• 2 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 5 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 7 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 8 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 3 days New Video Game Targets Oil Infrastructure
  • 3 days Shell Restarts Bonny Light Exports
  • 3 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 4 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 4 days Rosneft Signs $400M Deal With Kurdistan
  • 4 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 5 days Conflicting News Spurs Doubt On Aramco IPO
  • 5 days Exxon Starts Production At New Refinery In Texas
  • 5 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 6 days VW Fails To Secure Critical Commodity For EVs
  • 6 days Enbridge Pipeline Expansion Finally Approved
  • 6 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 6 days OPEC Oil Deal Compliance Falls To 86%
  • 7 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
Alt Text

The U.S. Shale Play To Watch In 2018

The original U.S. shale gas…

Alt Text

Why U.S. Crude Exports Are Booming

U.S. crude oil exports are…

What A Falling Rig Count Can Do For Oil Prices

What A Falling Rig Count Can Do For Oil Prices

The U.S. rig count fell below 500 for the week ending on March 4, as another 13 oil and gas rigs fell victim to the oil price downturn.

According to Baker Hughes, the number of active oil rigs declined by 8, falling to a total of 392, which is the lowest level since 2009. Natural gas rigs dipped by another 5, plunging below 100 rigs. The combined total fell to 489. Related: Horizontal Land Rig Count Summary 4th March 2016

The rig count began its descent after hitting a peak in October 2014 at 1,931 (oil and gas combined), plunging to around 900 by May 2015. Over the summer of 2015, the rig count held steady as oil prices rallied from their lows in the mid-$40s to above $60 per barrel. But beginning in the third quarter, the rig count followed oil prices down again and have been in decline since then.

The more recent descent of oil prices below $30 per barrel is inducing another period of contraction in drilling activity, which is clearly visible with the rig count in free fall. Related: Big Oil Eyes Upcoming Auction In Iran

Individual shale basins are feeling the pinch to various degrees. The Eagle Ford shale in South Texas, for example, had over 200 rig counts as of late 2014. That figure has fallen to just 46 as of early March. Oil production from the Eagle Ford has declined by 0.5 million barrels per day since the middle of last year. The Permian Basin in West Texas had over 500 oil and gas rigs at the end of 2014, a level that has plunged to just 158. Oil production from the Permian has finally come to a halt, and could begin to decline through this year.

There tends to be a lag between movements in the oil price and the resulting effects on the rig count. As a result, the rig count may not rebound immediately even if oil prices rise. That means that with production in the U.S. now declining, the declines should continue at a steady pace until oil prices post a sustained rally.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News