Rig-activity services use various methods to track drilling activity

Dean E. Gaddy
Drilling Editor

Published rig-activity reports can be confusing because of the various methods used to track and record information.Fig. 1 [28,421 bytes] compares Baker Hughes and Smith Tool active U.S. rig counts. From January 1987 to June 1997, both trend lines were fairly parallel; however, the average spread differed by 91 rigs. Although both companies use well-established sales networks to collect information from the same local and regional drill bit markets, their active-rig definitions are different, resulting in different data sets.

Different collection methods can also produce a wide disparity in data. Fig. 2 [12,686 bytes] shows a 17-state, side-by-side comparison of active rig counts. On Aug. 8, 1997, Rig Location & Permit Report Service (Rlprs) reported 1,323 rigs, while Hughes reported 890 rigs. The explanation is in how each company collects information.

For instance, Rlprs assigns dedicated personnel to contact contractors and operators for activity reports, while Hughes uses its field sales network to gather information. Rlprs' primary business function is to obtain information on rig activity, while Hughes's primary business function is to market drill bits.

These examples show why it is important to know how rig-activity data are collected and compiled.

The following report summarizes how six reporting services collect information, define rig activity, distribute information, and cover markets. The different methods affect data sets and apparent trends.

Baker Hughes

The Baker Hughes rotary rig count began in the 1930s as an in-house production and marketing tool. Noting that the information would be beneficial to the industry, Hughes Christensen (Hughes Tool Co.) began publishing monthly counts of U.S. and Canadian drilling activity to the public in 1940 and weekly counts in 1949.

The company eventually expanded it coverage, and in 1975 added a monthly international rig count. Finally, in 1987 it began to release a monthly workover rig count compiled by Baker Oil Tools.

The data come from the company's worldwide network of bit salespeople who maintain contact with rig crews operating in every major drilling arena.

North American rig count

The U.S. weekly rotary rig count includes rigs drilling on land, inland waters, and offshore by state. The count does not include cable-tool rigs, very small rigs, or truck-mounted rigs that operate without a permit. However, coiled-tubing drilling rigs are included.

Workover rigs are included only if they are actively drilling. Likewise, rigs involved in nondrilling activities such as workovers, completions, or production testing are not included.

"Turning to the right"

Baker Hughes counts only those rigs that are on location with the drill bit "turning to the right." This includes any operation that focuses on the drilling process including bit trips, etc. This begins when the well is spudded and ends when it reaches target depth.

Rigs that are moving from one location to the next, rigging up, or being used in nondrilling activities are not counted as active.

The U.S. report includes a breakdown of rigs drilling for natural gas and oil and of rigs drilling directional and horizontal wells (Fig. 3 [13,057 bytes]).

Baker Hughes publishes the U.S. and Canadian rotary rig count weekly. It is released on the last working day of the week.

The highest U.S. rig count recorded by Hughes was 4,530 on Dec. 28, 1981. The lowest count was 596 on June 12, 1992. In Canada, the highest monthly average rig count recorded was 455 in August 1980. The lowest monthly average was 32 in April 1992.

International rig count

For its monthly international rig count, Baker Hughes counts rigs that are in operation at least 15 days during the month. An international rig is counted if it is "turning to the right." The count does not include rigs drilling in Russia or onshore China. The data are broken into five areas: Europe, Middle East, Africa, Latin America, and Asia Pacific. There are two formats:

Onshore and offshore
Oil and gas.

The international rotary rig count is released the 15th of each month for the prior month. Since 1975, the highest recorded international rig count was 1,509 in November 1982, and the lowest was 709 in August 1994.

North American workover rigs

To be counted as an active U.S. and Canadian workover rig, production tubing must have been pulled from a well deeper than 1,500 ft. Counts are broken down into U.S. regions and into total U.S. and Canadian activity. They are reported weekly basis and released on the first working day following the 15th of each month.

The U.S. regions include the Texas Gulf Coast, Southeast, Midcontinent, Northeast, Rocky Mountains, West Texas, and Western U.S. Baker Oil Tools' district offices gather the data by contacting all workover contractors in their areas. Workover data collection does not depend on a sales force.

