oil prices fell to a 15 month low on the biggest weekly drop since the pandemic hit; oil drilling at 9 month low; global oil production exceeded demand by 620,000 barrels per day in February, despite OPEC production that was 927,000 barrels per day below their reduced quota
US oil prices fell to a 15 month low this week in the wake of the second and third biggest bank failures in US history...after falling 3.8% to $76.68 a barrel last week as traders repriced the likelihood of a demand crushing recession following hawkish comments from Fed Chairman Powell, the contract price for the benchmark US light sweet crude for April delivery fell as much as $4 in early trading on Monday as the collapse of Silicon Valley Bank roiled markets and raised fears of a new financial crisis, but came off the lows to move higher as a recovery in Chinese demand provided support for prices, but still settled $1.88 lower on the day at $74.80 a barrel as emergency measures taken by the Fed, the FDIC, and the Treasury Department to shore up confidence in the banking sector had just a limited effect in countering a selloff in the shares of regional lenders....oil prices fell more than $2 a barrel in Asian trading on Tuesday, extending the previous day's slide, alongside a continued slide in rattled equities markets, and continued on its downward path in New York trading on concerns of a broader recession that could reduce demand following the release of the Consumer Price Index report, and settled $3.47 lower at a three month low of $71.33 a barrel on a stronger U.S. dollar tied to expectations for another rate hike from the Fed next week, and persistent concerns over fuel consumption in the US along with uncertainty about a rebound in Chinese demand....Oil prices rebounded in Asian trading on Wednesday on an improving fuel demand outlook in China after OPEC raised its forecast for Chinese oil demand growth in 2023, but dropped more than 1% in early New York trading after the International Energy Agency forecast that the global oil market is likely to remain in surplus for the first half of this year, with oil inventories held in OECD countries climbing to 18-month highs on the back of strong Russian crude oil exports, and then tumbled to settle $3.72 or more than 5% lower at $67.61 a barrel, the lowest settlement since December 2021, as financial firms trying to limit their exposure to falling prices in the options market began dumping crude futures in a strategy known as delta hedging....oil prices moved up in Asian trade early Thursday, after markets received the welcome news that Swiss regulators had pledged to assist the beleaguered megabank, Credit Suisse, then climbed 1% in choppy US trading as Saudi-Russian assurances on production cuts and remarks that the U.S. banking system was ‘safe and sound’ amid the rescue of another lender helped restore some confidence, and settled 74 cents higher at $68.45 a barrel even as the European Central Bank lifted its benchmark lending rate by 50 basis points, defying expectations of a pause in rate hikes amid the banking turmoil, in a move that boosted the Euro against the U.S. dollar and hence boosted prices of commodities trading in dollars...oil prices recovered some more ground early Friday following support measures from the European Central Bank and U.S. lenders, but then turned lower after the bailed out Silicon Valley Bank filed for bankruptcy, and slid 3% to settle $1.61 lower at $66.74 a barrel on the session, the lowest close since December 2nd 2021, dogged by the banking sector crisis and worries about a possible recession...US oil prices thus finished the week down 13.0%, their worst weekly decline since April 2020, pressured by growing concerns that the banking turmoil in the United States and the European Union would trigger a financial crisis in coming months, wiping out a large chunk of the post-pandemic gains in oil demand growth..
Meanwhile, natural gas prices also finished lower, as the collapse in oil prices and the widespread market rout spread into other commodity contracts....after falling 19.2% to $2.430 per mmBTU last week on lower demand expectations following moderating temperature forecasts, the contract price of US natural gas for April delivery opened lower along with other energy commodities on Monday, but soon reversed and moved higher to settle up 17.6 cents on the day at $2.606 per mmBTU, on forecasts for demand to rise next week as gas flowing to LNG export plants was on track to hit a record high and on longer-range weather maps that continued to favor a cool start to April....natural gas prices opened higher on Tuesday, but pulled back as the 5% drop in oil futures weighed on all energy contracts and settled 3.3 cents lower at $2.573 per mmBTU as broader market concerns about inflation and panic in the financial sector helped slow price momentum....another 5% drop in the price of oil on Wednesday took natural gas prices down with it, and they settled 13.4 cents, or 5.2% lower at $2.439 per mmBTU, as analysts expected another weak EIA reading on underground inventories the next day....but natural gas prices moved higher Thursday after the reported withdrawal of natural gas from storage was well below historical pulls, but close to market expectations and settled 7.5 cents, or 3.1% higher at $2.514 per mmBTU as lower heating demand kept gains in check...however, natural gas prices moved lower again on Friday as the intimidating storage levels for the fuel: up 36% from the year-ago level and 24% above the five-year average, offset colder forecasts and sent prices tumbling 17.6 cents or 7% to $2.338 per mmBTU, and they thus finished 3.8% lower on the week...
