The United States and Canada each lost a net of 10 rigs, according to the most recent Baker Hughes tally for the week ending Nov. 20. All of the departing U.S. rigs were oil-directed. However, in Canada nine natural gas-directed rigs left, but only one oil-focused unit departed.
The rigs won't be missed by glutted natural gas and oil markets. Barclays analysts said in a note on Friday that the declining rig count is having an effect on the outlook for gas production.
"We have cut back year-on-year production growth forecast from 1.5 Bcf/d to 700 MMcf/d. According to our supply models, production levels will average 73.8 Bcf/d in 2016 with production largely static or partially declining until a new round of Northeast infrastructure additions hits the market in Q4 '16," Barclays said.
"A lower rig count is starting to take hold on production levels in other U.S. basins. Although [rig] declines have been helped greatly by higher production per rig, the EIA's DPR [drilling productivity report] shows many plays (Bakken, Eagle Ford, Haynesville, Niobrara) may have peaked for the year in Q1-Q2 '15 and have been slowly declining since as rig counts have also fallen [see Shale Daily, Nov. 9]."
Production growth in the Northeast depends upon the addition of takeaway capacity, the analysts said. Elsewhere it comes down to rigs, but with natural gas futures prices where they are, drillers are unlikely to grow the rig count for now, Barclays said.
Week by week, the rig count has been shrinking, by a little and a lot, over the last couple months. In the latest Baker Hughes Inc. tally, released Friday (Nov. 20), some plays posted modest gains. The Barnett Shale added two units; the Cana Woodford, Haynesville Shale and Green River Basin each added one, and the Eagle Ford Shale added two rigs.
The biggest losers were the Permian and Powder River basins, which each gave up four rigs.
Among states, Oklahoma and Louisiana each lost four rigs, followed by Colorado and Wyoming, which each lost three. Texas gained four rigs.
The U.S. count ended at 757 for the week, which is just over 39% of its year-ago total of 1,929. Canada ended the week with 166 rigs, a mere 38% of its year-ago level of 434.