Website

Baker Hughes has a robust website at bakerhughes.com. It provides information for all the rig counts, and historical data can be downloaded as spreadsheet files. OGJ reports Baker Hughes rig counts in the statistics pages.

Smith Tool

In 1982, Smith Tool Division of Smith International Inc. developed the Smith Tool activity tracking system (Stats). Stats provides current information on U.S. rigs, both onshore and offshore, according to depth, footage, and contract type.

The company's salespeople continuously gather rig information from rig personnel, contractors, and operators. The rig counts are updated weekly. An active rig is defined as one that is either drilling, rigging up, fishing, testing, or at TD. A rig count is not restricted by well depth, and any rig that has been drilling for that particular week is included.

Website

Smith publishes its rig count information through its website at smithtool.com. OGJ includes its weekly rig counts in the statistics pages.

Fig. 4 [19,098 bytes] shows Smith's "Week at a Glance," which includes current information about exploratory, deep (10,000 ft), horizontal, and directional wells.

A unique tool on the website is the Rig Stats database. Searches by state, county, operator, or district can be conducted individually or by cross-referencing.

Reed Tool

Reed has conducted its annual rig census since 1952. It begins the census during the summer and publicly releases the totals in October. Reed collects information by contacting all contractors. In order to be included, an available rig must meet the following criteria:

The rig must be located in the U.S. or in inland waters.
The rotary rig must be functional; cable tool rigs are excluded.
The rig must be capable of and normally employed in drilling wells deeper than 3,000 ft.

Although this excludes some shallow drilling rigs (mostly in the northeastern U.S.), it ensures that well-servicing rigs are not counted.

Rigs that have been stacked for more than 3 years are not counted.
The rig must be able to drill without requiring a large capital expenditure.

Up to 1996, this amount was $50,000 for both land and offshore rigs. For 1997, it will be raised to $100,000 for land rigs and $1 million for offshore rigs.

Once a rig is considered available, it is classified as either recently active or inactive. A rig is considered active if it has been drilling within a 45-day drilling period. Even if the rig drilled only 1 day within this time, it is still considered active. The Reed census is used to determine rig supply and demand (Fig. 5 [27,208 bytes]).

The rig census data can be obtained through Reed's ftp site at reedtool.com, or by calling Tory Stokes at 713-924-5361.

Rig Location & Permit Report Service

Rig Location & Permit Report Service (Rlprs) is a subscriber-based service that has been tracking onshore drilling activity since 1981. It does not provide coverage for every producing state in the U.S., but the states covered are comprehensive. Its base coverage includes a 10-state area including and surrounding Texas.

In 1995, Rlprs began tracking Gulf of Mexico offshore activity. It intends to add California and Alaska in early 1998, followed by the remaining producing states.

Rlprs obtains and provides two types of data from different sources. The first type consists of permit filings obtained from public sources including state and federal agencies.

The second type consists of active well locations. Rlprs obtains this information by contacting contractors and in many cases verifies the information by double-checking with the operators. Wells on the active list must be "turning to the right." Rigs are included regardless of depth.

Detailed report formats

There are two primary forms of data (permits and active wells) that provide the basis for four report formats.

The first format, "Permits & Players," is a weekly state-by-state recap of permit filings. The front page compares the current week against the prior week (Fig. 6 [8,916 bytes]). In addition, 4-week averages are compared against the prior year. Permit information is obtained from state and federal agencies.

The main body of the report has two sections. Section A details permits by state, county, field, operator, lease, and legal description. Section B contains alphabetical listings by operator and includes contact information. It also provides information on present TD, the field, and the lease.

The second format, "Locations and Operators," provides working rig counts by state (Fig. 2). The "Pre-Spud Loc's" column is a list of pending wells to be spudded soon.

Again, the main body has two sections. Section A details activity by state, county, predicted TD, legal location, and contractor. It also provides the spud date and the current status of the well. For instance, whether it is drilling ahead or performing rig repair. In many cases, it also gives directions to the well.

Section B contains alphabetical listings of the operators. It includes contact addresses and phone numbers in addition to predicted TD, legal description, contractor, and rig name and number.

The other formats include a "Drillers Report" and an "Offshore Activity Report." The Drillers Report is a contractor-based format, and the Offshore Activity Report contains information about permits and activity in the Gulf of Mexico.

