The U.S. rig count plunged this week, as the deleterious effects of the deeper fall in oil prices since December start to be felt.
According to Baker Hughes, the U.S. rig count declined by a shocking 48 rigs for the week ending on February 5, the largest reduction since March of 2015. The total rig count now stands at 571, made up of 467 oil rigs and 104 natural gas rigs.
The Permian Basin still accounts for the bulk of the active drilling rigs, with 180 as of this week. West Texas remains profitable to drill, at least in some of the best areas. Still, the Permian had well over 500 rigs a little over a year ago. Related: Obama Proposes $10 Tax On Each Barrel Of Oil
The Williston Basin in North Dakota, home of the Bakken formation, now only has 42 rigs, down from nearly 200 in late 2014.
Plummeting rig counts have yet to translate into significant cutbacks in oil production, although the sharp increase in output exhibited between 2011 and 2014 came to a screeching halt last year.
However, with rig counts plumbing new lows, production drop offs could be just around the corner.
By Charles Kennedy of Oilprice.com
More Top Reads From Oilprice.com:
ADVERTISEMENT
- Despite Bold Predictions, T. Boone Pickens Sells All Oil Holdings
- Global Oil Production On Pause, But Decline Seems Imminent
- The $2 Trillion Gift From Oil Companies To Consumers
1. what's the rig count?
2. how many holes were already drilled but waiting for the well installation? I heard that this number is huge.
3. what's the time delay from the time the hole was drilled by rig and before the well is installed?
4. what's the well count? No one reports it and it is the well count that determines the oil production and not the rig count.
5. Even if rig count goes to zero the oil production can easily increase - bu increasing the rate of extraction.
6. what is the rate of extraction per well?
And I could go on. this article is a perfect example how confused and shallow the new generation of 'journalists' or 'analysts' have become.
Was that a rhetorical question or were you asking the public to answer it?
1) The rig count is simply how many rigs are currently in operation. It is an active survey by BH.
2) That's known as the inventory. You are correct, production can still increase as drilled holes are 'completed'. The completion time can be anywhere between a couple of days to months. Unlike high pressured wells, shale wells have no pressure, so they can be fracked later.
3) It's true that the relationship between well count and production is now much fuzzy, however, in the medium term, if you drill less wells, you will have less producing wells.
I work in the industry so I know the numbers a little better than the average reporter.