Drilling activity hits 6-year low
US drilling activity continued to tumble, down by 41 rotary rigs with 1,085 still working the week ended Mar. 20.
By OGJ editors
HOUSTON, Mar. 20 -- US drilling activity continued to tumble, down by 41 rotary rigs with 1,085 still working the week ended Mar. 20.
That's the lowest weekly count since mid-August 2003 when 1,082 units were drilling, said Baker Hughes Inc. It compares with 1,784 rotary rigs working in the US during this same period in 2008.
Land drilling dropped 37 rigs to 1,036 still working this week. Offshore drilling was down 4 rigs to 43, including the loss of 3 rigs in the Gulf of Mexico. Inland-waters activity was unchanged with 6 rigs drilling.
Of the rigs still working, 857 were drilling for natural gas, down 27 from the previous week. Those drilling for oil were down 13 to 215. There are 13 rigs unclassified. Horizontal drilling increased by 4 rigs to 436. Directional drilling dropped 19 rigs to 207.
In New Orleans, analysts at Pritchard Capital Partners LLC said Mar. 17, "Over the past 2 weeks, the oil rig count decline has outpaced the gas rig count decline on a percentage basis. From the peak, the gas rig count has declined 45%, and the oil rig count has fallen approximately 47%." They said, "The nonvertical rig count decline accounted for 24 rigs, or 55% of the decline [through the week ended Mar. 13]. Since the year began, the nonvertical rig count has accounted for 213 of the 497 rigs, or 43%, that have been sidelined."
Pritchard Capital Partners also reported "a major shift" from rigs operating on term contracts to rigs drilling in the spot market. "Rigs on the spot market typically account for 30% of total drilling rigs but currently account for approximately 50%," they said.
The analysts said, "We believe the current cycle will reach a trough of 800-1,000 rigs, down 50-60% from the peak, by the second half of 2009. However, it appears possible that we could see a rig count bottom in the second quarter, given the rapidity of recent weekly declines. Regardless of when the trough occurs, we believe a significant rebound is unlikely until the second half of 2009."
They continued: "The 45% decline from peak continues to exceed the pace of past cycles, as the mid-1980s cycle was down 37%, the 1997–98 cycle declined 7%, and the 2001–02 cycle fell by 34% after the first 26 weeks."
Among the major producing states, Texas again had the largest loss this week, down 26 rigs to 430 still working. Louisiana and Colorado were down 5 rigs each to 132 and 56, respectively. New Mexico and California lost 4 rigs each to 39 and 19. Arkansas was down 3 rigs to 42. North Dakota lost 2 to 48. Wyoming and Alaska dropped 1 rig each to 43 and 10, respectively. The only gain among major producing states was in Oklahoma, up 6 to 116.
In other producing states of interest, Pennsylvania increased by 1 rig to 27. Utah dropped 2 rigs to 21 working. West Virginia gained 1 to 24.
Canada's count fell by 61 rotary rigs to 159 still working. That's down from 328 rotary rigs drilling in the same period a year ago.