Great Visualization Of Declining US Oil Rig Count

Adam Taggart
By Adam Taggart on Mon, Apr 13, 2015 - 10:55pm

We've all read about the blow lower oil prices is dealing to the US shale industry, the jobs and supply 'miracle' that was destined to make America energy-independent.

But what impact exactly are these lower prices having?

Bloomberg has released an excellent interactive map of the rise and subsequent collapse of active oil drill rigs in the US. I can't embed the interactive map itself, so either click here to see it, or click on the screenshot of the map below:

And the below chart from the EIA/Baker Hughes shows how swift and sudden the rig count collapse has been:

The loss in both revenue and jobs from this sharp decline has yet to be fully realized, or even admitted to, by our economists and media. Expect a lot of downside surprises over the next few quarters as the impacts ripple through the economic data.

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9 Comments

robshepler's picture
robshepler
Status: Silver Member (Offline)
Joined: Apr 16 2010
Posts: 105
Bakkan to Barnett

Neat map!

As we read about the drought in California it occurs to me that the map pretty much runs along the Ogallala aquifer which might be our next food/water challenge. We are pumping them down and praying for rain.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
US shale rigs & breakeven point

Based on EIA data, the red line shows the number of active rigs required to keep production at current levels, and the black line is the number of currently active rigs in the shale areas.

The red line is simply the total decline in legacy shale production divided by the "productivity per rig" stat provided by EIA.  Rig productivity: 332 bbl/day each month, and decline per month: 334 kbpd => 991 active rigs.

You can see we crossed over the sustainable production level about a month or so ago, and we are now at 760 active rigs.

TAMWO37101's picture
TAMWO37101
Status: Bronze Member (Offline)
Joined: Jun 17 2012
Posts: 44
PRICE

   Oh its so annoying to read "New technology drove this boom" when we all here know it was the price.  The technology has been around for decades!  No wonder the masses think technology will save us. Sigh. Cool map-thx for sharing!

TAM

 

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
D3 is great

For those who have never seen the wealth and health of nations visual, this is pretty cool as well...

http://romsson.github.io/dragit/example/nations.html

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5570
Yep, it's price
TAMWO37101 wrote:

   Oh its so annoying to read "New technology drove this boom" when we all here know it was the price.  The technology has been around for decades!  No wonder the masses think technology will save us. Sigh. Cool map-thx for sharing!

TAM

First, great chart DaveF.  That's a great way to visualize what's coming next.

Second, yes, it's price that unlocked the shale plays and price that's locking them back up.

It's unbelievable the number of articles that are utterly confused about the difference between per rig productivity and per well productivity, and take the former and extrapolate that to mean we're getting more oil per unit of effort.

Wrong.

It's not like the data isn't free and easy to come by.  David Hughes has gathered it all up and presented it on a platter.  See if you can note the huge impact of technology on the amount of oil we are getting out of each well in the Eagleford play:

Whether we are looking at the highest month of output (red), the first 6 months of output (yellow), 12 (green) or 24 months (blue), the answer is the same...a line that is not statistically different from flat.

Which means that either technology has not improved at all since 2011 (false) or the pace of technological gain is being fought to a standstill by geology.  That is, longer laterals and higher proppant usage is running up against less sweet spots.

Hello flat lines.

Goodbye technology meme.

It's not really a difficult thing to either grasp or relate, but you'd never know that from reading the WSJ, et al.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5072
just in time: ND DMR data on Feb 2015 Bakken Production

Just today, we have a release from the North Dakota Dept of Mineral Resources on Bakken production for February.  I have a chart contrasting EIA estimates of Bakken production vs the ND DMR, which gets production straight from the horse's mouth (i.e. well-by-well monthly production numbers from the drillers themselves).

I trust the DMR - black line in the chart below.  No moving averages, no shenanigans, no pretty websites - just the data in a no-frills PDF file.

According to the DMR, Bakken peaked in December.  Production dropped both in January and Febrary.  EIA is behind.

42 wells were completed in February, down from 63 in January.  Bakken needs 110 wells completed per month for production to remain at break-even.  900 wells await completion.

Today's Bakken oil price: $36.25/bbl.  This is clear proof of where bakken profitability is: perhaps 4-5% of wells just might be profitable at these prices.  That's it.

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1982
fires at rigs

There have been two fires blamed on lightning at fracking sites in the last couple of days. If I were an insurance investigator I'd be saying to myself, "Hm. Over-indebted. No longer making a profit. Could this be...arson?"

Maybe. Maybe not.

bj-brown's picture
bj-brown
Status: Member (Offline)
Joined: Dec 15 2009
Posts: 11
third option - cost cutting leads to carelessness

You ask: act of nature or arson?

There is a third, higher probability explanation. We all know the lightning risk to high metal objects on flat ground. In good times, owners, contractors and crews realize they have valuable assets and they spend time and money on making sure the site is properly protected against many hazards, lightning included.  In times of massive cost cutting, corners are cut on installing and maintaining "non-essential" equipment, leaving the site vulnerable.  

And, unfortunately, at current oil prices, the insurance payout may indeed be worth more than the assets, reducing the incentive to protect the site.

bj-brown's picture
bj-brown
Status: Member (Offline)
Joined: Dec 15 2009
Posts: 11
technology?

The masses think the newest selfie app and the next Facebook knock-off are technology.  Most of them have no idea what actually happens when they throw the light switch or turn up the thermostat. 

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