The Baker Hughes North American rig count is down 9 in the April 21 week to 956. The U.S. rig count is up 10 to 857 and is up 426 rigs from last year. The Canadian count is down 19 rigs from last week to 99, but compared to last year is up 59.
For the U.S. count, rigs classified as drilling for oil are up 5 to 688, gas rigs are up 5 rigs to 167, and miscellaneous rigs unchanged at 2. For the Canadian count, oil rigs are down 7 to 33 and gas rigs are down 12 to 66.
While the plummeting Canadian count looks catastrophic and has pulled down the North American overall count by about 134 rigs from its peak in February, it masks the less dramatic but more significant and persistent weekly increase in the U.S. count, which has more than doubled year-on-year.
The Canadian decline is seasonal and happens nearly every year due to the Spring thaw, when muddy terrain hampers machinery and drillers must curtail drilling activity for ecological reasons as well. And despite this seasonal decimation of the weekly count, Canadian rigs are still up nearly 60 percent from a year ago.
The U.S. count is up 101 percent year-on-year, rising steadily without missing a beat every single week since September 16. The most obvious reason for this impressive growth in U.S. exploratory drilling is the higher price of crude oil, which, currently at around $50 per barrel, has recovered from a dip below $30 in early 2016 to levels comfortably above the approximately $40 per barrel breakeven price for established producers in the most productive U.S. basins, such as the Permian basin in west Texas and New Mexico.
For these regions, moreover, not only is the rig count increasing, but new well oil production per rig is on the rise too, with each new well in the Permian region currently producing over 650 barrels per day, up from around 300 barrels 2 years ago, according to the U.S. Energy Information Agency's April Drilling Productivity Report for the Permian region.
In a self-reinforcing cycle, higher production per new well decreases costs and lowers the breakeven point even further, encouraging further exploratory drilling. Crude oil production in the Permian region has been steadily growing as result, rising from about 1 million barrels per day in 2011 to its current contribution of over 2.3 million barrels per day to domestic crude oil supply, about 12 percent of daily U.S. consumption. And the E.I.A. expects this production growth to accelerate in the months ahead, not good news for OPEC members aiming to bolster crude oil prices by cutting back supply.