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US drilling efficiency increasing Baker Hughes rig count shows each drilling rig can drill more wells in a given timeframe as technology and techniques improve Alan Bailey Petroleum News
A small decline in the number of active drilling rigs in the United States in recent months might at first blush seem reason for concern, in the face of a major upsurge in U.S. oil production. But looks can be deceptive.
An examination of the count of the number of wells drilled, rather than just the number of drilling rigs used, shows that the well count is actually going up, while the rig count drops, thus indicating increasing drilling efficiency, Ahmed Mousbah, U.S. lands region marketing and development director for Baker Hughes Inc., told the Alaska Support Industry Alliance’s Meet Alaska conference on Jan. 11.
Mousbah was talking at the conference about the Baker Hughes rig count, a widely used barometer of the oil industry that presents data about drilling activity in the United States and overseas.
Unconventional plays Mousbah attributed the improved drilling efficiency to the rapid expansion in drilling activity in unconventional oil plays, targeting oil production from source rocks such as the Eagle Ford shale in Texas and the Bakken in North Dakota. There have been advances in the horizontal drilling techniques used for source-rock development. And, once an operator has figured out the best means of exploiting one of these source-rock plays, drilling can progress relatively rapidly, Mousbah said.
Mousbah said that improved drilling efficiency has also resulted from the burgeoning use of pad drilling, the drilling of multiple, directional wells from a single well pad. By avoiding the need for cumbersome drilling rig moves between widely spaced well sites, pad drilling has enabled operators to increase their returns on their drilling investments by making it possible to drill more wells more quickly. Pad drilling also reduces the surface footprint of the drilling operations, Mousbah said.
Gathered by employees The Baker Hughes rig count report, which has been published weekly for U.S. data since the 1940s and monthly for international data since the mid-1970s, relies on data gathered in the field by around 200 Baker Hughes employees, all of them working at drilling sites, Mousbah said. The employees submit the data to Baker Hughes company headquarters, where the data are rigorously checked before publication, he said.
And, in some ways, the rig count provides a quite effective leading indicator of the health of the U.S. economy, Mousbah said.
A plot of drilling activity over the past decade shows an uptick in that activity in the mid-2000s, as the widespread use of horizontal drilling and hydraulic fracturing in source-rock plays started to emerge. Drilling rates continued to climb until crashing in the last quarter of 2008, as the impact of the subprime mortgage debacle and the ensuing financial crisis gripped the nation. Drilling activity rebounded in the second half of 2009.
Horizontal drilling A close examination of the data reveals the rebound to have reflected a growth in horizontal drilling, with the amount of vertical drilling, the technique used in traditional oilfield development, remaining fairly flat. And, while there has been an upward trend in drilling activity in states such as Texas and North Dakota, drilling levels have remained fairly static in Alaska.
Recently, with a glut of natural gas in North America, there has also been a shift in activity from the drilling of gas wells to the drilling of oil wells. Baker Hughes thinks that oil prices will remain in the $85 to $95 per barrel range in the near term, a price range that will continue to support oil drilling, Mousbah said. A resurgence of interest in gas would require gas prices to move above $5 per thousand cubic feet, a situation that is unlikely in the near future, he said.
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