Operators eye growth in basin
Gas rigs just 5% below pre-pandemic levels
The US oil and gas rig count climbed four to 603 in the week ended Aug. 4 amid an uptick in Permian basin drilling activity, rig data provider Enverus said Aug. 5.
The number of oil-focused rigs was up six at 463, while the number primarily chasing gas fell two to 140.
The rig count climb was centered in the Permian Basin, where operators added five rigs for a total 258, leaving the plays rig count just one shy of the 15-month high of 259 seen during the week ended July 21.
But rig counts in the other major named oil-focused basins were flat to lower. The SCOOP-STACK and Denver-Julesburg play rig counts were steady at 29 and 15, respectively. The South Texas Eagle Ford Basin shed two rigs, putting the total active there down to 40, a six-week low. Meanwhile, the Bakken rig count fell one to 22.
Among the major named gas plays, the Utica shale saw an increase in drilling rig count, which climbed one to 13. The nearby Marcellus basin shed one rig for a total 32, while in the Haynesville, operators idled one rig, leaving a total 55 active.
The lower overall gas rig count snapped three consecutive weekly builds that had seen gas-focused drilling activity reach the highest level since March 2020. Even after pullback in the week ended Aug. 4, the gas rig count is just 5% below pre-pandemic levels.
Oil-focused rigs, in contrast, despite holding near April 2020 levels are still down around 33% from pre-pandemic levels.
Permian growth eyed
Notably, Permian Basin rig count is down nearly 40% from pre-pandemic levels, significantly lagging the broader oil and gas rig count, which is down just 28% over the same period.
But despite laggard drilling activity, improved efficiencies have pushed Permian production to near pre-COVID levels. The basin’s crude output exceeded 4.8 million b/d before the pandemic, falling to a low of about 4.15 million b/d last August, before rebounding back up to about 4.7 million b/d this August, according to the US Energy Information Administration.
Permian basin growth was a common theme throughout second-quarter earnings presentations.
Plains All American Pipeline CEO Willie Chiang said during the company’s second quarter earnings call Aug. 3 that the Permian has finally stabilized from the ongoing coronavirus pandemic and will be back on a growth trajectory for years to come.
“The Permian is building momentum,” Chiang said. “We expect growth activity to resume.”
Meanwhile, Chevron’s Permian Basin volumes and activity are ticking up in second-half of 2021, with plans to exceed 600,000 boe/d of production in the West Texas/New Mexico play by year-end, a top company executive said July 30.
Chevron has five drilling rigs active in the Permian, Jay Johnson, Chevron’s executive vice president for upstream, said during the company’s second-quarter earnings conference call, and plans to add up to two additional rigs before 2022. In mid-2019, the company operated 20 rigs in the basin.
Chevron produced 577,000 boe/d from the unconventional Permian in Q2 2021, compared to 547,000 boe/d in Q1.
ExxonMobil pumped 400,000 b/d of oil equivalent from the Permian Basin in Q2 2021, which it aims to increase by 40,000 boe/d in Q3 through continued operating efficiencies, the company said July 30.
