Energy Prospectus

The North American active rig count increased by 14 last week.

United States:
> Rigs drilling for oil was up 10 to 351, compared to 1,609 in October, 2014 and 645 a year ago.
> Rigs drilling for gas was down 1 to 88, compared to 217 a year ago.

Canada:
> Rigs drilling for oil was up 2 to 37, compared to 91 a year ago.
> Rigs drilling for gas was up 3 to 43, compared to 78 a year ago.

A lot is being made of these small increases in the active count, but the active rig count will need to double before there is any hope of stopping the decline of both oil and gas production in North America.

According to its latest well completion report, the American Petroleum Institute estimates that U.S. oil well completions decreased by 69% in the second quarter of 2016 compared to year-ago levels, according to statistics in the organization’s 2016 Quarterly Well Completion Report, Second Quarter. Estimated exploratory gas well completions in the second quarter of 2016 decreased 84% compared to year-ago levels. So far this year, development well footage has decreased 53% and exploratory well footage has decreased by 64%, the API said.

This is why the rate of decline in U.S. oil and gas production will accelerate in Q3.

The international rig count for June was also released today, showing the total number of active rigs throughout the world was down by 28, with oil rigs accounting for 27 of those removed from the fleet. The international rig count is down 7% quarter-over-quarter, and 15% from this time last year. The bulk of the lost rig count came from Latin America, which reported ten fewer rigs in June, and Asia-Pacific, which reported eight fewer than in May.

This is why non-OPEC production is falling and we are heading full steam toward an oil shortage as soon as mid-2017.