Oil, natural gas production grow despite lower rig count
Oil and natural gas production continues to increase in Oklahoma even as the number of rigs drilling new wells falls.
Oil and natural gas company executives have talked for much of the past five years about their focus on efficiency and getting the most oil and natural gas out of the ground for the least expense.
A new report from the U.S. Energy Information Administration this week shows how those policies — and other industry trends — have affected the state.
The result of continued efficiency gains and increased production is mixed — but mostly positive — news for Oklahoma.
Fewer rigs mean fewer people working in Oklahoma's oil fields. Efficiency gains also have led to massive cuts in the number of office workers needed at oil and gas companies throughout the state and region.
But the increased oil and natural gas production translates to growing revenues for state and local coffers. The increased efficiencies also mean companies are able to stay in business — and continue employing workers — despite fluctuating prices.
The number of rigs drilling for oil and natural gas in Oklahoma fell by five last week to 111, down from 124 one year earlier, according to Baker Hughes. The national count is following a similar trend, down one last week to 1,026, up from 990 one year ago, but still down from late 2018.
Following the oil price collapse of 2014-2016, executives have focused on improving efficiency instead of total production. Shareholders increasingly have demanded companies reshape executive bonuses to reward efficiencies and costs per barrel of oil production.
As a result, production per rig has soared, far offsetting the reduction in the rig count.
In Oklahoma, oil production has nearly tripled over the past decade while natural gas production has almost doubled. The trend has continued even after the number of rigs drilling in the state tumbled in 2014.
In January 2007, Oklahoma had 176 active rigs production 19 barrels per day per rig, according to the Energy Information Administration's drilling productivity report released Thursday. By February 2019, the state's rig count dropped to 110, but production surged to 396 barrel per day per rig. The current oil production per rig is more than double the 169 barrels of oil per day per rig the state experienced in September 2014 when the state's rig count was at its recent high of 247.
Natural gas production tells a similar story.
In January 2007, those 176 rigs were producing 842,000 cubic feet per day per rig. Last month, 110 rigs were producing 2.85 million cubic feet per day. At the recent rig count peak in September 2014, rigs were producing just more than 1 million cubic feet per day.