U.S. Oil Drillers Break Production Records Despite Having Fewer Rigs

From Oilprice.com

The number of active oil and gas rigs in the United States may have fallen in 2019, but oil and gas producers in the United States are still breaking records, according to the EIA.

Efficiency gains per well have allowed U.S. producers to kick out more fossil fuels, even rig and well counts fell. For 2019, the United States produced 12.2 million bpd of oil, and 111.5 billion cubic feet per day of gas.

That year, the average active rig count sat at 943 per month, with an average 1,400 new wells drilled every month, according to Baker Hughes and IHS Markit data respectively. This is near the 45-year low—all the while producing record-breaking amounts of oil and natural gas.

The reason for this phenomena? Horizontal drilling, which allows producers to get into more of the formation. Even since the early 2000s, the average lateral length of a horizontal well has jumped from 10,000 feet to 18,000 feet last year, the EIA said in new research published Thursday.

This lateral length increase has offset—and then some—the fewer number of wells drilled.

For 2019, the trend toward increasing production and decreasing active rig counts and wells is clear. For 2020, the situation is less so, with the number of active rigs in the United States falling for 14 straight weeks, with production falling along with it. While 2019 was a year for technological advancements in rig efficiencies, 2020 has been a year of waning demand and oil price pain for U.S. producers as lockdowns work against the industry.

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