At total of 339 US oil and natural gas drilling rigs were in operation on 12 May – a 56% decrease since 17 March and the lowest level in the Baker Hughes Company’s rig count data series that began back in 1987.
The US Energy Information Administration said yesterday (20 May) that since 17 March, 71% (308 rigs) of the rigs taken out of service were in the top three US crude-producing regions: the Permian region in southeastern New Mexico and western Texas, the Eagle Ford region in southern Texas, and the Bakken region in Montana and North Dakota.
In mid-March, the Permian region had 405 operating rigs. By May 12, that number had fallen by 57% to 175 rigs. The Eagle Ford and Bakken regions saw similar declines in their rig counts, of 64% and 69%, respectively, in that time period.
The EIA also highlighted a fall in rig counts in natural gas-focused plays, although those plays had fewer rigs. Drilling rigs in the Marcellus and Haynesville regions, which are exclusively natural gas rigs, declined by 23% and 26%, respectively, from mid-March to 12 May.
The EIA noted that: ‘Changes in the number of oil rigs have historically followed changes in oil prices with a lag time of about four months.
‘However, the current drop in rig count followed the recent decrease in the oil price much more rapidly than in the past.
‘The spot price of West Texas Intermediate began March 2020 at $46.78 per barrel and ended the month at $20.51 per barrel; most of the decrease occurred in the first half of the month.
It continued: ‘The rig count began to decrease sharply in mid-March. The quick reduction in active rigs reflects the sudden loss of petroleum demand related to coronavirus-related mitigation efforts that also resulted in recent increases in the amount of crude oil placed in storage.