Rig count soars in Oklahoma
Drilling activity surged throughout Oklahoma and the region this week, fueling continued optimism that the oil and natural gas industry will continue to recover.
The number of rigs drilling for oil and natural gas nationwide jumped by 35 this week, marking the largest weekly gain since August 2012, according to numbers released by Baker Hughes.
The count in Oklahoma increased by seven, the largest weekly gain since November 2014.
“Oklahoma is well positioned with the STACK and SCOOP and in that a lot of Oklahoma firms have acreage in the Permian Basin,” said Russell Evans, executive director of the Steven C. Agee Economic Research & Policy Institute at Oklahoma City University. “Those are among the plays that are profitable at a price somewhere in the upper $40s to the mid $50s. I think that bodes well for us as prices firm up in the year ahead.”
The state count is up 37 from the low of 54 in February 2016 and is up four from one year ago. The count still is off 57 percent from 214 in November 2014, soon after oil prices peaked.
“I think there’s reason to believe the rig activity has further to go,” Evans said. “I think economic activity will be stronger this year. I think there are lots of reasons to think there’s upside to rig activity, but I don’t see a path to 200. I don’t think anybody’s talking about a return to anything like what was happening in 2013 or the first half of 2014, but there’s still a little bit of room to run there.”
Central Oklahoma’s STACK
and SCOOP fields are among the areas in the country where drilling activity has picked up fastest. The plays are part of the Cana Woodford basin, which gained nine rigs this week to 46.
The basin is the third most active in the country, following the south Texas Eagle Ford with 49 rigs.
The most active oil field in the country is the Permian Basin in west Texas and southeast New Mexico.
The Permian added 13 rigs this week, growing its total to 281.
The national rig count climbed to 694 this week, up 290 from the more than 60-year low set in February and up 57 from one year ago. Still, the count is off 64 percent from 1,929 in November 2014.
The number of rigs drilling for oil climbed by 29 to 551, while the natural gas rig count added six to 142. One rig is considered “miscellaneous.”
Texas again saw the biggest gain this week, adding 17 to 342. North Dakota added three, Ohio picked up two and New Mexico, Pennsylvania, Utah and West Virginia gained one rig each.
The nationwide rig count has increased steadily over the past few months as commodity prices have strengthened, in part because of declining production.
Members of the Organization of Petroleum Exporting Countries so far say they are keeping with pledges to cut the cartel’s production by 1.2 million barrels a day to about 32.5 million barrels a day.
OPEC members historically have overproduced quotas on average by about 20 percent. Three weeks into the new pledge, however, they say they remain committed to the cuts.
“OPEC had to have learned the lesson that their messaging position is as important at influencing short to medium oil prices as their actions are,” Evans said.
Domestic benchmark West Texas Intermediate crude gained $1.05, or 2 percent, Friday to close at $52.42 a barrel, up a nickel this week. Natural gas slipped 16 cents Friday to $3.20 per thousand cubic feet, down 22 cents on the week.
“Our model shows the oil price staying in the $50 to $60 range for the next 12 to 18 months,” Evans said.
“It’s hard for me to see a lot to the upside, although it is possible that we could see stronger economic growth than expected out of the rest of the world. Likewise it’s hard to see significant downward pressure absent a shock that puts the economy into recession.”