{"id":5847,"date":"2015-06-03T16:55:22","date_gmt":"2015-06-03T21:55:22","guid":{"rendered":"https:\/\/www.regiontrack.com\/www\/?p=5847"},"modified":"2015-06-03T16:55:22","modified_gmt":"2015-06-03T21:55:22","slug":"oil-rig-fall-now-exceeds-2008-09-nat-gas-rig-collapse-06032015","status":"publish","type":"post","link":"https:\/\/www.regiontrack.com\/www\/oil-rig-fall-now-exceeds-2008-09-nat-gas-rig-collapse-06032015\/","title":{"rendered":"Oil Rig Drop Now Exceeds 2008-09 Nat Gas Rig Collapse (06\/03\/2015)"},"content":{"rendered":"

The\u00c2\u00a0ongoing drop\u00c2\u00a0in the number of drilling rigs searching for crude oil now exceeds the collapse in natural gas rigs\u00c2\u00a0suffered back in the 2008-2009 period.\u00c2\u00a0<\/strong>Our pic of the week illustrates the similarity in size and pace between the respective oil and gas drilling\u00c2\u00a0collapses.\u00c2\u00a0Crude rigs are off\u00c2\u00a0by 60% in the 33 weeks since October 2014, from a high of 1,609 to only 646 currently. Natural gas\u00c2\u00a0rigs similarly dropped 59% from a peak of 1,606 to to only 665 over a period of 45 weeks in late 2008 and 2009.<\/p>\n

 <\/p>\n

\"potw_1_20150603\"<\/a><\/p>\n

It is not yet clear how close we are to a short-run bottom in the crude rig count.<\/strong> Most major producing areas continue to see slowly declining crude rig counts.<\/p>\n

The prior collapse in rigs on the natural gas side may provide a\u00c2\u00a0clue to the next move in crude\u00c2\u00a0drilling. Natural gas drilling managed to pick\u00c2\u00a0up only after a substantial rebound\u00c2\u00a0in natural gas prices from below $3\/mcf to $6\/mcf. The more troubling\u00c2\u00a0dimension of the natural gas\u00c2\u00a0story\u00c2\u00a0is the subsequent decline since 2011 to only about 225 natural gas\u00c2\u00a0rigs currently. We discovered along the way that current domestic natural gas demand can now\u00c2\u00a0be met with\u00c2\u00a0only about 200-400 active rigs and a market price for natural gas in the $2.75-$4.25 range.<\/strong> Unless increased LNG exports come to the rescue of the industry in 2016, the outlook for natural gas drilling is likely to remain unchanged in the near- to intermediate-term.<\/p>\n

The natural gas experience\u00c2\u00a0also suggests that crude oil prices may need to move well above the current $60 range to trigger another sustained increase in drilling activity.<\/strong> It further suggests\u00c2\u00a0that a quick\u00c2\u00a0return to anything close to recent\u00c2\u00a0peak drilling activity seems highly unlikely. The 15%+ annual crude oil production gains driven by that level of drilling activity are simply\u00c2\u00a0well in excess of demand growth. Much like natural gas, increased exports of crude oil appear to be a\u00c2\u00a0pivotal\u00c2\u00a0factor in reviving U.S. crude oil exploration in the near term.<\/p>\n

Sign up<\/a>\u00c2\u00a0to receive RegionTrack’s PIC OF THE WEEK!
\n[email_link]\n","protected":false},"excerpt":{"rendered":"

The\u00c2\u00a0ongoing drop\u00c2\u00a0in the number of drilling rigs searching for crude oil now exceeds the collapse in natural gas rigs\u00c2\u00a0suffered back in the 2008-2009 period.\u00c2\u00a0Our pic of the week illustrates the similarity in size and pace between the respective oil and gas drilling\u00c2\u00a0collapses.\u00c2\u00a0Crude rigs are 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