The EIA's natural gas storage report for the week ending March 10th indicated that the amount of working natural gas held in underground storage in the US fell by 58 billion cubic feet to 1,972 billion cubic feet by the end of the week, which left our natural gas supplies 521 billion cubic feet, or 35.9% above the 1,451 billion cubic feet that were in storage on March 10th of last year, and 378 billion cubic feet, or 23.7% more than the five-year average of 1,594 billion cubic feet of natural gas that were in storage as of the 10th of March over the most recent five years….the 58 billion cubic foot withdrawal from US natural gas working storage for the cited week was lower than was expected by analysts surveyed by Reuters, whose average forecast called for a 62 billion cubic feet withdrawal, and it was much less than the 86 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and also less than the average 77 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same late winter week over the past 5 years…
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending March 10th indicated that even after a big jump in our oil exports, we had surplus oil to add to our stored commercial crude supplies for the 11th time in 12 weeks, and for the 30th time in the past 47 weeks, largely due to a big jump in oil supplies that the EIA could not account for... Our imports of crude oil fell by an average of 55,000 barrels per day to average 6,271,000 barrels per day, after rising by an average of 63,000 barrels per day during the prior week, while our exports of crude oil rose by 1,665,000 barrels per day to 5,027,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,189,000 barrels of oil per day during the week ending March 10th, 1,720,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly unchanged at 12,200,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have averaged a total of 13,389,000 barrels per day during the March 10th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,398,000 barrels of crude per day during the week ending March 10th, an average of 430,000 more barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 221,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 10th appear to indicate that our total working supply of oil from net imports and from oilfield production was 2,230,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+2,230,000] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed..... Furthermore, since last week’s “unaccounted for crude oil” was at [-384,000] barrels per day, that means there was a 2,614,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering any such comparisons nonsensical.... However, since most everyone treats these weekly EIA reports as precise, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they hope to do about it)
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,255,000 barrels per day last week, which was 1.1% less than the 6,327,000 barrel per day average that we were importing over the same four-week period last year. This week's 221,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be unchanged at 12,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was 3,000 barrels per day higher at 440,000 barrels per day and added 400,000 barrels per day to the the rounded national total, same as Alaska added last week....US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 6.9% below that of our pre-pandemic production peak, but was 25.8% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 88.2% of their capacity while using those 15,398,000 barrels of crude per day during the week ending March 3rd, up from their 86.0% utilization rate during the prior week, as US refineries are beginning to ramp up after completing their seasonal maintenance... The 15,398,000 barrels per day of oil that were refined this week were still 1.3% less than the 15,601,000 barrels of crude that were being processed daily during week ending March 11th of 2022, and 3.9% less than the 16,020,000 barrels that were being refined during the prepandemic week ending March 8th, 2019, when our refinery utilization was 87.6%, close to normal for early March ...
Even with that big increase in the amount of oil being refined this week, the gasoline output from our refineries was again lower, decreasing by 446,000 barrels per day to 9,111,000 barrels per day during the week ending March 10th, after our gasoline output had decreased by 179,000 barrels per day during the prior week. This week’s gasoline production was 2.9% less than the 9,380,000 barrels of gasoline that were being produced daily over the same week of last year, and 6.4% less than the gasoline production of 9,735,000 barrels per day during the prepandemic week ending March 8th, 2019. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 97,000 barrels per day to 4,428,000 barrels per day, after our distillates output had decreased by 84,000 barrels per day during the prior week. With this weeks decrease, our distillates output was 10.5% less than the 4,945,000 barrels of distillates that were being produced daily during the week ending March 11th of 2022, and 8.8% less than the 4,856,000 barrels of distillates that were being produced daily during the week ending March 8th, 2019...
