Posted on January 30, 2019
It’s apparently going to take more than a 40 percent plunge in oil prices to slow down drilling activity in the United States.
The number of rigs actively drilling for oil and gas jumped by nine from last week even with U.S. crude oil prices sitting at about $45 a barrel — way down from an early October high of $76.
Industry observers believe the sub-$50 oil price will have to drag on well in 2019 to really put a dent in U.S. oil and gas, especially in West Texas’ booming Permian Basin. Also, the rig count typically can lag behind changes in oil pricing by a couple of months or so.
It was the Bakken shale in North Dakota that led the way last week with an increase of three rigs. The little-known Mississippian shale in Oklahoma and Kansas also added three rigs, giving the play a total of eight active rigs, including the only two rigs operating in Kansas.
The total rig count rose to 1,080 rigs nationwide, according to the energy services firm Baker Hughes, a GE company. Of that tally, 883 are drilling primarily for oil while 197 are actively seeking natural gas.
Out of the 883 oil rigs, well more than half of them — 486 — are situated in the Permian, which extends from West Texas into New Mexico. Texas accounts for 531 rigs overall, almost 50 percent of the nation’s full tally.
Because of pipeline shortages in West Texas, many companies are continuing to drill Permian wells while leaving more of them uncompleted until new pipelines come online starting in mid-2019.
The total rig count is up from an all-time low of 404 rigs in May 2016 during the bottom of the last oil bust.
South Texas’ Eagle Ford shale remains the next most active area after the Permian with 80 rigs, although that number is closer to 100 if additional neighboring counties were counted. Oklahoma’s Cana-Woodford shale with is next with 59 rigs. Statewide, Oklahoma ranks second after Texas with 141 rigs. New Mexico is next with 106 rigs.
With this week’s jump, the oil rig count is down 45 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.
However, rigs today are able to drill more wells than before and to deeper depths to produce more oil and gas. That’s largely why the U.S. is producing record volumes of both crude oil and natural gas.