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US oil, gas rig count steady at 461; Permian total at 9-month high: Enverus

The US oil and gas rig count stood steady at 461 in the week ending Feb. 24, rig data provider Enverus said, but Permian operators added rigs as recent severe weather loosened its grip on the region.

The total number of rigs chasing primarily oil and those chasing gas were both steady week on week at 339 and 122, respectively, but rig counts were more volatile across the major named basins.

In the Permian, operators added five rigs for a total of 210, putting the number of rigs active in the basin at the highest since early May. The uptick marked a return to the steady uptrend seen in the basin throughout 2021, eclipsing a three-rig pullback in the previous week prior.

But rig counts were mostly lower in other top oil plays.

Operators in the Eagle Ford basin idled one rig leaving a total of 35 active in the play, and the Denver-Julesburg basin rig count dipped one to 11.

Bakken operators shed a single rig for a total of 14 last week. The move was in line with recent trends that have seen rig counts hover in the mid- to low-teens since October.

The number of rigs active in the SCOOP-STACK remained steady at 16 for a fifth week.

Rigs counts in the major gas-focused plays were mixed. The Haynesville basin dropped three rigs, putting the total active there at a 15-week-low 44. Marcellus basin operators added a single rig for a total 34, while the Utica play rig count was steady at 10 for a third week.

Bakken rail eyed amid potential DAPL shutdown

Crestwood Equity Partners is seeing a “big surge” in interest in shipping Bakken crude by rail as industry fears mount that the Dakota Access Pipeline could be shuttered later this year, CEO Bob Phillips said Feb. 23.

The discount for Bakken barrels assessed at Williston, North Dakota, which are injected into DAPL, versus those at Clearbrook, Minnesota, which has access to the Enbridge pipeline, opened to as much as $1.70/b last week, up sharply from a January average of around 60 cents/b.

Phillips said the differentials would quickly widen to incentivize crude-by-rail shipments if DAPL closes.

A federal appeals court ruling in January essentially confirmed the nearly 4-year-old Dakota Access Pipeline is operating illegally without the necessary legal permitting, and that it is up to the US army Corps of Engineers, now under President Joe Biden, to determine whether it will let the Energy Transfer-operated pipeline continue to flow crude oil while the environmental review determines whether the needed easement is deserved.

With crude oil prices rising and the COVID-19 vaccine rollout picking up, Phillips said he is bullish on Bakken crude demand later in 2021, with or without DAPL. Drilling and completions activities already are on the rise, he said.

EcoPetrol to triple Permian investment

Colombia’s state-controlled Ecopetrol plans to triple its investment in the US’ Permian Basin this year to $600 million.

CEO Felipe Bayon said Feb. 24 the company’s Texas joint venture with Occidental Petroleum will see production to Ecopetrol rise to as much as 14,000 b/d by the end of 2021 from an exit output of 4,500 b/d in 2020.

Ecopetrol and Oxy plan to drill a total of 90 wells in the Permian this year, financed in part by the Colombian company’s $600 million investment, which would be up from $193 million last year.

The company’s total 2021 capex budget is slated at $3.5 billion-$4 billion at a $45/b Brent benchmark, but could be as high as $5 billion if crude prices continue to rise.

Crude prices increased in the week ending Feb. 24, with WTI averaging $61.21, up $1.49; WTI Permian averaging $62.35/b, up $1.51, and the Bakken Composite averaging $59.37/b, up $1.48.

Natural gas prices saw a drastic decrease in prices after a huge surge last week brought on by a deep freeze across the Southern US that cut into supply and caused widespread power outages across multiple states. Henry Hub prices fell $8.94 on week to average $4.17/MMBtu, and Dominion South prices dropped $2.58 to average $2.89/MMBtu.

The S&P Global Platts LNG Virtual Conference is gathering the industry to discuss navigation of the global pandemic and the associated risks, the ongoing transition of the global energy economy, policy implications of the 2020 US election and more.
Source: Platts

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