2012 Forecast: Oil drilling continues to drive rig count rise

Average number of rigs and gas/oil drilling split

Average number of U.S. rotary rigs in operation

The U.S. drilling market recovery that began in 2010, following the significant drop in 2009, continued through 2011. According to Baker Hughes’ Rotary Rig Count, activity is still riding the wave of higher oil prices. Beginning with an average 1,713 rigs in January 2011, the number of units running grew steadily as the year progressed, especially in the spring and summer, reaching an October peak of 2,020 rigs, an increase of 17.9%. In the end, an average of 1,877 rigs ran in 2011, equal to a 21.6% jump from 1,543 rigs in 2010.

Texas increased its average rig count to 838 for the year. This 27.2% bump represents a whopping 179 more rigs. Railroad Commission Districts 1 and 2 each had a boost of roughly 113% year–on–year, and the behemoth that is District 8 saw an increase of 97 rigs, or 63.8%. Oklahoma posted a 52–rig increase on average, up 40.6%, while North Dakota experienced a 47.4% rise with 54 more rigs working in the state.

However, these improved regional rig counts have come at the expense of other states. Some of the hardest–hit areas included Louisiana, in particular the northern half, which lost 27 rigs, or 27.4%, as well as Districts 5 and 6 in Texas, each of which dropped by about 23%.

Higher oil prices continue to draw the attention of operators away from drilling for gas in favor of liquid–rich shale plays. In April of last year, for the first time since April 1995, more than half of the active rigs were drilling for oil. By the end of the year, nearly 60% of the rig fleet was drilling for oil, a trend that is likely to carry into 2012, World Oil predicts an average rig count of 2,019 for 2012, representing a 7.6% increase over 2011.