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Page added on August 18, 2018
Oil Price Rise to Drive Up Drilling Globally
The rise in oil prices is feeding through into higher spending in the oil and gas sector and will continue to drive up drilling activity globally over the second half of the year and 2019, according to oil and gas analysts at Fitch Solutions Macro Research.
“Globally, rotary rig counts have averaged 183 rigs higher in the year to date, compared to the same period last year,” the analysts said in a report sent to Rigzone on Tuesday.
“The majority of additions have been made in North America, as shale developments continue to pick up pace. Internationally, the rig count has averaged 23 rigs higher, but performance has been widely varied between the different regions,” the analysts added.
Fitch Macro Solutions Research analysts said they expect “continued strong growth in US shale, with producers set to add around 1.25 million barrels per day of crude and condensates over 2018 on an annual average basis”.
In the report, the Fitch Macro Solutions Research representatives also stated that “there is a shift underway away from gas and towards oil-directed drilling”.
“When oil prices decline, both oil-and gas-directed rig counts tend [to] fall, due to the outsize impact of oil revenue on capex [capital expenditure]. However, due to a number of factors, including differences in cost and contracting structures, gas-directed drilling tends to face less downside pressure overall,” the analysts said.
“As oil prices continue to recover, and investor confidence with them, we expect the focus to swing back towards oil over the coming years. However, we view the shift as a cyclical and not a structural one, with secular trends in policy, pricing and technology strongly favoring gas over a longer-term (multi-decade) horizon,” the analysts added.
12 Comments on "Oil Price Rise to Drive Up Drilling Globally"
twocats on Sun, 19th Aug 2018 7:19 am
“with producers set to add around 1.25 million barrels per day of crude and condensates over 2018 on an annual average basis”
i’m not exactly sure what Fitch means by annual average basis, but if they mean that “on average” over the course of the year, the increase will be 1.25 mbpd then they are crazy. the TOTAL increase might MIGHT get to 1.25, which would be about 6.35 mbpd.
considering that january and february were completely stall-outs on production, and 2015 – 2017 decline rates are absolutely brutal, even getting to 1.25 ENDING annual basis is a HUGE ASK.
I want what Fitch is smoking.
twocats on Sun, 19th Aug 2018 7:21 am
actually looking at it again, 2015 – 2016 decline rates have at least flattened. so, whew, they only have to worry about the sheer cliff that is 2017.
Chico on Sun, 19th Aug 2018 9:19 am
I don’t know anyone in their right mind drilling for Natural Gas! The shift to Oil began in 2008. All the gas we are seeing is just by product. Where have you been?
Anonymous on Sun, 19th Aug 2018 12:11 pm
Twocats, the STEO has 2017 at an average of 9.4 mm bpd. May and June were a little above 10.4.
It is likely the average for this year is above 10.4. If they miss the 1.25 extra it will just be by a little. I think even with the pipeline headwinds they still get it done.
Remember that the shale haters and eia doubters were dramatically wrong last fall and spring. Production exploded and eia actually underestimated not overestimated.
Boat on Sun, 19th Aug 2018 3:44 pm
Eia report
https://www.eia.gov/outlooks/steo/?src=home-b2
Boat on Sun, 19th Aug 2018 3:52 pm
10.8 in July
10.7 avg for the year 2018
9.4 for 2019
Estiments will be revised.
Boat on Sun, 19th Aug 2018 3:58 pm
2cat
Wrong per normal. That 10.8 mbpd in July will keep climbing. No Clift, lol
Boat on Sun, 19th Aug 2018 4:03 pm
amouse
Your just as lost. 10.4 mbpd in 2018 will be closer to 11 mbpd as the eia generally underestimates this report.
twocats on Sun, 19th Aug 2018 7:47 pm
anonymous – at least you were polite, but i’m obviously talking about LTO only, which is where all the growth is. It’s all permian and bakken. the rest is declines.
to have an AVERAGE increase of 1.25 they are going to have to step on it. what were the averages for january, february, march, april, may? they’ve already revised june and july DOWN!! the weeklies have been shown to be WAY TOO high. Sorry, but not convinced.
twocats on Sun, 19th Aug 2018 8:04 pm
I see what you are saying though – if all Fitch is saying is that the US will maintain a plateau on production for the year with no declines? because they started at 10.5 and the beginning of 2017 was a total disaster, then yes, I think they can do that.
i thought we were talking increases here over end of year 2017. fitch made is sound all impressive and shit.
Anonymous on Mon, 20th Aug 2018 12:26 am
twocats: from the EIA:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a
1. Here is the 2017 average: 9,367 thousand bopd
2. Here are the 2018 production figures (JAN to MAY, thousands bopd): 9,995; 10,248; 10,461; 10,472; 10,442. The average for the first 5 months was 10,324.
———–
IOW, just the first 5 months was averaging just a hair under 1 million bopd more than 2017. It is very likely that overall, 2018 will average higher than 2017 by more than a million.
If we are shy of 1.25 million more, it will be just a small amount shy. I would not assume that we miss it at all though. There is still growth occurring in shale (even with Permian gridlocked). And GOM has one to two hundred thousand bopd ready to come back from maintenance
Matthew W Flanisdas on Wed, 19th Sep 2018 2:10 pm
It is impossible for oil price, production of electric cars and solar panel production to all go up at the same time. This is not possible. One of them has to lose in this competition. Judging from the last 20 years of progression and trend on electric car sales and solar panel usage, it is obvious that oil price will drop tremendously. It is not a matter of if, it is a matter of time. Simple as that.