August 28, 2012: discussion in local media about decreasing rig count
- At 191, the number of rigs drilling for oil is at the lowest level in a year
- the decrease in rigs is due to oil companies becoming more efficient
- new rigs are being built specifically for drilling in the Bakken
- there are now more Bakken wells than traditional wells in the state
- over 4,000 Bakken wells have been drilled in the last 6 years
- North Dakota produces more oil with 7,300 wells than California does with 60,000 wells
Every time I talk about current price of oil affecting the oil companies, I am reminded by folks who have followed the industry for years, the daily price has little effect on daily rig counts.
All things being equal, the well-established Bakken companies are noting:
- even with decreased number of rigs, they can increase their monthly/annual production
- they are putting an ever-increasing amount of oil into a saturated pipeline and storage system
- stacking a rig results in immediate savings
- and, oh, by the way, in the Bakken, most of their leases are now held by production
A very long time ago I mentioned that an oil company would do almost anything it had to to save a lease if it was a good lease, even if they had to partner with another operator to drill the well. With stacking of rigs, it tells me that companies are not worried about losing leases. Sure, they will lose some leases, but the ones they lose, they won't miss. [See NOG at this link.] And if a company finds itself in a bind, needs to drill a well, there are now more rigs available.