U.S. exploration and production activity rising

Platts finds only North Dakota is standing still when it comes to rig counts.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   Feb. 8, 2017 at 6:22 AM

Feb. 8 (UPI) -- A review of exploration and production activity in the United States finds standing still is the worst case scenario for major oil and gas regions.

A forecasting unit for S&P Global Platts produced an independent assessment of rig counts in the United States. Rig counts reflect exploration and production activity and serve as a metric to gauge confidence in a particular region.

For all of the United States, Platts counted 773 rigs in service as of January, up 9 percent from the previous month. Taken as a whole, the Gulf of Mexico saw a greater net increase than shale basins in the Lower 48.

That forecast is slightly higher than the 8 percent increase recorded this week by oilfield services company Baker Hughes.

Rig counts have yet to materialize as significant measured production gains. Nevertheless, most of the reported growth from the United States is showing up in the Gulf of Mexico.

Anthony Starkey, the manager of energy analysis for S&P Global Platts, said in a separate report from earlier this year that most of the recent gains in U.S. oil production have yet to factor in resilient shale.

"We have yet to really see the improvement in shale output," he said.

For shale-rich states, Texas reported the most growth in the rig count data from Platts by volume with an increase of 31 rigs from December. Most of the reported rig activity in the United States is in Texas and some of the shale basins there have been more resilient to market pressures than previously expected.

North Dakota, the No. 2 oil producer in the United States, reported no change in rig activity from December and was the only one of six major producing states to show a year-on-year decline.

Lynn Helms, the director of North Dakota's oil and gas commission, said last month that operators in the state were committed to restraint so long as oil prices stay below $60 per barrel.

West Texas Intermediate, the U.S. benchmark price for crude oil, was trading at around $51.50 early Wednesday. Oil prices are considerably higher than they were this time last year when supply-side pressures, in part from the United States, pushed markets to historic lows.

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