With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the sixth time in eighteen weeks and for the 16th time in 31 weeks, decreasing by 2,061,000 barrels to 235,997,000 barrels during the week ending March 10th, after our gasoline inventories had decreased by 1,134,000 barrels during the prior week. Our gasoline supplies fell by more this week as the amount of gasoline supplied to US users rose by 32,000 barrels per day to 8,594,000 barrels per day, and because our exports of gasoline rose by 60,000 barrels per day to 891,000 barrels per day, while our imports of gasoline rose by 4,000 barrels per day to 450,000 barrels per day.. Following four straight gasoline inventory decreases, our gasoline supplies were 2.1% below last March 11th's gasoline inventories of 240,991,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…
With the decrease in our distillates production, our supplies of distillate fuels decreased for the 6th time in 11 weeks, and for the 24th time over the past year, falling by 2,537,000 barrels to 119,715,000 barrels during the week ending March 10th, after our distillates supplies had increased by 138,000 barrels during the prior week. Our distillates supplies decreased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 222,000 barrels per day to 3,736,000 barrels per day, and because our exports of distillates rose by 77,000 barrels per day to 1,209,000 barrels per day, while our imports of distillates rose by 14,000 barrels per day to 155,000 barrels per day.. Even after fifty-eight inventory withdrawals over the past ninety-six weeks, our distillate supplies at the end of the week were 4.8% above the 114,206,000 barrels of distillates that we had in storage on March 4th of 2022, but still about 8% below the five year average of our distillates inventories for this time of the year...
Finally, with nearly two and a quarter million barrels per day of new oil supplies that could not be accounted for, our commercial supplies of crude oil in storage rose for the 18th time in 31 weeks and for the 25th time in the past year, increasing by 1,550,000 barrels over the week, from 478,513,000 barrels on March 3rd to 480,063,000 barrels on March 10th, after our commercial crude supplies had decreased by 1,694,000 barrels over the prior week. With several large oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were about 7% above the most recent five-year average of commercial oil supplies for this time of year, and also about 45% above the average of our available crude oil stocks as of the first weekend of March over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And even after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this March 10th were 15.4% more than the 415,907,000 barrels of oil we had in commercial storage on March 11th of 2022, but 4.1% less than the 500,799,000 barrels of oil that we had in storage after winter storm Uri on March 12th of 2021, while 5.8% more than the 444,119,000 barrels of oil we had in commercial storage on March 13th of 2020…
OPEC's Report on Global Oil for February
Tuesday of this past week saw the release of OPEC's March Oil Market Report, which includes the details on OPEC's & global oil data for February, and hence it gives us a picture of the global oil supply & demand situation during a period when demand for oil was increasing in the 2nd month after China had reopened to foreign travelers and removed the Covid-related lockdowns on its citizens, while oil supplies from Russia were further reduced by the European Union's ban of Russian oil imports by sea, and by the G7's Russian oil price cap....February was also the fourth month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related lower prices...
The first table from this month's report that we'll review is from the page numbered 50 of this month's report (pdf page 60), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings below indicate...for all their official production measurements, OPEC has used an average of production estimates by as many as eight "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA), the industry newsletter Petroleum Intelligence Weekly, the energy consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures….
As we can see in the bottom right hand corner of the above table, OPEC's oil output increased by a rounded 117,000 barrels per day to 28,924,000 barrels per day during February, up from their revised January production total that averaged 28,807,000 barrels per day....however, that January output figure was originally reported as 28,876,000 barrels per day, which therefore means that OPEC's January production was revised 69,000 barrels per day lower with this report, and hence OPEC's February production was, in effect, just 48,000 barrels per day more than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official December OPEC output figures as reported a month ago, before this month's revision)...
while OPEC and other aligned oil producers agreed to reduce production by 2,000,000 barrels per day beginning in November, and while the net 605,000 barrel per day they've cut since were well short of that, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when this policy was initiated in October, so the 28,924,000 barrels per day they produced in February still leaves them short of what they were expected to produce during the month, as we'll see in the next table...
The above table was originally included as a downloadable attachment to the press release following the 33rd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through the end of 2023, and the quotas shown above were reaffirmed by the cartel for the first 6 months of 2023 in during the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that level, leaving each with a Volunary Production level they're expected to hit during 2023, whether they've produced that much recently or not....since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers since May 2020, they are not shown on the above list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day from November 2022 through December 2023...therefore, the 24,489,000 barrels those 10 OPEC members actually produced in January were still 927,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola and Saudi Arabia accounting for the majority of this month's production shortfall...
