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U.S. Oil Rig Count Climbs To A 10-Month High

U.S. Oil Rig Count Climbs To A 10-Month High

The Baker Hughes rig count…

Bakken Production Down Plus IEA Predictions

The Bakken and North Dakota production data is in.

BakkenData

(Click Image To Enlarge)

Bakken production was down 19,502 bpd in August while all North Dakota was down 20,552 bpd.

AmplifiedChart

(Click Image To Enlarge)

Here is an amplified chart of Bakken and all North Dakota production.

BakkenBPD

(Click Image To Enlarge)

Bakken barrels per well per day is now 112 while all North Dakota gets 94 barrels per well per day.

Related: The End Of The Oil Major?

MonthlyChange

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This chart shows the monthly change in North Dakota production. It is likely that by next month the 12 month average change in production will be negative.

Bakken wells producing increased by 69 and ND wells producing increased by 65.

Related: Cheap Gas Claims Another Nuclear Victim

From the Director’s Cut

July Permitting: 233 drilling and 0 seismic
Aug Permitting: 153 drilling and 1 seismic
Sep Permitting: 154 drilling and 1 seismic

July Sweet Crude Price1 = $39.41/barrel
Aug Sweet Crude Price = $29.52/barrel
Sep Sweet Crude Price = $31.17/barrel

Today’s Sweet Crude Price = $35.00/barrel
(low-point since Bakken play began was $22.00 in Dec 2008)
(all-time high was $136.29 7/3/2008)

July rig count 73
Aug rig count 74
Sep rig count 71
Today’s rig count is 67
(in November 2009 it was 63)(all-time high was 218 on 5/29/2012)

Comments: The drilling rig count increased 1 from July to August, decreased 3 from August to September, and dropped 4 more this month. Operators are now committed to running fewer rigs than their planned 2015 minimum as drill times and efficiencies continue to improve and oil prices continue to fall. This has resulted in a current active drilling rig count of 10 to 15 rigs below what operators indicated would be their 2015 average if oil price remained below $65/barrel. The number of well completions fell from 119(final) in July to 115(preliminary) in August. Oil price weakness now anticipated to last well into next year is the main reason for the continued slow-down. There was one significant precipitation event in the Minot area, 6 days with wind speeds in excess of 35 mph (too high for completion work), and no days with temperatures below -10F.

Over 98% of drilling now targets the Bakken and Three Forks formations. At the end of August there were an estimated 993 wells waiting on completion services, 79 more than at the end of July.

The drop in oil price associated with anticipation of lifting sanctions on Iran and a weaker economy in China is leading to further cuts in the drilling rig count. Utilization rate for rigs capable of 20,000+ feet is about 40% and for shallow well rigs (7,000 feet or less) about 20%.

Drilling permit activity decreased sharply from July to August but stabilized from August to September as operators continued to position themselves for low 2016 price scenarios. Operators already have a significant permit inventory should a return to the drilling price point occur in the next 12 months.

Highlights of IEA Oil Market Report had an interesting chart this month.

IEAChart

This is a chart of nine different demand growth and production forecasts, sorted left to right on the amount of shortfall in Non-OPEC production. Or, to put it another way, it is sorted on the amount OPEC will have to increase production to keep supply and demand in balance.

The IEA says demand will increase by 1.2 mb/d while Non-OPEC supply falls by .5 mb/d meaning the “call on OPEC” will be to increase production by 1.7 mb/d. The most optimistic prediction says the “call on OPEC” will be only 1.2 mb/d while the most pessimistic prediction says the “call on OPEC” will be 2.3 mb/d.

By Ron Patterson

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