Number Of U.S. Drilling Rigs Hits Record Low

Only 339 oil and natural gas drilling rigs were operating in the United States as of May 12, the lowest level in the Baker Hughes’s rig count data series that dates back to 1987. The U.A. Energy Information Agency (IEA) reports the number of active rigs began sharply decreasing in mid-March as crude oil prices fell: rigs have fallen by 56% (433 rigs) since March 17. Most of the decrease was in oil-focused geologic plays, but natural gas-focused plays also saw significant decreases.

Since March 17, 71% (308 rigs) of the rigs taken out of service were in the top three U.S. crude oil-producing regions: the Permian region in southeastern New Mexico and western Texas, the Eagle Ford region in southern Texas, and the Bakken region in Montana and North Dakota. Drilling in oil-focused plays has declined as the impact of mitigation efforts for the 2019 novel coronavirus (Covid-19) have caused declines in petroleum demand and the resulting fall in crude oil prices. In mid-March, the Permian region had 405 operating rigs. By May 12, that number had fallen by 57% to 175 rigs. The Eagle Ford and Bakken regions saw similar declines in their rig counts, of 64% and 69%, respectively, in that time.

Rig counts have also fallen in natural gas-focused plays, although those plays had fewer rigs. Earlier this year, the top natural gas-producing regions (aside from the Permian region, where much of the associated natural gas is produced in the United States and where all rigs are classified as oil-directed) were the Marcellus region in Ohio, Pennsylvania, and West Virginia and the Haynesville region in Louisiana and Texas. Drilling rigs in the Marcellus and Haynesville regions, which are exclusively natural gas rigs, declined by 23% and 26%, respectively, from mid-March to May 12.