US drilling activity up, offsetting week-ago decline

By OGJ editors

HOUSTON, July 19 -- The number of rotary rigs drilling in the US and its waters rose by 11, to 856 this week, nearly offsetting a 14-unit decline seen the previous week, officials at Houston-based Baker Hughes Inc. reported Friday.

The current count marks the 11th week that the rig count has been above the 800-unit mark, but it is still well below the 1,278 rigs that were working during the same period a year ago.

The largest gains were made in offshore operations, up 7 active rigs, to 115, this week, Baker Hughes said. Gains also were made in land operations, which rose 5, to 725 rigs this week. Drilling in inland waters, meanwhile, fell 1 unit, with 19 rigs active.

Canadian drilling activity fell 4 rigs, reaching 266 active units this week. Ten of these units were offshore, while the remainder were land-based. Despite being below last year's count of 343 for the same period, Canada's rig count has been creeping upward since April—a trend that some analysts believe will continue. "By the second half, (drilling) activity should begin to rebound solidly in Canada along with marginal activity improvement in the US," said James Wicklund, analyst with Banc of America Securities LLC.

Among US rigs, the number of units drilling for natural gas this week rose 14, to 725 active rigs this week. Those rigs drilling for oil, meanwhile, fell 3 units, to 132, Baker Hughes said. Two rigs were unclassified.

Rigs involved in vertical drilling rose by 11 units this week, while those drilling directionally fell by 2 units.

Among the US states, Texas led the activity gains, adding 10 units, reaching 335 rigs active. Two other states—Oklahoma and New Mexico—both saw increases in activity as well, up 8 units, to 108, and up 2 units, to 45, respectively. Louisiana's rig count declined, by 4 units, to 158 active rigs. Those rigs drilling in Alaska dropped 3 units, to 9 still drilling.

California and Wyoming each lost 1 unit, reaching 23 and 45 rigs this week, respectively.

Offshore rig demand rose this week in the world's major rig markets, said Houston-based ODS-Petrodata Group. The utilization rate among mobile offshore rigs in the Gulf of Mexico reached 69.5% this week, ODS-Petrodata said. Gulf rig numbers under contract were up 3 rigs out of a 197-unit fleet.

The utilization rate for rigs contracted in European waters rose to 82.7% with one more rig under contract from last week. Of the 104 rigs, 86 were under contract.

Worldwide rig demand rose by 3 units this week vs. last, while worldwide offshore rig fleet utilization reached 81.4%, ODS-Petrodata said.