Kemp: US Oil And Gas Producers Stir From Hibernation
(John Kemp is a Reuters' market analyst. The views expressed are his own.)
LONDON, Oct 24 (Reuters) - U.S. oil and gas drillers are reporting the biggest and most sustained upturn since oil prices began slumping in the middle of 2014.
The number of rigs drilling across the country has risen by 149, or 40 percent, since hitting a cyclical low at the end of May, according to oilfield services company Baker Hughes (http://tmsnrt.rs/2eB7eso).
The active rig count has risen in 18 of the last 21 weeks confirming that a sustained upturn in drilling is occurring (http://tmsnrt.rs/2enk54E).
Most of the extra rigs are targeting oil-rich formations (127) rather than gas-bearing formations (21) though most wells will produce a mix of hydrocarbons.
Oil prices started rising earlier than natural gas prices which likely explains why so many additional rigs have been deployed in oil-rich areas.
The number of oil-directed rigs has been rising since the end of May while the number of gas rigs has been rising consistently only since the end of August.
Southwest
More than two-thirds of the extra rigs have been deployed in the neighbouring southwest states of Texas (80), New Mexico (+16) and Oklahoma (+14).
Within those states most of the additional rigs have been deployed in the Permian (90) and Anadarko (11) basins of western Texas, eastern New Mexico and western Oklahoma.
The Permian and Anadarko offer near-ideal conditions for low-cost and low-risk oil and gas production despite the continuing slump in other regions.
These are some of the oldest, largest and best understood hydrocarbon basins in the United States with production stretching back to the 1920s ("Trek of the oil finders", Owen, 1975).
Hundreds of thousands of wells have been drilled in the region: there are few places on the planet where the subsurface geology has been better explored and understood.
The sedimentary basins are many kilometres deep and there are multiple thick oil and gas bearing formations stacked on top of one another which can be exploited simultaneously.
The region is dominated by oil and gas production, with a friendly regulatory framework, an established liquids and gas gathering network and a large eco-system of exploration and production, drilling and oilfield services firms.
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Gunvor CEO Sees Russian Refining Capacity Taking Hit from Drone Strikes
- These Factors Helped Brent Oil Price Break Above $85
- Sinopec Engineering Posts Higher Annual Petrochemicals Revenue
- Imperial Pipeline in Winnipeg Goes Offline for Three Months
- Gaz System to Acquire Gas Storage Poland
- Subsea7 Secures Contract to Service Woodside's Trion
- Adnoc Inks Supply Deal for Ruwais LNG Project with Germany's SEFE
- India Buying More USA Oil as Sanctions Stifle Russian Flows
- EIA Boosts USA Crude Oil Production Forecasts
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension