North American Rig Count Slumped but Is Well Above year-ago Levels


Baker Hughes, which provides services for oil and gas exploration — known as the upstream part of the energy sector — on Friday published the rig count for February, showing waning activity across much of North America.

In the United States, among the largest oil and gas producers in the world, rig counts were down 14 from January levels. Canada, which hosts one of the largest crude oil deposits in the world in Alberta, saw a 22 rig count reduction from January.

The North Dakota government said last month that its rig count is stuck in the mid 40s, with only gradual increases expected over the next two years. Rig counts hit a record high in 2012 at 218.

North Dakota sits on the Bakken shale formation. Bakken shale oil production peaked at around 1.5 million barrels per day in late 2019, before the onset of the COVID-19 pandemic, and is now at around 1 million bpd.

Slumps in rig counts, however, could reflect the steady string of inclement weather that hit the northern United States and Canada last month. The Dakotas were buried under two feet of snow during a late February storm.

North American energy companies, meanwhile, are favoring shareholder returns over new investments in oil and gas production. Nevertheless, Baker Hughes data, sent in an emailed report, show the U.S. rig count is up by 103 from year-ago levels and Canada’s is up 28 year-on-year.

The United States is still expected to set records this year, with crude oil production alone topping 12 million bpd this year, which would beat the previous record set in 2019 should federal estimates prove accurate.

Canada too is expecting a rebound. The Canadian Association of Petroleum Producers said Wednesday it was expecting $29 billion in upstream spending this year, an 11% increase from 2022 levels.

CAPP President and CEO Lisa Baiton said new pipelines in Canada and prospects for an emerging liquefied natural gas export business means the outlook for 2023 remains positive.

“The year 2023 may be one of the most pivotal moments in time for Canada’s oil and natural gas industry,” she said.

Canada’s largest export market for crude oil is the United States. The U.S. economy gets most of its foreign crude oil from its northern neighbor, importing an average of 3.6 million barrels per day last week, which represents 65% of total U.S. imports.

Source: UPI