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How Many Wells From 1 Onshore Rig?

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The U.S. rig count keeps dropping, as reported by Baker Hughes. 

I am wondering if anybody could give some insight as to how many wells the average, active oil rig usually drills in one year?

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4 hours ago, Toranaga said:

The U.S. rig count keeps dropping, as reported by Baker Hughes. 

I am wondering if anybody could give some insight as to how many wells the average, active oil rig usually drills in one year?

Good Question - The rig count contains all rigs both offshore and onshore, I'm sure a land rig could drill two wells a month depending on depth, offshore 90 days is a short well.

Rig count is not a very good barometer for the oil industry as a whole, but im sure someone like @wrs or @ceo_energemsier could give you a much better answer regarding US land plays.

Gents your up

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You're up

:) 

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(edited)

5 minutes ago, DayTrader said:

You're up

:) 

Its not Countdown, cut me some slack, I will try harder, but your actually edumacating me, so I should be pleased Thanks for embarrassing me in public...

Edited by James Regan
Thinking of Carol Vordman in a bikini
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Haha just kidding 

#jabbar

I like '' It's not Countdown ''  

Fantastic

 

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It all depends on where and which formation they are drilling. Eagleford wells (and plenty of other fields) can be drilled in 3-4 days and we can drill quite a few in a month especially if they are drilling multiple wells per pad which means they aren't rig moving but rather 'skidding' the rig to another wellhead on the same pad...oh and they are 10,000ft laterals!

The rig count is dropping because the investment in shale oil is falling and at this time of the year companies have used up their drilling budgets. The low oil prices are doing a lot of damage but shale drilling can be turned around on a dime if the conditions are right, you could mobilize a rig and start drilling very quickly unlike offshore oil.

Hope that helps

 

 

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1 hour ago, James Regan said:

Good Question - The rig count contains all rigs both offshore and onshore, I'm sure a land rig could drill two wells a month depending on depth, offshore 90 days is a short well.

Rig count is not a very good barometer for the oil industry as a whole, but im sure someone like @wrs or @ceo_energemsier could give you a much better answer regarding US land plays.

Gents your up

I'd say rig count is a very good indicator for the US oil industry to be honest but it depends on what you meant by that.

For people who work in it absolutely, for investors probably not there's always a bargain to be had during times like these

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Nikko,

By rig count are you including offshore, onshore, conventional and unconventional rigs?

I suspect that this could get confusing. A rig employed in a conventional play could punch down a lot more vertical or deviated wells than a rig drilling in the LTO arena drilling and completing long lateral wells. The time savings in the LTO regions would be saving time on rig moves (multiple wells from one pad). The killer would be time spent on the hydraulic fracturing operations.

I would say that you would need to determine where the rig count is falling then getting an average number of wells drilled per year by a typical rig drilling a typical well in that play.

Does that make sense?

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2 minutes ago, Douglas Buckland said:

Nikko,

By rig count are you including offshore, onshore, conventional and unconventional rigs?

I suspect that this could get confusing. A rig employed in a conventional play could punch down a lot more vertical or deviated wells than a rig drilling in the LTO arena drilling and completing long lateral wells. The time savings in the LTO regions would be saving time on rig moves (multiple wells from one pad). The killer would be time spent on the hydraulic fracturing operations.

I would say that you would need to determine where the rig count is falling then getting an average number of wells drilled per year by a typical rig drilling a typical well in that play.

Does that make sense?

 

I think Baker do separate the rig count for on and offshore and then further to oil rigs, gas and 'other' which I assume are unconventional and work over rigs etc...if not then someone does I'll have to take a look at that.

If the rig count is falling I'd say, from my own experience of having much less work this year, it's the shale oil drillers that are finishing up their drilling campaigns either through design or due to the oil prices or going bust. We're at the sharp pointy end of things so it  happens really fast to us, when we're busy we don't pay attention to the market untill everything goes down the toilet and I end up trying to figure out what the heck happened (again).

We finished one contract where our rigs were drilling 4+ 10,000ft lateral wells inside a month.

