Onshore rig count stays high across US; Canada sees big jump

By Phaedra Friend Troy

The number of rotary rigs working in the US onshore and off remained the same this week, but Canada saw a huge jump in the number of rigs working there, according to the weekly rig report from Baker Hughes Inc. (NYSE:BHI).

In the US, the number of rigs working onshore stood at 1,661 units.

The state with the most rigs active continues to be Texas with 731 rigs drilling in the state. Although a decrease of two for the week, this is an increase of 218 year over year. Most rigs are active in the Permian Basin, Eagle Ford Shale, Haynesville Shale and Barnett Shale. Additionally, four of the rigs are offshore.

With 166 rigs drilling (145 onshore, 21 offshore), Louisiana is the second-most active state in the Union; although Oklahoma is gaining on it with 164 rigs drilling. Not far behind, North Dakota, with increased activity in the Bakken Shale of the Williston Basin, boasts 154 rigs drilling.

Shale Supports Drilling Ops

There are 789 rigs drilling for oil in the US and 902 rigs drilling for natural gas. Additionally, most rigs are drilling horizontal wells at 967. There are 514 rigs drilling vertically and 219 rigs drilling directionally.

The number of rigs drilling for natural gas dropped by 12 this week, while the number of rigs drilling for oil climbed by 12.

“That is indicative of what’s happening in the shale market,” advised Gary Flaharty, Baker Hughes Vice President of Investor Relations.

The number of rigs drilling for dry gas is dropping.”Look no further than the price of gas on the NYMEX for the reason for that,” Flaharty added.

The price for wet gas, or NGL, is up, and oil is nearing the $100 mark; while natural gas is selling at about $4.50 per mbtu.

“Operators are simply seeing an economic advantage to drill for oil or natural gas liquids,” he said.

Activity in shale plays mirrors the market situation, with increased activity in the oil-heavy Bakken and Eagle Ford. Nonetheless, because of unique JV agreements and drilling carries, activity in dry natural gas shale plays continues.

Offshore the US

Additionally, there are 14 active rigs in US inland waters and 25 offshore rigs in the US Gulf of Mexico – numbers that are also unchanged.

At this time last year, there were 40 offshore rigs drilling in the US Gulf, but that number has dwindled since the Deepwater Horizon accident, which was followed by increased drilling restrictions and delayed drilling permits.

“What you’re seeing is primarily drilling in on the (Continental) Shelf,” Flaharty said.

While the drilling moratorium has limited deepwater drilling, permits continue to be issued on the Continental Shelf, Flaharty explained.

Additionally, there are one or two rigs drilling injector wells in the deepwaters that have been permitted by BOEMRE and “probably four to six rigs doing workover in deepwater,” he added.

Baker Hughes doesn’t include maintenance drilling its weekly rig counts, although BOEMRE has permitted some deepwater workovers.

Drilling Spikes in Canada

In Canada, there are 577 rigs actively drilling, an increase of 155 week over week, as well as a jump of 111 rigs year over year.

The majority of the drilling rigs are working in Alberta, which hosts 406 rigs. Saskatchewan has 93 active drilling rigs, British Columbia has 62 rigs, and Manitoba has 14. There are also two offshore rigs located in the waters off Nova Scotia.

“Typically in Canadian rig counts, the activity is the highest when the ground is frozen,” Flaharty explained. “Always in the fourth quarter and first quarter, you see higher rig counts because it is easier to move around big machinery then.”

Additionally, there was some recovery following the holiday week. “This was not an unusual increase,” he added.

The highest rig count ever recorded in Canada was 718 in February 2006.



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