US oil, gas rig count remains steady at 791; Permian gains most rigs: Enverus

The US oil and gas rig count remained steady at 791 on the week, preserving the previous week's sizable gain as the Permian added a healthy tranche of rigs, energy analytics and software company Enverus said April 14.

And while most basins lost rigs or stood still on the week that ended April 13, the total oil and gas count held onto the dozen rigs gained the previous week.

Oil rigs rose by six to 624 for the week ended April 13, while natural gas plays shed six rigs to 167.

The Permian Basin rose by six rigs to a total of 337—still the highest level since the first week of April 2020, although rigs in the West Texas/New Mexico play are still appreciably shy of coronavirus pre-pandemic levels near 430.

Since mid-April 2021, Permian rig levels have risen by about 100 rigs.

According to Scott Sheffield, CEO of big Permian producer Pioneer Natural Resources, the Permian is the only basin with large production growth potential.

Based on current and internal forecasts, Permian production is forecast to increase from 5 million b/d of oil and 20 Bcf/d of natural gas currently to 8 million b/d of oil and 35 Bcf/d of gas by 2030, Sheffield told a US House of Representative Energy and Commerce Subcommittee on Oversight and Investigations hearing April 6 on current high fuel prices.

Only play consistently growing

"Long term, the Permian is the only play consistently growing" in the US, he said. "In other plays, the inventories are limited."

The basin, which generally has three sections—the Midland sub-basin on the eastern flank, the Delaware Basin on the western flank and the Central Basin Platform, which is generally conventional production from vertical wells. That is unlike the other two areas, which produce unconventional oil and gas from horizontal wells.

Besides the Permian, the only basin to gain rigs in the week ended April 13 was the DJ Basin, mostly in Colorado, which was up one rig to 18.

Otherwise, the Eagle Ford Shale of South Texas lost four rigs, dropping to 67, while the Haynesville Shale of East Texas/Northwest Louisiana fell by three rigs leaving 69 and the Utica Shale mostly sited in Ohio declined by two rigs, leaving 11.

Moreover, three other basins remained the same week on week: the SCOOP-STACK of Oklahoma, staying at 43 rigs; the natural gas-prone Marcellus Shale, remaining at 41 rigs; the Williston Basin in North Dakota/Montana, remaining at 35.

Also during the week ended April 13, consultancy Rystad Energy reported that permitting was at an all-time monthly high in March with 904 permit awards, owing to higher oil prices and production demand.

'Unprecedented' high activity

Weekly permits approved have ranged from 188 to 227 since March 7, which Rystad called "an unprecedented period of high activity." That kicked up the four-week average to 210, which was a record for horizontal permit approvals in the core US shale patch over four weeks, Rystad said.

"This is a clear signal that operators in the basin are kicking into high gear on their development plans, positioning for a significant ramp-up of activity level and an acceleration in the speed of output expansion over the next few months once supply chain bottlenecks ease," says Artem Abramov, Rystad Energy's head of shale research, said in a statement.

"The surge in permitting activity positions the industry for continuous rig count additions in the second half of 2022 and foreshadows a significant increase in supply capacity from early 2023," Abramov said.

Rystad cautioned that many permits never get drilled and that the time from permit approval to drilling start differs "substantially" across the producer spectrum, even in the same basin.

But still, the recent permit activity trend "points to a continuous uptick in drilling in the coming months," the consultancy said. "Weekly horizontal permit approvals have occasionally spiked above 200 in recent years, but the persistently elevated levels currently being seen [by] regulators in Texas and New Mexico are unprecedented."