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Tuesday, January 25, 2011
Expectations for $100+ oil helped push the number of traditional (>5,000 ft) oil rigs past 700 last week—a Biweekly Report first. Strong demand in emerging economies and diminishing excess productive capacity should underpin long-term support for domestic drilling for oil and liquids. That said, the yearend rally in the overall rig count fizzled quickly. Looking at 2010, the average change in rig count for sequential biweekly periods was 3% in Q1, 1.8% in Q2, and 0.8% in Q3.
Sequential declines didn’t crop up until Q3, and since early October, changes typically were much less than 1% and mainly small declines. But the surge past 1,700 in mid-December was the third biggest gain of the year at 4.7%. This was probably a last-gasp effort by operators dealing with budget spend-downs and uncertainty over taxes this year. Yet it was quickly followed by a drop of 3.7% December 31, leaving the Q4 average at 0.7%. This pattern probably will persist in 2011, as hikes in the oil rig count often offset declines in the gas rig count.
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Rig Count
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Tuesday, November 30, 2010
From the Biweekly Report with data as of November 19, 2010
On the other hand, the gas rig count lost relatively less ground than did the oil rig count in recent weeks. For much of the year, it has seemed that macroeconomic trends were keeping the gas rig count from collapsing in spite of a physical supply/demand balance that warranted lower gas prices. Overdue recognition of the looming supply glut finally asserted itself in the 3Q, and a gas price slide followed suit. Now we’re seeing a modest bounce back in prices with the onset of colder temperatures. And the gas rig count slide seems to decelerate. Is a rebound in gas drilling in the offing? Not likely. The likelihood remains that in the months to come, gas drilling is attractive mainly if the driver is associated condensate and other liquids—or if it’s the irrepressible Marcellus. The gas rig count has added only about 100 units in total in the past year, and we can account for almost all of that gain with the major unconventional gas-prone plays. We also still think that the hunt for liquids is propping up much of the gas rig count. Except for the low-cost ...
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Marcellus Shale
Rig Count
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Saturday, October 09, 2010
From the Biweekly Report with data as of October 8, 2010
At the same time, it must be noted that the 19-unit increase in the gas rig count was that category’s biggest sequential gain since mid-February. Our modest surprise is rooted in the resilience of the unconventional gas plays. All of the pure-play gas shales held steady in the latest biweekly comparison, with even small gains notched by the ever-surprising Marcellus and Haynesville plays and most of the tight sands plays. So will that resilience hold up going forward, or are we looking at an anomaly? We’re betting the latter, given a 10% drop in gas prices this month alone—and heading into a heating season, no less. Until economic recovery can revive gas demand, we will continue to see gas rig counts tread water at best, despite the occasional anomaly. Right now, oil rigs are approaching 800 and as rigs are struggling to stay near 900. We expect to see those counts swapping out next year, And we expect to see some of gas rig losses come on the unconventional side.
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Haynesville Shale
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Saturday, September 11, 2010
From the Biweekly Report with data as of September 10, 2010
To a great extent, unconventional gas drilling has become a victim of its own success. Certainly the economic downturn has hammered gas demand and gas drilling with it. But the long-anticipated decline in supply when gas prices fell to the $3/Mcf area never happened; the tightening of supply and demand failed to materialize, even with an uptick in power demand for gas amid a brutally hot summer. While some forecasts call for a colder winter, it’s hard to see a weather-related demand spike strong enough to overcome an expected gas supply gain of 3-4 Bcfd this year. Is there a chance gas prices could break out of its 2009–2010 range of $3–5/Mcf? Sure. Would it last? We wouldn’t double-down on that bet.
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Gas Prices
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Monday, July 05, 2010
From the Biweekly Report with data as of July 2, 2010
Overall we’ve seen an increase of 4.2% in the tally of Ready Rigs (those having drilled at least one oil or gas well in the previous four quarters). But the increase in Ready Rigs from end-1Q 2010 to end- 2Q 2010 was 5.6% for the traditional count vs. <0.8% for the <5,000 ft rigs. Looking at power capacity ratings, the sizable gains in Ready Rig counts also occurred among the higher horsepower fleets, save for the really big rigs. The increases break out as 0.7% for <500 hp rigs, 4.2% for 500-999 hp rigs, 6.6% for 1,000-1,499 hp rigs, and 7.9% for 1,500-1,999 rigs. Meanwhile, the biggest class of rigs, 2000+ hp, dropped its Ready Rig tally quarter to quarter by 0.8%. Respective market shares have shifted among the Ready Rigs as well. The smallest group of rigs at the end of 2Q 2010 accounted for 12.3% of the Ready Rigs total. That compares with a market share of 12.7% at the end of 1Q 2010. The big rigs lost market share as well, dropping to 5.4% from 5.7%. Respective market share shifts for the other horsepower classes from ...
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Ready Rigs
Horsepower
Rig Count
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Sunday, June 20, 2010
From the Biweekly Report with data as of June 18, 2010
In 2Q 2010, operators kept an average of 852 traditional rigs turning to the right for natural gas. Of these, approximately 488 (57%) were located in the major unconventional plays. Notably, over a third of the active rigs are drilling in three leading areas, the core area of the Haynesville (northwest Louisiana), the Pennsylvania Marcellus, and the Barnett. The Haynesville attracted the most rigs with a weekly average of 115, representing 13.5% of the traditional gas rigs. In second was the Marcellus with 87 active rigs, followed by the Barnett with 84. Elsewhere, tight gas was well represented with an average of 103 active rigs.
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Haynesville Shale
Rig Count