Friday, June 7, 2019

Weekly Number Of Active Oil Rigs Meaningless -- June 7, 2019

I've maintained for quite some time, probably since 2014 or thereabouts, that rig counts no longer matter (not to be taken out of context).

I was reminded of that when I saw this headline over at oilprice.



For the record:
  • oil rigs fell by 11 (to 789; or a decrease of 1.375% -- big whoop!)
  • natural rigs actually increased by 2 (to 186, or an increase of 1% -- another big whoop!)
  • overall, a net decrease of 9 rigs (or a decrease of 0.9% -- not even a 1% decrease and that's the big headline -- wow -- completely missing the point)
Much more relevant: number of wells offline for operational reasons and wells drilled to depth but not completed (DUCs). I track that in the Bakken at this site. These are wells that could be brought on line within days in some cases, weeks in all cases, if necessary.

By my reckoning there are upwards of three-years worth of inactive wells/DUCs in the Bakken. Stop drilling in the Bakken today, and the state could clip along for three years just be bringing those wells into production.

And that doesn't even count the tens of thousands, perhaps twenty thousand wells that should be re-fracked in the Bakken with modern completion strategics and state-of-the-art technology.

I don't track the numbers in the Permian but my hunch is that at some point in the future, the similar data point in the Permian will be upwards of 10 times what it is in the Bakken.

I track the number of DUCs and inactive wells in North Dakota at this site.

One can also track posts on DUCs using this "search."

Related tags:
Much more relevant than rig counts:
  • number of DUCs
  • fracking backlog
  • drilling rig efficiency
  • the EPA drilling reports (the "dashboards")
By the way, the "raw" number of rigs -- worldwide -- added or taken down is incredibly useless information. If one wants to consider the number of rigs as somewhat meaningful, we need to know:
  • regionally, the rig numbers, not the global numbers; and, 
  • rigs being added or taken down on a percentage basis
Even when the number of active rigs in North Dakota was hitting "modern" lows, North Dakota was still setting all-time production records.

Some oft-visited posts:
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