Horizontal rig count dives to five-year low
Published: Friday, 20 March 2015
Horizontal rigs lead overall fall with oil exploration on clear downward trend.
The horizontal drill rig count in the US
continued to follow its recent sharp downward trajectory in the
first half of March 2015, with the total number of horizontal
drilling rigs falling by 51 to 895 — the lowest level
Associated most strongly with oil and gas
exploration in the hydraulic fracturing (fracking) industry,
though also contributed to by regular oilfields, the horizontal
rig count is thought to be indicative of the general state of
the fracking business.
While the number of horizontal rigs will also be
affected by economic factors, the global recession that began
in 2008 resulted in only a relatively small dent in the upward
trend. As similar economic contraction is not occurring today,
it can be assumed that the fall is due to pricing and demand
The fracking boom of 2013-2014 is visible in the
horizontal data released by oilfield services company Baker
Hughes Inc.; oil prices falling in mid-late 2014 then led to a
reduction in profitability per well, and thus exploration
budgets are falling, resulting in less drilling and fewer
Reducing numbers of horizontal wells looks to be
the main drag on the total number of US drilling rigs, which
have now dropped by 582 from their September 2014 peak of 1,930
While horizontal wells for fracking are most
associated with proppants including frac sand and ceramic
alternatives, wells also use barite (barytes), bentonite,
calcium carbonate and other minerals to increase the density,
and change the other physical properties, of drilling mud.
Hopes in India’s state of Andhra
Pradesh, one of the world’s main producers of
barite, for increased barite prices could now be denied by
market realities – fewer rigs will likely result in
less barite demand and falling prices.
The secular trend of vertical rig count reduction
in the US also appears to have been accelerated by oil price
Worldwide, the shifts in rig count are yet to
have any great significance, owing to the variability in
Canadian rig counts that obscures short term trends.