Also I don't think these kind of companies frac their wells between the rig moves/skidding I assume it's done months down the line...they drill to TD, complete and move and then the frackers probably turn up later on.

Right now there is not much activity from where we're sitting, I am in drilling and evaluation, have worked for service companies for almost 20 years and I'm now a consultant geologist that specialises in geosteering (sounds good but it isn't). We used to be the rock stars of the industry 😆

Short version: Shale oil 'frackers' are cutting back like crazy...but they can also turn it on faster than any other type of drilling operation from my own limited experience. Most of my time was working for (NOC) national oil companies in North Africa and the Middle east plus a few years in UK/Europe.

Even shorter version: Who bloody knows these days??

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it's the shale oil drillers that are finishing up their drilling campaigns either through design or due to the oil prices or going bust.

This is the fallacy concerning the LTO plays....they CANNOT drill in a campaign fashion! Since these LTO wells have a drastic drop in their production rate within a year or two, to maintain a production plateau they must either drill or complete a well every year or two to replace the drastic drop in production for those wells which no longer produce anywhere near their initial rate. The idea of performing a drilling campaign then ‘living off the production’ does not apply to shale oil areas.

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Not an expert here but the EIA in their monthly Drilling Productivity Report has shown a trend  of a fewer wells drilled but an uptick in completed wells. According to multiple monthly reports actual production is still rising and for the first time in years the drilled but uncompleted wells count dropped a few. 

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5 hours ago, El Nikko said:

I'd say rig count is a very good indicator for the US oil industry to be honest but it depends on what you meant by that.

For people who work in it absolutely, for investors probably not there's always a bargain to be had during times like these

Nikko - You're probably correct for US Rig count if it specifies areas, I have seen it somewhere where is specifies Land Rigs, Jack Ups, semi subs , drillships, tenders, etc, Im only assuming but I would hazard a guess that the Baker Hughes has it all together, hence my point about not being a very good barometer. Especially in the land plays as a barometer for the Industry as a whole, as you state 3 days to drill out a well, once you hit TD it may be the last thing you do, ie then rig down and no more work, its that fickle in the LTO plays. Offshore projects are longer and normally well planned so we have more time to find another job and the contractors and operators have a big interest to keep the rigs working due to high start up costs. logistics and transit to new locations globally.

So as you said your at the VERY POINTY end, here today gone tomorrow, that's the nature of LTO. Looked for some info found one site which was interesting as it has links to other investor based but not my gig, being just below you at the less pointed end, but rely heavily on you guys, I know what its like as does Doug we both started at the pointy end.

They quote -The Baker Hughes rig count is an important business barometer for the oil drilling industry. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for oil products.

Somewhere in the sentence will be the offshore side as well, but due to lag time, hence I made my comment about not being a good indicator for the Industry.

https://www.investing.com/economic-calendar/baker-hughes-u.s.-rig-count-1652

This one is a bit more technical and links to trading technicals

https://ycharts.com/indicators/us_oil_rotary_rigs

Good luck and I hope you get back turning to the right, but slow down as your drilling yourselves out of work......easier said that done but a fact.

Screen Shot 2019-09-29 at 05.14.42.png

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14 hours ago, James Regan said:

Edited 13 hours ago by James Regan
Thinking of Carol Vordman in a bikini

Thanks for that

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Thanks to all. Trying to reconcile this with figuring out Dan Steffens' articles from 25 August and 09 September.  Will do some calculations later today and share results.

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(edited)

9 minutes ago, DayTrader said:

Thanks for that

Much nicer than that Richard dude, but sometimes the Oxford English dictionary specialists were smoking hot and smart, Carol she could beat a bank load of Jews in an arithmetic competition.

Screen Shot 2019-09-29 at 13.02.36.png

Edited by James Regan
ooh arrr miz zumerzet....

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4 minutes ago, Toranaga said:

Thanks to all. Trying to reconcile this with figuring out Dan Steffens' articles from 25 August and 09 September.  Will do some calculations later today and share results.

Could you post links to those articles please?

