Baker Hughes reported on Friday that the number of combined oil and gas rig count in the US fell yet again this week by 3, to 244, as the pandemic continues to batter the oil and gas industry that is coming off a second-quarter financial season filled with billions in industry writedowns and projections of weaker-than-projected oil demand growth going forward.
Total oil and gas rigs in the United States are now down by 691 compared to this time last year.
The number of oil rigs slipped for the week by 4 rigs for the second week in a row, according to Baker Hughes data, bringing the total to 172, compared to the 770 active oil rigs this time last year. The Permian Basin alone lost five rigs this week, with Ardmore Woodford losing one, and Arkoma Woodford gaining one. The Permian now has just 117 rigs, compared to 441 a year ago.
The total number of active gas rigs in the United States increased by one, landing at 70 total rigs. This compares to 165 rigs a year ago.
To compare active rigs with supply figures, the EIA’s estimate for oil production in the United States fell for the week ending August 7—the last week for which there is data, at 10.7 million barrels of oil per day. Oil production in the United States is 2.4 million bpd less than its all-time high reached earlier this year.
Canada’s overall rig count rose this week by 7, reaching 54 active rigs. Oil and gas rigs in Canada are now down 88 year on year.
The Frac Spread Count in North America, provided by Primary Vision, fell last week, to 76 from 80. In terms of activity per basin, Primary Vision's Mark Rossano notes that ''the demand for completion crews remains range bound with support in the Appalachia and Permian basins. Pricing headwinds and reduction in activity in other basins will keep the ceiling in place as the U.S. struggles to find a footing.''
Oil prices were trading down on the day on Friday despite tensions between the United States and Iran, and reports of decreases to crude oil inventories in the U.S.
At 12:57 pm EDT, WTI was trading down 0.66% at $41.95—roughly $0.30 up on the week. Brent was trading down 0.58% on the day, at $44.70, a lackluster $0.20 per barrel higher than last Friday.
At 1:08 pm, WTI was trading at $41.97 per barrel, with Brent changing hands at $44.75 per barrel.
By Julianne Geiger for Oilprice.com
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Active oil rig count has fallen from 770 rigs this time last year to 172 now. Allowing for the fact that shale oil production accounts for 60% of total US production and also allowing for the shale oil industry’s estimate that one rig produces on average 10,000 barrels a day (b/d), this means that shale oil production has fallen this year to 1.42 mbd from 7.8 mbd at the start of the year. Adding conventional oil production of 5.2 mbd accounting to 40% of total US production, we come to a figure of 6.62 mbd for US production this year compared with the US Energy Information Administration’s (EIA’s) figure of 10.7 mbd.
The EIA doesn’t want the world to know the size of the collapse of US oil production as a result of the COVID-19 pandemic. That is why it is drip-feeding the information. First it claimed that production declined by 660,000 b/d to 12.34 mbd, By March it was talking of 1.2 mbd decline then it increased it to 2 mbd and now it is telling us that it is 2.4 mbd. At this rate the EIA will reach my estimated figure of 6.38 mbd by the end of the year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London