U.S. energy firms this week added oil and natural gas rigs for a third week in a row as oil prices rose to a near seven-year high, prompting some drillers to return to the wellpad.
The oil and gas rig count, an early indicator of future output, rose six to 556 in the week to Nov. 12, its highest level since April 2020, energy services firm Baker Hughes Co. said in its closely followed report on Nov. 12.
That puts the total rig count up 244 rigs, or 78%, over this time last year.
U.S. oil rigs rose four to 454 this week, their highest since April 2020, while gas rigs rose two to 102, their highest since September 2021.
WTI crude futures in the U.S. rose close to their highest prices since 2014 earlier this week and were trading around $81/bbl on Nov. 12.
With oil prices up about 67% so far this year, some energy firms said they plan to boost spending in 2021 and 2022 after cutting drilling and completion expenditures in 2019 and 2020.
That spending increase, however, remains small as most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns rather than adding output.
U.S. oil production is expected to slide from 11.3 million bbl/d in 2020 to 11.1 million bbl/d in 2021 before rising to 11.9 million bbl/d in 2022, according to government projections. That compares with the all-time annual high of 12.3 million bbl/d in 2019.
Oddly, an even bigger price increase in natural gas—futures were up 91% so far this year—has not yet encouraged drillers to seek much more gas.
The oil rig count was up about 70% since the start of the year, while the number of active gas rigs was up only about 23%.
U.S. financial services firm Cowen & Co. said the independent E&P companies it tracks plan to increase spending about 4% in 2021 versus 2020, and 11% in 2022 versus 2021 for the dozen or so firms that have already announced estimates for next year.
That follows capital expenditure reductions of roughly 48% in 2020 and 12% in 2019.
Recommended Reading
First US Utility-scale Offshore Wind Farm Starts Operations
2024-03-14 - The 12-turbine, 130-megawatt South Fork Wind project is a joint venture between Denmark's Orsted and New England-based electric utility Eversource.
Equinor, Ørsted/Eversource Land New York Offshore Wind Awards
2024-02-29 - RWE Renewables and National Grid’s Community Offshore Wind 2 project was waitlisted and may be considered for award and contract negotiations later, NYSERDA says.
Eversource to Sell Sunrise Wind Stake to Ørsted
2024-04-19 - Eversource Energy said it will provide service to Ørsted and remain contracted to lead the onshore construction of Sunrise following the closing of the transaction.
Dominion Energy Receives Final Approvals for 2.6-GW Offshore Wind Project
2024-01-30 - Dominion Energy’s Coastal Virginia Offshore Wind project will feature 176 turbines and three offshore substations on a nearly 113,000-acre lease area off Virginia Beach.
Ørsted Names New CFO, COO Following 2023 Setbacks
2024-02-27 - Ørsted appointed Trond Westlie as CFO and executive board member and Patrick Harnett as COO following company difficulties in 2023, including a $4 billion impairment charge in third-quarter 2023.