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I said I would get back to this on Sunday, but then I decided to wait for the EIA monthly production data for July.  As Dan Steffens predicted, it shows a significant drop to ~11.8 million barrels. [https://www.eia.gov/petroleum/production/] Dan said this would occur partly due to Hurricane Berry, but reason indicates there is almost certainly still an underlying down trend due to the declining rig count. Counteracting that is the DUCs. According to the EIA data, the number of DUCs is declining, but still high.  Contradicting that based on his own expertise, Mr. Steffens says the DUC inventory has returned to normal. But he offers no proof or explanation.  Putting the rig production data discussion aside for a moment, let's look at wells per rig.

I very much appreciate the comments made on this thread. I had the inspiration of check CRC's Q1 2019 earnings call transcript [https://www.crc.com/images/documents/IR/Financials/CRC1Q19EarningsTranscript.pdf]

They gave some specific numbers and their statements are subject to SEC action if misleading since CRC is a public company.  

They drilled 60 wells that quarter. They started the quarter with 10 rigs, and ended with 6.  So let's go with an average of 8 rigs. 60/8 = 7.5 wells per rig for the 3 month quarter, or 2.5 wells per rig per month.  

That is fairly consistent the estimate given by James Regan at the top of this thread, that being 2 wells per month.  

But CRC only has 1 rig doing fracking. Maybe fracking rigs are faster. Some people on this thread were saying that.

I will go with 3 wells per rig per month for purposes of getting some idea of what is going on, using a slightly higher figure so I don't predict an oil shortage that may never materialize.  

In his August 25 article [https://oilprice.com/Energy/Crude-Oil/The-Real-Reason-Why-US-Oil-Production-Has-Peaked.html], Dan Steffens said the U.S. needs 12,000 new horizontal wells per year to maintain production. 

Baker Hughes says that of the 860 total rigs as of 9/27/2019, 752 are horizontal. 3 x 752 x 12 = 27,072. Those 752 horizontal rigs can drill 27k wells per year.

Based on the calculations above, we will not be seeing much of a decrease in production, even with a declining rig count. 

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(edited)

On 9/29/2019 at 12:05 PM, James Regan said:

Much nicer than that Richard dude, but sometimes the Oxford English dictionary specialists were smoking hot and smart, Carol she could beat a bank load of Jews in an arithmetic competition.

Screen Shot 2019-09-29 at 13.02.36.png

I am far from being a person prone to objectify, but that is prime oil & gas acreage.

[Cut out the rest because it went quite too far with the metaphors.]

Actually, I am talking about the land in back of her.

 

Edited by Toranaga
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(edited)

Simply put , it all depends on the geo formation being targeted and type of rig being used without being to technical.

Vertical wells vs horizontal wells. Multi well single pad drilling, from a single pad you can have a single rig drill multiple wells (walking rigs etc) save time and $$$$ drill a well move over to the next spot on the same pad and so on, 3-12? even more, again depending on what is going to be required and what will be supported and then that is only the well from the surface, you have have multiple wells drilled and completed into different zones , and in different directions in the same formation.

A rig can drill as many wells as an operator/driller wants to drill.

 

 

 

https://www.eia.gov/todayinenergy/detail.php?id=7910

 

 

 

 

Oil and natural gas wells have traditionally been drilled vertically, at depths ranging from a few thousand feet to as deep as five miles. Today, advances in drilling technology allow oil and natural gas companies to reach more reserves while reducing environmental impact by:

reducing the surface “footprint” of drilling operations,

drilling smaller holes and generating less waste

creating less noise,

avoiding sensitive ecosystems, and

completing operations more quickly.

Here are some technologies used:

 

Horizontal Drilling - Horizontal drilling starts with a vertical well that turns horizontal within the reservoir rock in order to expose more open hole to the oil. These horizontal “legs” can be over a mile long; the longer the exposure length, the more oil and natural gas is drained and the faster it can flow. More oil and natural gas can be produced with fewer wells and less surface disturbance. However, the technology only can be employed in certain locations.

