Drillers might be feeling the summer heat, and doldrums, as there was little to report in the way of change in the latest rig count by Baker Hughes Inc.
The number of operating U.S. oil/natural gas rigs held pat at 884 as three departed offshore service and another three were added on land. The tally is well less than half the 1,913 U.S. rigs that were running a year ago.
Natural gas supply has been holding steady of late as well, according to Societe Generale. "A very slight rise in production [during the week ended Aug. 7] almost entirely offset the slight decline in Canadian imports," analyst Breanne Dougherty said in a note Thursday. "Relative stability has been the name of the game for supply this summer, and we do not see anything on the horizon to materially change that over the next six weeks."
But if anyone is looking for change, it has to be the beleaguered upstream companies wrestling with depressed prices. Why there are any rigs running at all in the United States is "due to the resilience of the service sector," Don Briggs, president of the Louisiana Oil & Gas Association, said in a recent editorial.
Things could get worse for the upstream sector -- or they could get better, Briggs wrote. For now, though, the question is" how low can you go -- and for how long?
"How long can the service industry offer reduced rates, and how long can the operators continue to drill with unprofitable oil prices?" Briggs wrote. "...[A]ll players involved in the crude oil market as a whole are beginning to ask yet another question. Is this a short-lived “downturn” in oil and natural gas or is this the “new normal” for the global market?
Briggs wrote that the upcoming presidential election, U.S. nuclear talks with Iran with oil/gas ramifications, as well as unrest in the Middle East could disrupt oil prices and blow winds of change through the currently depressed oil patch.
Briggs' home state of Louisiana saw four rigs depart service in the latest count, tying it with Oklahoma, which also lost four rigs. Texas added six rigs. Across the states, other changes were more modest.
While the net U.S. rig count was static, the North America count gained three, thanks to Canada, which added three natural gas-directed rigs. While Alberta lost two rigs, British Columbia added one, Saskatchewan added five, and Manitoba lost one rig.