BHI: US rig count rises for 13th straight week

The tally of active rigs in the US gained 8 units to 847 during a week ended Apr. 13 shortened a day by the Good Friday holiday, Baker Hughes Inc. data indicated. Much of the lift was again provided by the Permian—but this time on the New Mexico portion of the basin.

The tally of active rigs in the US gained 8 units to 847 during a week ended Apr. 13 shortened a day by the Good Friday holiday, Baker Hughes Inc. data indicated. Much of the lift was again provided by the Permian—but this time on the New Mexico portion of the basin.

It marked the 13th straight week in which the overall count has increased (OGJ Online, Apr. 7, 2017). The count is now up 440 units year-over-year and 443 units since the bottom of the drilling dive on May 20-27, 2016.

US oil-directed rigs recorded their fifth straight double digit increase, jumping 11 units to 683, up 352 year-over-year and 367 since their bottom on May 27. Gas-directed rigs lost 3 units to 162, still double their count on Aug. 26. Two rigs considered unclassified remained active during the week.

US land-based rigs rose 10 units during the week to 823, with horizontal rigs also recording their fifth consecutive double-digit rise, gaining 11 units to 706, up 392 since May 27. Directional drilling rigs dived 7 units to 64.

Data from the US Energy Information Administration indicate US crude oil production during the week ended Apr. 7 surpassed the 9.2 million b/d mark to average 9.24 million b/d. The 36,000-b/d week-over-week increase reflected a 35,000-b/d rise in onshore output and 1,000-b/d rise in Alaska.

In its Short-Term Energy Outlook for April released this week, EIA estimates US crude production in March averaged 9.1 million b/d, the highest level in a year. EIA now forecasts production to grow to an average of 9.2 million b/d in 2017 and 9.9 million b/d in 2018.

The forecast growth for 2018 is about 200,000 b/d more than forecast in the March STEO. The higher forecast reflects improvements to the rig methodology that captures increased cash flow as production increases. The change’s largest effect is on Permian and Niobrara production.

EIA explains that its expectations of higher production are supported by recent capital expenditure activity. Capex for 44 US onshore-focused producers increased $4.9 billion between fourth-quarter 2015 and fourth-quarter 2016 based on their public quarterly financial statements.

Company announcements and increases in the number of oil rigs working suggest producers continued investment growth in first-quarter 2017, the agency says.

Gulf output gaining

Contributing to higher forecast production in the US Gulf of Mexico, meanwhile, is continued development of the Thunder Horse South Expansion and the Gunflint projects that started in 2016, a year in which 8 projects came online in the region. Another 7 projects are anticipated to start up by yearend 2018.

Based on expected production levels at new fields and existing fields, annual gulf production is expected to increase to 1.7 million b/d in 2017 and 1.9 million b/d in 2018.

EIA notes, however, that the number of rotary rigs operating in the gulf decreased from an average of 55 in 2014, when the Brent crude oil spot price began dropping, to 22 in 2016, and the number of development and exploratory wells has fallen in each year since 2012.

Development wells have fallen at a faster pace than exploratory wells, as operators have taken advantage of the lower day-rates in the current low-price environment with the expectation of higher returns when crude prices rise and discoveries are brought on stream.

During the week ended Apr. 13, the US offshore count lost 1 unit to 21, while 1 rig drilling in inland waters went offline, brining that tally to 3.

New Mexico drilling spike

New Mexico led the major oil- and gas-producing states with a 7-unit climb to 58, up 45 since its low point on Mar. 18, 2016. The Permian rose 8 units to 339, up 205 since May 13.

Oklahoma’s surge hot streak continued with a 3-unit increase to 125, up 71 since June 24. The Cana Woodford grabbed 2 units to 52, up 28 since June 24.

Texas increased 2 units to 420, up 247 since May 27. The Eagle Ford rose 3 units to 75, up 44 since Oct. 14. The Granite Wash and Haynesville, the latter of which spans East Texas and North Louisiana, each dropped a unit to 37 and 9, respectively.

North Dakota and Ohio each gained a unit to respective totals of 43 and 22, reflecting 1-unit increases in each of the Williston and Utica to 43 and 23, respectively. California and the DJ-Niobrara each also added a unit and now count 9 and 24, respectively.

Louisiana and Alaska each fell 2 units to respective counts of 58 and 5.

Canada continued its seasonal plunge with a 14-unit loss to 118, down 234 since Feb. 10. Gas-directed rigs dropped 12 units to 78, and oil-directed rigs declined 2 units to 40.

Contact Matt Zborowski at matthewz@ogjonline.com.

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