Rlprs offers additional formats other than what is described above. Rlprs can be contacted through a linked website at oilonline.com.

Petroleum Information/Dwights

Petroleum Information/Dwights (PI/D) is a subscriber-based service that has a digital rig-count data base dating to 1982. It provides comprehensive coverage of every region in the U.S. Its rig tallies are provided in weekly "Rotary Report and Activity Analysis" reports broken down into the following regions:

Rocky Mountains
Midcontinent
Southern U.S.
Gulf Coast
Gulf of Mexico
Permian Basin
North Texas
Michigan Basin
Appalachia and Illinois
West Coast.

PI/D counts a rig if it is "turning to the right" or if it is under contract. This is done regardless of drilling depth. The regional rig tallies are not combined into a total U.S. rig count.

Each week, PI/D's scouts call all active contractors, and even the rigs themselves, to determine rig location and the operator. They then double-check with operators to determine well status (drilling, tripping). PI/D's website is pidwights.com.

Detailed report formats

Fig. 7 [13,387 bytes] shows the first page of the "Rotary Report" for the Gulf of Mexico. The report compares current activity with the prior week, month, and year. The map shows active rig counts by geologic province.

The "Rotary Report and Activity Analysis" report has four sections. The first section includes details on exploration and development plans. It also has short news and editorial articles, followed by specific well details sorted by area, operator, and class (wildcat, development).

The second section contains a table that shows the top 25 rankings sorted by area, operator, and contractor for the active rigs in the region (Fig. 8 [43,816 bytes]). The third section is a current weekly rig analysis sorted by area and contractor. Section four is a current weekly rig analysis sorted by operator.

Offshore Data Services

Offshore Data Services (ODS), a subscriber-based service, tracks all offshore rigs in the world including the Gulf of Mexico, Central-South America, North Sea-Northwest Europe, Mediterranean-West Africa, Middle East-India, and Southeast Asia-Far East-Australia. It provides offshore rig supply and demand data by geographic region and rig type. Fig. 9 [43,816 bytes] shows the total supply, marketed supply, and demand for the Mediterranean/West Africa region.

Emphasis is placed on tracking competitive rig markets that generally have fixed, long-term contracts. Data are collected for all rigs, although most subscribers request information for only the competitive fleets.

ODS collects rig count data by contacting contractors and cross-referencing with the operators. Hardcopy editions for the Worldwide, Gulf of Mexico, and North Sea reports are generated weekly; the remaining regions are covered monthly. Electronic versions are provided weekly through e-mail, diskette, and electronic bulletin board.

ODS's rig data base includes contact information and operating specifications for every existing and under-construction mobile offshore drilling unit in the world.

The data base is updated daily with information collected by eight full-time employees. It includes historical monthly rig count and utilization data back to 1955. ODS provides customizable report formats.

Website

Weekly rig count and utilization data are made publicly available at ODS's website offshore-data.com. The data cover the European, U.S. Gulf of Mexico, and Worldwide offshore rig markets and contains data for the current week, the previous week, 1 month prior to the current week, 1 year prior to the current week, and 5 years prior to the current week.

The website includes data for:

Total rigs in drilling fleet-defined as the total number of mobile offshore drilling units in the specified market exclusive of tender-assisted units and rigs under construction. This number includes all rigs in the given market regardless of their working or competitive status and represents the maximum number of offshore rigs in existence equipped for offshore drilling.
Rigs under contract-defined as the number of mobile offshore drilling units with firm work contracts or commitments, regardless of whether the unit is actually on a location and working or not. This number indicates overall demand for offshore drilling rigs.
Rigs without contract-defined as the number of mobile offshore drilling rigs without contracts or contract commitments. This represents the number of rigs that may be available for work or are currently unable to work for various reasons.
Fleet utilization rate-defined as the percentage of each market's fleet that is under contract. This number is useful for comparing demand trends over time as the fleet size for any given market fluctuates.

Detailed report formats

Subscribers receive more detailed information customized to their needs, and it can be provided in hardcopy or electronic formats. Rig supply, demand, utilization, status, and contract data can be provided for rigs in 24 geographic regions. ODS also provides day-rate data by subsets of rig types for the Gulf of Mexico and six other regions.