Platts rig data expects more than 11,000 US oil & gas wells to be drilled during 2017
On the heels of OPEC’s announcement that its members will voluntarily freeze or reduce oil production, S&P Global Platts says American producers can expect a significant uptick in drilling next year.
S&P Global Platts released the Platts RigData U.S. Land Rig Three-Year Forecast Monday. The annual forecast, now in its 2nd year, is an analysis of the key drivers of domestic oil and gas supplies and what they imply for future trends over the next three years for land rig demand.
As the report notes, oil prices will continue to be the primary catalyst determining US rig demand in the months ahead.
“OPEC’s latest agreement to modestly reduce production, a move aimed at supporting the price of crude oil globally, reinforces our expectations of strengthened U.S. rig counts next year,” said Trey Cowan, senior industry analyst, Platts RigData, a forecasting unit of S&P Global Platts.
Specifically, Platts RigData projects the US rig count will grow by an average of 131 rigs or 29 per cent year over year during 2017.
This would be an increase from the average estimated 449 rigs actively drilling in 2016.
Forecast highlights Include:
- Oil prices to trend higher as incremental US supply levels normalize
- Oilfield service activity to continue the recovery begun in May
- Elevated production derived from “high grading” (operator focus on development of highest returning wells) has entered the latter stages for this recovery cycle
- Lower incremental-production volumes per well are likely
- Despite recent drawdowns in drilled-but-uncompleted (DUCs) wells, oil and natural gas supply unlikely to expand as rapidly as first signaled
“In our opinion, the expected smaller incremental-well production volumes would imply the need for a greater number of wells to be brought into production in order to reach targeted production goals,” said Cowan.
The Platts RigData US Land Rig Three-Year Forecast looks at the full US landscape, with deep dives into analysis of eight key regions active in oil and gas development.
“To this end, Platts RigData expects more than 11,000 US oil & gas wells to be drilled during 2017. That would be an improvement of 25 per cent year over year versus our 8,900 well spud estimate for 2016,” said Cowan.
Utilizing Platts RigData’s extensive database, the Forecast goes into granular detail of specifications and the technical capabilities of each rig and its working history.
Unlike some approaches, the levels of production, consumption, and price trends projected in the Platts RigData Forecast are based on rig demand.
Key components of the Platts RigData U.S. Land Rig Three-Year Forecast:
- Regional projections of a base case plus a downside and upside growth case
- Regional summaries of developments, commodity prices, and operators’ drilling sentiments
- Assessment of macroeconomics
- Outlook for technology advancements, effects of rig fleet age, and financial health of large service providers
- DUCs inventory overhang and outlook