U.S. Rig Counts Drop Everywhere--Except Texas and the Permian Basin

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--The U.S. and North American weekly rig count from oilfield services firm Baker Hughes (NASDAQ:BKR) (Houston, Texas), released on Friday, April 5, showed a continuing downward trend that started about two months ago--except in Texas and the Permian Basin. For the U.S. as a whole, the land rig count was down one, to 620. In Texas, the count rose to 297, up by seven from the week before. In the Permian, the count was up by one, to 317.

Pennsylvania was the only other state to see an increase, rising by one, to 22, but that number was two fewer than in 2023. States whose counts dropped from the previous week included California and New Mexico (both down by three), Louisiana (down by two) and West Virginia (down by one). Other states' totals remained the same.

All those numbers are considerably below those from a year earlier, the report shows, with the U.S. count down by 131 from 2023's 751, and Texas' down by 80 from 2023's 377.

On a year-over-year basis, rigs for natural gas were particularly low due to gas prices holding steady at three-year lows, landing last week at 110 rigs, 48 fewer than the 158 from 2023 nationally. Oil rigs actually grew by two, reaching 508, a number that is 82 fewer than those counted a year earlier.

Offshore rigs were at 20, the same as the previous week and three more than the 17 on the list for last year. Eighteen of those were in the Gulf of Mexico.

Vertical, Horizontal, Directional
Not all wells are the same, and counts for the three main types were led by horizontal rigs at 557, down by one from the previous week and minus 129 from March of 2023. Directional rigs accounted for 51, up by one from the previous week and unchanged from 2023. Bringing up the rear was the vertical well count at 12, down one from the previous week and two less than the year before.

Canada's Counts
The news is similar north of the U.S. border, with Canadian rig numbers less by 15 from the previous week, at 136. That's actually nine more than the 127 rigs in action a year earlier. Canadian gas rigs dropped by five to 71 compared to last week, and four fewer than the 75 counted in the same week last year. Oil rigs came in at 65, 10 fewer than the previous week and 13 more than the 52 enumerated in 2023.

Texas Drilling Permits for March
Also last week, the Texas Railroad Commission, which oversees oil and gas activity in the state, issued its monthly Drilling Permit and Completions Statistics for March. Overall, the commission issued 1,052 original drilling permits in March. The total includes 922 to drill new oil or gas wells, 10 to re-enter plugged wellbores and 107 for re-completions of existing wellbores.

Those well types break out as follows: 272 oil, 55 gas, 672 oil and gas, 42 injection, one service, and 10 other permits.

By region, the Permian Basin led the chase with the Midland area showing 434 new permits, 612 oil completions and 112 new gas completions. Add to that the number from San Angelo, which included 97 new permits and 114 new completions, all of which were for oil wells.

Production Can Still Grow
Even with rig counts down from last year, the U.S. Energy Information Administration (EIA) sees production continuing to grow in 2024, although at slower rates than in 2023. That's due to more-productive technology used in newer wells. "The number of new wells brought online by drilling activity has historically been the key determinant of whether crude oil production increases or decreases. However, advances in horizontal drilling and hydraulic fracturing technologies have increased well productivity, enabling U.S. producers to extract more crude oil from new wells drilled while maintaining production from legacy wells," the EIA said in March.

Another reason that rig counts have been less predictive of new production than in previous decades is the growth in multi-pad drilling, where one rig can drill multiple laterals from one position, then "walk" a few yards away and drill more, with little downtime. In fact, the EIA said U.S. production will grow by about 260,000 barrels per day in 2024.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).