US drilling activity still in decline

By OGJ editors
HOUSTON, June 12 -- US drilling activity continued to drop this week with 876 rotary rigs working, 11 fewer than the previous week and down from 1,901 during the same period in 2008.

Land drilling lost 8 rigs with 823 still active. Offshore operations were down 5 to 47 units in US waters, including 46 in the Gulf of Mexico. Inland waters increased by 2 rigs to 6 drilling.

The number of rigs drilling for gas dropped 15 to 685. Oil drilling increased by 4 units to 183. There 8 rigs unclassified. Horizontal drilling increased by 9 rigs to 381. Directional drilling declined by 6 rigs to 164.

Among the major producing states, Texas was down 7 rigs with 320 still drilling. Colorado lost 5 to 41. Alaska dropped 2 to 4. Arkansas was down 1 to 44. Oklahoma, Wyoming, and California were unchanged at 76, 31, and 21, respectively. Louisiana and New Mexico were up 1 rig each to 133 and 36. North Dakota gained 2 to 36.

In other states of interest, Pennsylvania was up 4 to 37 rotary rigs working. West Virginia was unchanged at 22, and Utah was down 1 to 14.

Canada’s rig count increased by 7 to 108, but was down from 230 a year ago.

In New Orleans, analysts at Pritchard Capital Partners LLC earlier said natural gas would likely “retest the $4.30/Mcf level” on the New York futures market if the US rig count continues to fall in conjunction with the latest lower-than-expected build. The US Energy Information Administration reported the injection of 106 bcf of natural gas into US underground storage in the week ended June 5. That increased the amount of working gas in storage to 2.4 tcf, up 586 bcf from the same period a year ago and 438 bcf above the 5-year average.

Issue of drilling permits fell 7% to 2,470 during May for the 30 states monitored by analysts at Barclays Capital Inc. in New York. “Permit issuances are now 55% below last year's levels. Most states surveyed indicated slower permit activity during the month, with Wyoming (down 29%, or 139 permits), California (down 36%, or 70 permits), and Oklahoma (down 22%, or 51 permits) leading the declines. Given the persistent weakness in permit numbers, we expect the rig count to remain weak through the summer,” said Barclays Capital analysts.

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