Rig Counts Jump: Producers step up drilling across North America

By Phaedra Friend Troy

According to the weekly rig report from oilfield services firm Baker Hughes Inc. (NYSE:BHI), the number of rotary rigs drilling in the US and Canada increased by 35 rigs this week.

In the US, there are 1,732 rigs drilling, which is an increase of 19 rigs for the week and 415 rigs year over year. Specifically, there are two more inland water rigs, one less offshore rig, and 18 more land rigs working in the US.

Shale Developments Continue to Push US Rig Counts

Through improvements in horizontal drilling and hydraulic fracturing, the commerciality of producing shale hydrocarbons has become a reality in the last few years, supporting a massive increase in drilling rigs.

The state with the biggest jump in active rigs was Pennsylvania, which gained 10, taking the number of rigs drilling in the state's Marcellus Shale to 108. This also represents an increase of 38 rigs year over year. All 108 rigs are drilling for natural gas, and 88 percent of them are drilling horizontal wells.

The next biggest jump happened in Louisiana, which gained five rigs. With active drilling both offshore Louisiana and in the onshore Haynesville Shale play, the number of drilling rigs in the state is 174. Nonetheless, the number of active rigs in Louisiana has dropped by 23 year over year, due mostly to decreased offshore drilling. A year ago, there were 37 active drilling rigs offshore Louisiana’s coast; today, that number has dwindled to 23.

With ramped up activity in the Avalon Shale play of the Permian Basin, New Mexico also gained four rigs, taking the rig count in the state to 77, which is also an increase of 24 rigs year over year. Most of the rigs are drilling for oil at 87 percent, but the break-down in well type is a-typical for unconventional developments: only 48 percent of the wells are horizontal, and 44 percent are vertical.

With a whopping 740 rigs drilling, activity in Texas is supported by various shale and unconventional plays, including drilling for natural gas in the Haynesville and Barnett Shales; for natural gas, condensate and oil in the Eagle Ford Shale; and mainly for oil in the Permian Basin. While the state lost one rig during the week, there are 202 more rigs drilling in Texas year over year.

With 166 active rigs, Oklahoma drilling is supported by development of the Woodford Shale, as well as the Anadarko Basin. While Oklahoma has long been a major producer of natural gas for the US, drilling has certainly picked up with the development of its unconventional resources; there are 54 more rigs drilling in the Sooner State than this time last year.

Development of North Dakota’s Bakken Shale formation has spiked over the last year, as well. North Dakota currently has 154 rigs drilling in it, which more than doubles the active number of rigs at this time last year. All of the rigs are drilling for oil, and 90 percent are drilling horizontal wells.

Drilling Increases in Canada’s Oil Sands

Increasing by 16 during the week, the number of rigs drilling in Canada has reached 637, an increase of 106 year over year. Most of the rigs are drilling onshore, with only three rigs active offshore Canada.

With the most activity, Alberta has 464 rigs drilling in it, a weekly increase of 20 and year-over-year increase of 103. Climbing oil prices have supported activity in Alberta’s oil sands region, which requires a higher price point because of development and refining costs.

Saskatchewan also has 103 active rigs, and British Columbia has 63 rigs. In addition to one onshore rig, all three offshore rigs are working in waters off the coast of Newfoundland. The only other state with drilling activity is Manitoba with three rigs, which was a decrease of 13 during the week.

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