- Permian rigs up 12 to recent record of 284
- Highest level for the play since mid-April 2020
- SCOOP-STACK returns to pre-pandemic level
The US oil and gas rig count jumped 11 to 683 in the week ending Nov. 17, Enverus said, with the Permian Basin of West Texas/New Mexico posting an even larger increase in rig activity.
The domestic oil rig count rose by 16 to 541 for the week ended Nov. 17, while the natural gas-directed count fell back five to 147.
The Permian, the largest US producing basin at 4.78 million b/d of oil and a 13.4 Bcf/d of gas, according to S&P Global Platts Analytics, added 12 rigs for a total of 284, reaching its highest count since mid-April 2020.
Also growing was the SCOOP-STACK in Oklahoma, which climbed three to 41 rigs. The rig count in the play is back to a pre-pandemic level last seen in the first week of March 2020.
Most US basins had little to no rig count changes. The Bakken Shale of North Dakota/Montana ticked up one to 32 rigs, on par with its early-November 2021 figure. That single rig add restored the play’s rig count to its highest level since the week ended April 22, 2020.
The count was unchanged in the Marcellus Shale (33 rigs), sited mostly in Pennsylvania/West Virginia; the DJ Basin (16 rigs), chiefly in Colorado; and the Utica Shale (12 rigs), mostly in Ohio.
Two basins lost rigs. The Eagle Ford Shale in South Texas was down two to 53, while the Haynesville Shale of East Texas/Northwest Louisiana shed one rig for a total 51.
Commodity prices fell for a second week, but remained relatively high.
According to Platts Analytics, WTI averaged $80.48/b, down $1.02 for the week; WTI Midland averaged $80.79/b, down 98 cents; and Bakken Composite averaged $79.16/b, down $1.37.
For natural gas, Henry Hub prices averaged $4.85/MMBtu, down 38 cents; and prices at Dominion South averaged $4.29/MMBtu, down 14 cents.
The latest forward-looking Drilling Productivity Report, issued by the US Energy Information Administration on Nov. 15, sees the pace of the Permian’s output capacity kicking up by a projected 67,000 b/d in December 2021 from 59,000 b/d in November and 52,000 b/d in October.
In addition, EIA figures show the play is drawing down its DUCs, or drilled but uncompleted wells, at a faster clip than any of the other major US basin. In October, the Permian had 1,705 DUCs, down 107 from September, but less than the 124 DUCs completed in September or the 130 completed in August.
Even with 1,700 DUCs left, and drawdowns of about 100 DUCs per month, the Permian’s DUC inventory is still “worrisome,” since it diminishes the number of quality wells in upstream operators’ inventories, EIA drilling analyst Jozef Lieskovsky said.
Sometimes the quality of some of those wells is not as good as others, or there might be mechanical problems, which reduces further an upstream company’s well inventory and operational flexibility, he said.
“If you only have 10 [DUCs], you run a risk if anything goes wrong with any of the wells, and you may not meet your quota,” said Lieskovsky. “You want to have more of them. Also, when you double your inventory, you can negotiate with [oil service companies] for the best pricing and timing.”
“If you deplete your inventory even from 13 to 10, your options are more limited,” he added. “When you gross it up, it can have a fairly significant impact.”