Drilling rig counts in Permian Basin, Texas and U.S. posted sizable gains in the past week, according to Baker Hughes, amid reports from CERAWeek in Houston March 7-11 that federal officials are calling for more energy production and industry officials are saying supply chain problems could limit production. As of March 11, there were 316 rigs in Permian Basin (up 6 in past week, up 104 in past year), 320 in Texas (up 12 in past week, up 117 in past year), 98 in New Mexico (down 1 in past week, up 38 in past year) and 663 in U.S. (up 13 in past week, up 261 in past year).
New Mexico counties of Lea (60 rigs) and Eddy (34) continue to lead Permian Basin followed by Martin with 30, Midland with 29, Reeves with 22, and Howard and Loving each with 20. Haynesville is No. 2 among regions with 65 rigs followed by Eagle Ford with 56, Marcellus with 36, Williston with 34 and Cana Woodford with 28. And Louisiana remains No. 3 among states with 56 rigs followed by Oklahoma with 49, North Dakota with 33 and Pennsylvania with 25.
Speaking to industry executives March 9 in Houston, Jennifer Granholm, U.S. energy secretary, called for more production after President Biden banned the import of oil from Russia after its invasion of Ukraine. “Right now we need oil and gas production to rise to meet current demand,” she said, “and we are here to work with anyone and everyone.” Gasoline prices have reached near record levels.
But Vicki Hollub, president and CEO of Occidental Petroleum, said supply chain issues pose problems for producers. Some had planned to keep production flat and limit expenses this year to return capital to investors. “Nobody really anticipated needing to grow significantly,” she said. Materials such as pipe and sand are slow to arrive, and the cost of labor is rising. “The challenge is pretty significant to get back to growth in the Permian, and that’s the only basin that’s going to grow U.S. oil production.” Analysts at Cowen and Co. told Oil & Gas Journal they don’t expect many management teams to re-evaluate their spending plans.
U.S. Energy Information Administration said March 8 oil production in U.S. is forecast to reach 12 million barrels per day this year – up from its previous forecast of 11.97 million – and 13 million b/d in 2023.