Active Rig Count - June 10
Posted: Fri Jun 10, 2016 1:45 pm
The North American active rig count was up for the second week in a row. I now expect this trend to continue, but the increases should be small and it does not change my view that U.S. oil & gas production will decline and the decline will likely accelerate in the summer. There is a 2-3 month lag between the active rig count and production response, therefore the BIG DROP in the active rig count from January to May will show in declining production in June - August.
U.S.
> The number of rigs drilling for oil increased by 3 to 328, compared to 1,609 in October, 2014 (the peak) and 635 a year ago.
> The number of rigs drilling for gas increased by 3 to 85, compared to 221 a year ago.
To stabilize U.S. production we need twice as many rigs as we have drilling today.
Canada (increasing because Spring Break-Up is now over)
> The number of rigs drilling for oil increased by 16 to 29, compared to 68 a year ago.
> The number of rigs drilling for gas increased by 8 to 36, compared to 59 a year ago.
The EIA's "Drilling Productivity Report" (See http://www.eia.gov/petroleum/drilling/#tabs-summary-2 ) predicts production from the seven big producing basins in the United States.
EIA is forecasting the following production declines from May to June.
Oil: A decline of 113,000 bbls per day during June
Gas: A decline of 464,000 mcf per day during June
The only area outside of these seven areas where there is any drilling activity is the SCOOP/STACK play in Oklahoma. My guess is that rising production in Oklahoma is probably offset by declines everywhere else.
So, the United States is on-track to have 1.2 to 1.3 million barrels per day less onshore oil production a year from now and 5.0 to 6.0 Bcfpd less onshore gas a year from now. In 2015 the Gulf of Mexico added about 300,000 BOPD, but that won't happen in 2016. We can import more oil to take up the slack, but we have almost no import capacity for natural gas. The gas we are importing from Canada is on decline.
U.S.
> The number of rigs drilling for oil increased by 3 to 328, compared to 1,609 in October, 2014 (the peak) and 635 a year ago.
> The number of rigs drilling for gas increased by 3 to 85, compared to 221 a year ago.
To stabilize U.S. production we need twice as many rigs as we have drilling today.
Canada (increasing because Spring Break-Up is now over)
> The number of rigs drilling for oil increased by 16 to 29, compared to 68 a year ago.
> The number of rigs drilling for gas increased by 8 to 36, compared to 59 a year ago.
The EIA's "Drilling Productivity Report" (See http://www.eia.gov/petroleum/drilling/#tabs-summary-2 ) predicts production from the seven big producing basins in the United States.
EIA is forecasting the following production declines from May to June.
Oil: A decline of 113,000 bbls per day during June
Gas: A decline of 464,000 mcf per day during June
The only area outside of these seven areas where there is any drilling activity is the SCOOP/STACK play in Oklahoma. My guess is that rising production in Oklahoma is probably offset by declines everywhere else.
So, the United States is on-track to have 1.2 to 1.3 million barrels per day less onshore oil production a year from now and 5.0 to 6.0 Bcfpd less onshore gas a year from now. In 2015 the Gulf of Mexico added about 300,000 BOPD, but that won't happen in 2016. We can import more oil to take up the slack, but we have almost no import capacity for natural gas. The gas we are importing from Canada is on decline.