The next graphic from this month's report that we'll look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from March 2021 thru February 2023, and it comes from page 51 (pdf page 61) of OPEC's March Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
Including this month's 117,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production increased by a rounded 600,000 barrels per day to average 101.90 million barrels per day in February, a reported increase which came after January's total global output figure was apparently revised down by a rounded 400,000 barrels per day from the 101.70 million barrels per day of global oil output that was reported for January a month ago, as non-OPEC oil production rose by a rounded 500,000 barrels per day in February after that downward revision, with most of February's production growth coming from the OECD Americas and OECD Europe, which were partially offset by production declines in Latin America and Kazakhstan.…
After that 600,000 barrel per day February increase in global output, the 101.90 million barrels of oil per day that were produced globally during the month were 2.61 million barrels per day, or 2.6% more than the revised 99.29 million barrels per day that were being produced globally in February a year ago, which was the seventh month of the series of 400 million barrel per day production increases that OPEC and their allied producers implemented as their fourth output policy reset in response to the global demand recovery, following the early pandemic lockdowns (see the March 2022 OPEC report for the originally reported February 2022 details)…with this month's increase in OPEC's output somewhat smaller than the reported global increase, their February oil production of 28,924,000 barrels per day was down by 0.1% to 28.4% of what was produced globally during the month, after their share of the global total in December was revised up 0.1% from the 28.4% reported last month (due to the large downward revision to global output)….OPEC's February 2022 production was ultimately revised to 28,500,000 barrels per day with the April 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 843,000 barrels per day, or 1.5% more barrels per day of oil this February than what they produced last February, when they accounted for 28.8% of a smaller global output total…
With the increase in global oil output that we've seen in this report, the amount of oil being produced globally during the month was again above the expected global demand, as this next table from the OPEC report will show us...
The above table came from page 29 of the March Oil Market Report (pdf page 33), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2023 over the rest of the table…on the "Total world" line in the second column, we've highlighted in blue the figure that's relevant for February, which is their estimate of global oil demand during the first quarter of 2023….OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe have been using an average of 101.28 million barrels of oil per day, which is an upward revision of 20,000 barrels per day from their estimate 101.26 million barrels per day for 1st quarter demand of 2023 a month ago (the revisions to 2023 demand estimates are highlighted in green)…but as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 101.90 million barrels per day during February, which would imply that there was surplus of around 620,000 barrels per day of global oil production in February, when compared to the demand estimated for the month...
In addition to figuring February's global oil supply surplus that's evident in this report, the downward revision of 400,000 barrels per day to January's global oil output that's implied in this report, slightly offset by the 20,000 barrels per day upward revision to first quarter demand noted above, means that the 440,000 barrels per day global oil output surplus we had previously figured for January would now be revised to a surplus of just 60,000 barrels per day for that month...
Also note that in orange we've also circled an upward revision of 30,000 barrels per day to 2022's demand, which also means that the supply surpluses and shortfalls that we previously reported over last year would have to be revised....a separate table on page 28 of the March Oil Market Report (pdf page 38) indicates the revisions to 2022 demand included an a downward revision of 70,000 barrels per day to 4th quarter demand, an upward revision of 50,000 barrels per day to 3rd quarter demand, an upward revision of 70,000 barrels per day to 2nd quarter demand, and an upward revision of 70,000 barrels per day to 1st quarter demand...we're not inclined to go back and recompute each month of 2022, but we have totals for each month of the year accompanying our review of OPEC's December report, should anyone want to review how 2022's oil supply & demand shook out..
This Week's Rig Count
The number of drilling rigs active in the US increased for the first time in five weeks during the week ending March 17th, but were 4.9% below the prepandemic count, despite increasing ninety-six times over the past 128 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 8 to 754 rigs over the past week, which was also 91 more rigs than the 663 rigs that were in use as of the March 18th report of 2022, but was 1,175 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global market with oil in an attempt to put US shale out of business. .
The number of rigs drilling for oil decreased by 1 to to a nine month low of 589 oil rigs during the past week, after the number of rigs targeting oil had decreased by 2 during the prior week, but there are still 65 more oil rigs active now than were running a year ago, even as they amount to just 36.6% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 13.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 9 to 162 natural gas rigs, which was also up by 25 natural gas rigs from the 137 natural gas rigs that were drilling during the same week a year ago, even as they were still only 10.1% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
In addition to those rigs targeting oil and natural gas, Baker Hughes continues to show that three rigs they've labeled as "miscellaneous" are still drilling this week: those include a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track, and a directional rig drilling to between 5,000 and 10,000 feet into a formation in Pershing county Nevada, also unnamed by Baker Hughes….While we haven't seen any details on any of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration rather than production, for carbon dioxide storage, and for utility scale geothermal projects....a year ago, there were two such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was up by two to 16 rigs this week, with 15 of those rigs drilling for oil in Louisiana's offshore waters, and one drilling for oil in Texas waters….that Gulf rig count is also up by 4 from the 12 Gulf rigs running a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas…in addition to rigs drilling in the Gulf of Mexico, this week saw the startup of a directional rig drilling for oil at a depth between 10,000 and 15,000 feet, offshore from the Kenai Peninsula Borough of Alaska, as apparently the weather has moderated enough for Alaskan offshore drilling to resume...hence, we now have a total of 17 rigs drilling offshore, up from the national offshore count of 12 a year ago..
