigs up in 10 straight weeks
US oil-directed rigs gained 4 units to 529, up 213 since May 27. That count has risen in 10 straight weeks and only declined once in the past 28 weeks.
Gas-directed rigs rose 3 units to 135, up 54 since Aug. 26. One rig considered unclassified remains active.
All but one of the 7 units to start work this week were land-based, bringing that total to 640. Rigs engaged in horizontal drilling gained 2 units to 534, up 220 since May 27. Directional drilling rigs edged up a unit to 57.
One rig started work offshore Louisiana, lifting the overall US offshore count to 24. One rig remains drilling in inland waters.
After ending 2016 with a 67-unit drop a week ago, Canada rebounding to begin 2017 with a 48-unit jump to 205, which is still 169 units higher than where the count stood on May 6.
Oil-directed rigs in Canada reclaimed 29 units to total 81. Gas-directed rigs took back 23 units to reach 123—their highest point since Mar. 13, 2015. Four rigs considered unclassified went offline, bringing that tally to 1.
Texas-New Mexico rebound hub
Among the major oil- and gas-producing states, Texas and New Mexico, both home to the Permian basin, led the way each with 3-unit increases to 327 and 37, respectively. Louisiana was the only other state with a double-digit increase, gaining 2 units to 50.
Texas’s count is up 154 units since May 27 while New Mexico’s count has risen 24 units since Mar. 13. The Permian also climbed 3 units and now totals 267, up 133 since May 13.
The Haynesville rose 2 units to 29, up 16 since Sept. 30. The Eagle Ford continued its slow rise, edging up a unit to 47, up 18 since June 3. The Granite Wash, meanwhile, dived 5 units to 10.
Pennsylvania, Colorado, and Ohio each edged up 1 unit to respective totals of 33, 29, and 20. The Marcellus and Utica each gained 1 unit to 40 and 20, respectively. The two shale gas regions’ counts have doubled during the rebound.
Major shale gas producer Antero Resources Corp. said this week that it plans to operate 4 rigs in the Marcellus in West Virginia during 2017 and expects to complete 135 wells with an average lateral length of 9,200 ft (OGJ Online, Jan. 6, 2017).
In the Ohio Utica, the firm plans to operate 3 rigs for the year and expects to complete 35 wells with an average lateral length of 9,700 ft.
Alaska dropped 1 unit to 8 rigs. Wyoming decreased 2 units to 17.
Contact Matt Zborowski at email@example.com.