Multilateral Drilling - Sometimes oil and natural gas reserves are located in separate layers underground. Multilateral drilling allows producers to branch out from the main well to tap reserves at different depths. This dramatically increases production from a single well and reduces the number of wells drilled on the surface

Extended Reach Drilling - Extended Reach Drilling - Extended reach drills allow producers to reach deposits that are great distances away from the drilling rig. This can help producers tap oil and natural gas deposits under surface areas where a vertical well cannot be drilled, such as under developed or environmentally sensitive areas. Wells can now reach out over 5 miles from the surface location. Offshore, the use of extended reach drilling allows producers to reach accumulations far from offshore platforms, minimizing the number of platforms needed to produce all the oil and gas. Onshore, dozens of wells can be drilled from a single location, reducing surface impacts.

Complex Path Drilling - Complex well paths can have multiple twists and turns to try to hit multiple accumulations from a single well location. Using this technology can be more cost effective and produce less waste and surface impacts than drilling multiple wells.

Edited by ceo_energemsier
correction
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1 hour ago, El Nikko said:

This might be of help and it has some historical data so yuo can compare to previous years.

https://www.westwoodenergy.com/news/us-drilling-and-completions-set-to-exceed-20000-wells-in-2019/

That is an excellent piece of analysis. So Westwood was  predicting 1,100 rigs and 21,000- 22,000 wells in 2019.  The number of rigs certainly has not met that prediction. But their number of wells per rig is probably the rule of thumb of a professional oil consultancy so I'll go with that.  22,000 wells from 1,100 rigs is 20 wells per year (1.66 per month).  With 752 horizontal wells as of 9/27, that is still 15,000 wells. So I don't see possibility for reaching the 12,000 well decline threshold presented by Mr. Steffens.   

 

However, clearly, the rig count is declining significantly.  Harold Hamm said in a recent speech he thinks it will go down to 800. The Westwood analysis then states that the DUCs will be completed, and I believe that these oil companies desperate to utilize their DUCs before they become unusable due to seismic shifts, permits and leases expiring, and so on, will prevent the U.S. crude production level from falling significantly. Overall, I think Dan Steffens is correct that U.S. oil production has probably already peaked for the year. That is indeed a big difference from these predictions of 14.5 million bpd that have been bandied about. Does it make any difference for prices?  OPEC+ has been withholding well over 1.2 million bpd from the market. Any increase in price will probably get slapped down pretty quickly by OPEC+ loosening their deal, or by even more DUCs being completed.

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19 minutes ago, Toranaga said:

That is an excellent piece of analysis. So Westwood was  predicting 1,100 rigs and 21,000- 22,000 wells in 2019.  The number of rigs certainly has not met that prediction. But their number of wells per rig is probably the rule of thumb of a professional oil consultancy so I'll go with that.  22,000 wells from 1,100 rigs is 20 wells per year (1.66 per month).  With 752 horizontal wells as of 9/27, that is still 15,000 wells. So I don't see possibility for reaching the 12,000 well decline threshold presented by Mr. Steffens.   

 

However, clearly, the rig count is declining significantly.  Harold Hamm said in a recent speech he thinks it will go down to 800. The Westwood analysis then states that the DUCs will be completed, and I believe that these oil companies desperate to utilize their DUCs before they become unusable due to seismic shifts, permits and leases expiring, and so on, will prevent the U.S. crude production level from falling significantly. Overall, I think Dan Steffens is correct that U.S. oil production has probably already peaked for the year. That is indeed a big difference from these predictions of 14.5 million bpd that have been bandied about. Does it make any difference for prices?  OPEC+ has been withholding well over 1.2 million bpd from the market. Any increase in price will probably get slapped down pretty quickly by OPEC+ loosening their deal, or by even more DUCs being completed.

I'm not sure but some of those horizontal wells could be gas wells and if so that could bring the estimated number down closer to Dans estimation. Also not all of these rigs are going to be multi-lateral wells and not all of them are drilling in places where they are drilled so fast. At the moment I'm doing one that has gone on for a month, before that we did several that took about 7 days from spud to TD with a week in between for the rig move etc.

I haven't fully checked over the Westwood article. I have to say I'm hoping Dan is right, OPEC's September production has falled to a 10 year low partly due to the attacks on Saudi. The low oil prices are going to deter investment and it's going to give everyone a shock eventually I'd imagine.

 

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