Continued declines in U.S. active drilling rigs cause concerns over shale slowdown
An analysis released Monday by a leading investment bank for the energy sector reported “continued declines” in overall drilling activities and a “slump” in horizontal drilling in the United States last week.
The analysis report, published by investment and merchant bank Tudor, Pickering, Holt & Co. headquartered in Houston, Texas, signaled a forthcoming reduced supply of oil and natural gas and possibly higher prices.
According to the report, horizontal rig reductions drove the bulk of last week’s slump, with 11 week-to-week fewer rigs and 31 fewer rigs over the last four weeks.
It said “80 percent of weeks starting Mar-19 have seen activity trend down, or flat, week-to-week, not a pretty picture for U.S. onshore drilling activity indeed.”
The number of active drilling rigs in the United States decreased by eight to 934 last week, down 123 from last year’s count of 1,057, according to the weekly data released by international oilfield services provider Baker Hughes on Friday.
Of the 934 rigs, 909 are land drilling rigs, down nine from last week, and 25 offshore drilling ones, up one. The inland water drilling rigs remain zero.
Of the land drilling rigs, 817 are horizontal drilling rigs, down two from the previous week.
According to the U.S. Energy Information Administration (EIA), hydraulically fractured horizontal wells accounted for 69 percent of all oil and natural gas wells and 83 percent of the total linear footage drilled in the country.
Horizontal drilling is one of the most renowned technologies in the petroleum industry, which has brought about a revolution in worldwide energy production.
With the combination of hydraulic fracturing and horizontal drilling, oil production has increased significantly, and this is termed as “Shale Revolution.”
By far, the Permian basin has been the largest source of shale oil production growth in the United States, which has become the engine of supply growth outside the Organization of the Petroleum Exporting Countries in the past years. An important question for energy investors is how far and fast the Permian will expand in the coming years.
“U.S. onshore activity levels will likely prove lackluster,” Katherine Webb, an analyst at Tudor, Pickering, Holt & Co., told Xinhua.