In the unconventional gas resource era, falling rig counts no longer mean declining production, and the traditional rig count no longer tells the tale of where the industry and the market are going, according to Bentek Energy LLC.
“It takes far fewer rigs in today’s environment to accomplish what the historical rig count used to do,” said Bentek’s Tom Sherman, a senior energy analyst. “With the efficiency gains per rig that we are seeing in today’s rig fleet, production can remain flat or even increase with a rig count that is 50% less than what it was last year.”
Bentek has developed what it’s calling the Bentek Productivity Index (BPI), which uses the Jan. 1, 2005 rig count as a benchmark and then factors in efficiency and productivity gains seen in the gas patch to develop an indicator that it says is more representative of the production outlook than the traditional rig count.
In support of the need for a new index, Bentek cites productivity gains seen in the Barnett Shale play of North Texas. Barnett wells drilled in 2008 were three times more productive than the average U.S. land gas well in 2006, according to Alan Orr, executive vice president of engineering and development at Helmerich & Payne International Drilling Co. Haynesville Shale wells being drilled in North Louisiana and East Texas are 10 times more productive than the average 2006 well, he said.
“Perhaps more importantly, the volume of natural gas production per well is dramatically higher today compared to levels seen only two years ago,” Bentek said in a Market Alert released Wednesday. “Today, initial production rates have climbed to an average of 2.2 MMcf/d in the Green River/Overthrust compared to about 1.5 MMcf/d two years ago.”
As of Oct. 16 Bentek’s BPI was 2,764, which was 1,408 rigs higher than the actual rig count of 1,356 active oil and gas rigs as measured by RigData. “The BPI shows that the ‘effective’ rig count is much higher than the actual rig count because the rigs that are still operating are far more productive than the rigs that were operating in the past,” Bentek said.
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