In addition to rigs running offshore, there is also a water based directional rig drilling for oil at a depth greater than 15,000 feet through an inland body of water in Terrebonne Parish, Louisiana this week...a year ago, there were three rigs drilling on inland waters...
The count of active horizontal drilling rigs was unchanged at 692 horizontal rigs this week, which was still 86 more rigs than the 606 horizontal rigs that were in use in the US on March 18th of last year, even as it was just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014.....meanwhile, the vertical rig count was up by three to 15 vertical rigs this week, which was still down by 6 from the 21 vertical rigs that were operating during the same week a year ago…at the same time, the directional rig count was up by 5 to 47 directional rigs this week, and those were also up by 11 from the 36 directional rigs that were in use on March 18th of 2022…
The details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of March 17th, the second column shows the change in the number of working rigs between last week’s count (March 10th) and this week’s (March 17th) count, the third column shows last week’s March 10th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 11th of March, 2022...
even with a nine rig increase in natural gas drilling this week, the Utica shale count was down by four gas rigs to eleven; three of those gas rigs were pulled out of Ohio, while the lone Utica rig that had been drilling in Pennsylvania was also shut down.... but Pennsylvania saw an increase of three rigs drilling in the Marcellus, while two more Marcellus rigs were added in West Virginia, and hence the Marcellus rig count was up by five...four more natural gas rigs were added in the Eagle Ford shale of southeast Texas, while 6 oil rigs were pulled out of the Eagle Ford at the same time, leaving the Eagle Ford rig count down by two, with 62 oil rigs and 8 targeting natural gas deployed in the basin...another natural gas rig was added in the Permian basin, which also saw 6 oil rigs added at the same time, leaving the Permian with 345 oil rigs and 5 targeting natural gas...in addition, three natural gas rigs were added in the Haynesville shale in Texas, but the Haynesville shale count remained unchanged because three natural gas rigs were pulled out of the Haynesville in Louisiana at the same time... finally, three more natural gas rigs were added in "other" basins that are not tracked by Baker Hughes...it's not evident from the summary tables where those might have been added, and the only way to find out for sure would be to tediously scan through the individual well records found in the North America Rotary Rig Count Pivot Table...
meanwhile, checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find that there was one rig added in Texas Oil District 8A, which overlies the northern part of the Permian Midland, and that 2 rigs were added in Texas Oil District 7C, which includes two counties in the easternmost Permian Midland...since the Texas Permian rig count was thus up by 3 rigs while the national Permian count was up by 7, we can figure that the 3 rigs added in New Mexico were set up to drill in the western Permian Delaware, in the southeast corner of that state....in addition, since another rig must have been added somewhere else in the Permian, it must have been offset by a concurrent removal of a rig in the same area, such that it wouldn't show in the totals....
in the Eagle Ford region of Texas, the rig count was down by seven in Texas Oil District 1, but up by eight in Texas Oil District 2, and up by two in Texas Oil District 3, but down by three in Texas Oil District 4...since the Eagle Ford count was down by two, two of the noted rig additions weren't targeting the Eagle Ford, but another basin that Baker Hughes doesn't track; among the other Eagle Ford additions, at least 4 were targeting natural gas, while among the Eagle Ford removals, six had been targeting oil; the remainder would be combinations of offsetting changes of similar rigs that would add up to zero, and hence not appear in the summary data...
elsewhere in Texas, there was a rig pulled out of Texas Oil District 5. which had apparently been targeting a basin not tracked by Baker Hughes, while were there three natural rigs added in the Haynesville shale in Texas Oil District 6, which we only know because there were three rigs removed from the Haynesville shale region of Louisiana at the same time, while the national Haynesville count remained unchanged; the Louisiana rig count ended up down by two with the addition of two rigs in the state's Gulf waters, and the concurrent removal of the only land based rig which had been drilling in the southern part of the state..
in other parts of the country, the rig added in Oklahoma was targeting a basin not tracked by Baker Hughes, while the rig added in Colorado was set up to drill for oil in the Niobrara chalk of the Rockies front range...meanwhile, the Alaska rig count remained unchanged despite the addition of the aforementioned rig offshore from the Kenai Peninsula because a directional rig that had been added in Alaska last week to target oil at depth of between 10,000 and 15,000 feet with its location in Alaska blank is no longer shown this week, almost calling into question that odd addition..
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Note: there’s more here..
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+yi+sun+shin.jpg)
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