U.S. energy firms this week cut the number of oil and natural gas rigs operating to the lowest since January 2022, energy services firm Baker Hughes said in its closely followed report on June 14.
The oil and gas rig count, an early indicator of future output, fell by four to 590 in the week to June 14.
That puts the count down for the second week in a row.
Baker Hughes said the total rig count is down 97 rigs, or 14%, below this time last year.
Baker Hughes said oil rigs fell by four to 488 this week, also their lowest since January 2022, while gas rigs were unchanged at 98, which was the lowest since October 2021.
The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising output.
U.S. oil futures were up about 10% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures were up about 15% so far in 2024 after plunging by 44% in 2023.
That increase in oil prices should encourage drillers to boost U.S. crude output from a record 12.9 MMbbl/d in 2023 to 13.2 MMbbl/d in 2024 and 13.7 MMbbl/din 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.
Even though gas futures were trading higher now, several producers reduced spending on drilling activities earlier in the year after prices drop to 3-1/2-year lows in February and March.
That drilling decline should cause U.S. gas output to slide to 102.1 Bcf/d in 2024, down from a record high of 103.8 Bcf/d in 2023, according to the EIA.
Recommended Reading
Exxon Taps Air Liquide for Largest Low-carbon Hydrogen, Ammonia Project
2024-06-24 - Exxon Mobil and Air Liquide’s hydrogen and ammonia project is expected to transport low-carbon hydrogen from Exxon’s Baytown, Texas, facility through Air Liquide’s pipeline network.
Walking the Talk: Exxon Mobil Makes CCUS Strides
2024-06-27 - Exxon Mobil is developing a low-carbon intensity hydrogen plant using natural gas as feedstock and carbon capture in Baytown, Texas.
Energy Transition in Motion (Week of June 28, 2024)
2024-06-28 - Here is a look at some of this week’s renewable energy news, including plans for another offshore wind energy lease sale.
Brewing Hydrogen: Cemvita’s Gold H2 Targets Commercialization
2024-06-19 - Under the right conditions, depleted oil reservoirs can be transformed into hydrogen producers, or subsurface biorefineries, Gold H2 CEO says.
McDermott Secures Contract for $8.7B Hydrogen, Ammonia Project
2024-06-18 - McDermott said the project, being developed in Canada, will use wind and solar energy to produce hydrogen and ammonia.