The U.S. rig count remained unchanged from last week in a sign that perhaps the sharp plunge in drilling activity is finally bottoming out after 20 straight weeks of losses.
Energy companies are operating 251 oil and gas rigs nationally, the same as last week and a record low for the industry, according to Baker Hughes, a Houston oil-field services company that has been tracking the rig count since the 1940s. There are 180 oil rigs, down one from last week, and 69 gas rigs, up one from last week, and two maintenance rigs.
The rig count, a leading indicator of U.S. oil and gas production, has plunged more than 60 percent since mid-March after the coronavirus pandemic decimated crude demand and prices, forcing drillers to pause production and halt drilling. The count is well below the bottom of the last oil bust in May 2016, when there were 404 operating rigs nationally.
Texas gained one rig last week, raising the state’s total to 104 from 455 a year ago. Texas, home to most of the Permian Basin, hosts about half of the nation’s oil and gas rigs.
The Permian Basin, the nation’s most productive shale play that stretched from West Texas into New Mexico, has 124 rigs in operation, down two rigs from last week. The Eagle Ford in South Texas has 12 rigs in operation; no change from last week.
Some energy companies are restarting production as crude prices have climbed above $40 a barrel. Diamondback Energy, a Midland shale driller, has restarted oil production on nearly all of its wells in June, and ConocoPhillips, a Houston oil major, is expected to restore its curtailed production by September.
Karr Ingham, a petroleum economist with the Texas Alliance of Energy Producers, said he expects the rig count to bottom out in the coming weeks, but that recovery will take time. Prices and permitting activity have to rebound first, before drilling companies start adding more rigs.
Ingham said it’s unclear if the rig count will fully recover from this downturn. With growing financial pressure, many energy companies are turning to new technologies to produce more crude with fewer rigs and workers, he said.
“Who knows when we’ll have a rig count of 300?” Ingham said. “It seems like quite a ways off to me.”
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August 01, 2020 at 03:30AM
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Oil and gas rig count may be bottoming out - Houston Chronicle
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