Environment and Energy

Drilling Rigs Down in Both USA & Canada

Written by Brett Linton

According to Baker Hughes data from September 18, 2015, the U.S rig count for the week was 842 rigs exploring for or developing oil or natural gas. This is a decrease of 6 rigs when compared to last week, with oil rigs down 8 to 644 rigs, gas rigs up 2 to 198 rigs, and miscellaneous rigs unchanged at 0 rigs. Compared to this time last year, the 842 count is down 1,089 rigs, with oil rigs down 957, gas rigs down 131 and miscellaneous rigs down 1.

The decline in the drilling of new gas and oil wells is having a direct impact on the amount of line pipe, storage tanks, and OCTG that is being used by the energy sector. A good portion of these products come from hot rolled coil or plate substrate, and are reasons for both the short lead times on hot rolled and plate at North American steel producers and the falling steel prices we have seen going back to mid-2014. Prices have since stabilized for hot rolled coil but the product is having a difficult time breaking out of a very narrow trading range partially due to the weakness in the energy sector.

The situation in Canada started to show improvement over the last 2 months, but has recently stalled. The Canadian rig count decreased by 3 to 182 rigs this past week, with oil rigs unchanged at 70 rigs and gas rigs down 3 to 112 rigs. Compared to last year the 182 count is a decrease of 195 rigs, with oil rigs down 132 and gas rigs down 63. International rigs increased by 19 to 1,137 rigs for the month of August, a decrease of 202 rigs from the same month one year ago. For a history of both the US and Canadian rig count, visit the Steel Market Update website here.

About the Rotary Rig Count

A rotary rig is one that rotates the drill pipe from the surface to either drill a new well or sidetracking an existing one. They are drilled to explore for, develop and produce oil or natural gas. The Baker Hughes Rotary Rig count includes only those rigs that are significant consumers of oilfield services and supplies.

The Baker Hughes North American Rotary Rig Count is a weekly census of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States and Canada. Rigs considered active must be on location and drilling. They are considered active from the time they break ground until the time they reach their target depth.

The Baker Hughes International Rotary Rig Count is a monthly census of active drilling rigs exploring for or developing oil or natural gas outside of the United States and Canada. International rigs considered active must be drilling at least 15 days during the month. The Baker Hughes International Rotary Rig Count does not include rigs drilling in Russia or onshore China.

Brett Linton

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