Despite triple-digit prices and calls for US producers to ‘drill baby drill’ and rapidly increase oil output, rig activity continues to show only moderate growth.
Oil and gas producers cite a number of hurdles to quickly ramping up output amid concerns about supply shortages, high energy prices and the Russian invasion of Ukraine, which has prompted the US and much of the world to boycott Russian energy supplies. Those hurdles include investor demand to return cash to shareholders rather than investing in new drilling, a tight labor market and supply chain constraints that make it challenging to obtain more rigs, tubulars or other goods needed to drill wells.
Still, activity is increasing as oilfield services firm Baker Hughes said in its weekly report Friday – the US rig count rose by seven to 670, the highest level since April 2020. The rig count also rose for a record 19th consecutive month but the March increase of nine rigs was the lowest since September 2020. The rig count is 253 rigs higher than the 417 at work a year ago.
There were 531 rigs drilling for oil, up seven for the week and 207 higher than the 324 at work last March. The number of rigs drilling for natural gas was unchanged at 137 – 45 more than the 92 working last year.
Texas added six rigs for 326 at work within the state – a gain of 121 rigs from the number of rigs counted the previous March. New Mexico fell one rig to 96. Louisiana (2), North Dakota (1) and Pennsylvania (1) joined Texas as producing states seeing gains for the week. Alaska (1) and Ohio (1) joined New Mexico in reporting declines.
The Permian Basin added three rigs for 319 at work, 98 more than the 221 reported a year ago.
Lea County, New Mexico, remains the most active county in the Permian with 56 rigs, down two for the week. Eddy County, New Mexico, follows with 36, up one for the week.
Martin County reported 32 rigs for a second week while Midland County added one rig for 31. Loving County had 25 rigs, up four and the biggest increase among Permian counties this week. Reeves County added one rig for 23. Howard and Upton counties each reported 19 rigs, unchanged for Howard and up one for Upton. Glasscock and Pecos counties each reported 10 rigs, unchanged for both counties.
Enverus Rig Analytics said its US rig count fell by 13 in the last week to 754 as of March 23. Activity levels are up 2 percent in the last month and 58 percent in the last year. The count was as high as 775 in the last week compared to a peak of 769 the prior week, representing a six-well peak-to-peak increase. The March 23 reading is likely an indication of rig downtime rather than rigs being released.
As of March 23, the Anadarko Basin has six fewer rigs running than a week ago, at 58. However, the peak-to-peak weekly change was a two-rig increase. In the Permian, nine fewer rigs were active March 23 at 297, while the region had a smaller peak-to-peak decline of two rigs. The Appalachian daily count was down by three and by two on a peak-to-peak basis.
For plays with 10 or more rigs, seven stand out for their gains in the last year. SCOOP activity is up 214 percent, or 15 rigs, to 22. Camino Natural Resources (plus three to three), Citizen Energy (plus three to three), Continental Resources (plus two to five) and Gulfport Energy (plus two to two) account for 10 of the added wells.
Powder River Basin rig levels have charted a 200 percent, or eight-rig, YOY increase to 12. Anschutz Exploration (plus two to three) and Continental (plus two to two) fueled 50% of the increase. The Bakken rig count is up 143 percent YOY, or 20 rigs. Two-rig increases were tallied by ConocoPhillips (at two total), Continental (six), Enerplus (two), Ovintiv (two) and Whiting Petroleum (three).
In the Eagle Ford, drilling activity has increased 88 percent, or 29 rigs, in the last year to 62. More than 50 percent of that increase is attributable to BP (plus three to four), Chesapeake Energy (plus three to three), Recoil Resources (plus two to two), Repsol (plus two to two), SilverBow Resources (plus two to two), Validus Energy (plus two to two) and Verdun Oil & Gas (plus two to two).
Rounding out the plays with increases of 80 percent or more are the Uinta Basin (plus five to 11), Texas Haynesville (plus 12 to 27) and STACK (plus eight to 18).