Shale oil rig (courtesy of Day Donalson)
Its not a passing fad or anomoly.
This week, Baker Hughes Inc., a significant supplier of oilfield services and equipment revealed that for the week of November 18, the U.S. drilling rig count rose twenty units to 588. That increase alone is the biggest rise since April 2014 - long before oil's engineered collapse by OPEC's leader, Saudia Arabia later in November of that same year.
While the increase is the biggest in that time, it follows a slow but steady weekly increase which started last June. Since then 184 units have restarted, despite oil remaining below the $50 a barrel threshold.
While the numbers are a far cry from November 2014 when an addition 1332 units were active, the turnaround shows the worse seems behind.
As mentionned in our previous blog, "Wolfcamp: the new name of U.S. oil independence" with serious attention now being paid to the assessment of significant oil trapped in old Texas Permian shale beds, its not at all surprising to learn that the lion share of the increase in those rig counts occured in the Permian Basin with 229 horizontal drilling rigs now in operation.
While the numbers suggest a turnaround, the output in the Permian, which straddles West Texas and southeastern New Mexico now produces over 2.065 million barrels a day, nearly a third of total American production.
The attraction of the Midland section of the Wolfcamp shale (within the Permian Basin) appears to be coming at the direct expense of the once might Eagle Ford play, which has seen no new rigs added in the past several weeks.
Interestingly, Canadian oil rig counts appear to be edging up as well. While there is a tendency to overlook Canadian oil as either heavy oil from its vast tarsands or its highly prized conventional (Edmonton Par) light oil, there are in fact over 100 active oil-directed rigs, with 11 having joined this week alone.
Though no one is expecting a massive rebound in oil rig activity in the near future, the small but noticeable uptick is an apt reminder that the enegy dynamic of North American produced oil, wasnt just a casual occurence. When oil demand begins to rebound, domestic producers will be active in exploiting evr greater reserves for decades to come.