Oil rig drilling in the US is climbing into the stratosphere while hitting another new high, while horizontal drilling for both oil and natural gas has become not only the preferred drilling direction but broke usage records last week, according to the venerable Baker Hughes rig count.
The weekly count, which has kept track of the split between rigs drilling for oil versus natural gas since July 1987, posted an oil rig peak -- at least for most of the time that Baker has kept records -- of 764 for the week ended December 11 of that year.
In the 23 years since, that number was only exceeded three times -- first, during the week ended December 22, 2010 when it jumped to 771 oil rigs (because of the Christmas holiday, the data was released earlier than normal), and then again the following week ending December 30, 2010 when it hit 765 rigs. (See this December 30 blog entry.)
Last Friday, for the week ended January 7, the
"Given recent holiday
week impacts create quirky compables, current activity now
stands at +1% versus fourth-quarter average activity for Baker
Hughes," investment bank Tudor Pickering said in its daily
industry report January 10.
Although TPH was
talking about total rig count activity rather than oil rigs
specifically, oil rigs have made amazing gains percentage-wise
on their gassy counterparts in recent years.
From more than 4,500
rigs drilling during an industry boom in late 1981, the total US
rig count fell steadily in the years after that. It stood around
1,900 rigs when the price of oil tanked in early 1986. Within a
few months the rig count was below 1,000 rigs and was in the
900s when Baker Hughes began calculating the oil/gas drilling
split in July 1987 -- which then stood around 65%-35%
respectively.
Even though the oil rig
count has grown proportionately, it is still far from that
amount. This past week, it stood at 46%-54% in favor of natural
gas.
But that's saying something, because at one
point -- in June 2005 --, the oil rig count reached a low of
10.5%, versus 89.3% for gas. (Totals often don't add up to 100%
because a handful of rigs in any week may also drill for
something other than oil or gas, such as water, liquid gas or
injection wells. In recent years these have amounted to 1-2% or
less of the total rig count.)
Meanwhile, the number of US rigs drilling horizontally reached
an all-time utilization high of 56.8% last week, while the
actual number -- 966 rigs out of a total US rig count of 1,700
-- tied that of early and mid-December 2010.
"Year-over-year, Baker
Hughes' horizontal oil rig count is up 236 rigs, or 207%,
compared to the overall rig count gaining 511 rigs, or 43%,"
investment bank Global Hunter Securities noted in its daily
industry report January 10.
Horizontal drilling,
typically used in unconventional reservoirs, allows the
extraction of higher volumes of oil and gas as it cuts a larger
swath of a reservoir. While it has been used for decades, it's
only been with the advent of shale drilling in the last decade
that it began to be the preferred technique.
Even at
that, the number of horizontal rigs drilling in the
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