US Oil Rig Count Rises by One; Crude Price Remains Higher

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In the week ended February 23, 2018, the number of land rigs drilling for oil in the United States totaled 799, one more than in the previous week and up by 197 compared with a total of 602 a year ago. Including 179 other land rigs drilling for natural gas, there are a total of 978 working rigs in the country, up by three week over week and 224 more year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday.

West Texas Intermediate (WTI) crude oil for April delivery settled at $62.77 a barrel on Thursday and traded up about 1.3% Friday afternoon at $63.55 shortly before regular trading closed.

The natural gas rig count increased by two to 179 this week. The count for natural gas rigs is now up by 28 year over year. Natural gas for April delivery traded down about 0.9% at around $2.65 per million BTUs, as well as up five cents since last Friday.

The U.S. Energy Information Administration (EIA) noted Thursday that tight (shale) oil production will rise to more than 8.2 million barrels a day by 2040 and account for nearly 70% of total U.S. production, up from 54% of production in 2017. The EIA said:

Development of tight oil resources is more sensitive than nontight oil to different assumptions of future crude oil prices, drilling technology, and resource availability, but tight oil remains the largest source of U.S. crude oil production in all of the [Annual Energy Outlook] 2018 sensitivity cases.

The EIA also noted that total U.S. oil production is expected to increase over the next 20 years, from 9.3 million barrels a day in 2017 to nearly 12 million in the early 2040s and then decrease slightly through 2050.

Among the states, Baker Hughes reported that Texas added three rigs last week and New Mexico added two. Colorado, Louisiana, North Dakota, Ohio and Wyoming each added one rig. Oklahoma had two fewer rigs last week and Kansas, Pennsylvania and West Virginia lost one rig each.

In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 433, two more compared with the previous week’s count. The Eagle Ford Basin in south Texas has 70 rigs in operation, unchanged week over week, and the Williston Basin (Bakken) in North Dakota and Montana now has 50 working rigs, up by one for the week.

Producers added three new horizontal rigs last week to raise the count at 842, while offshore drillers dropped one working rig to bring the offshore total to 17, flat compared to last year.