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What Does the US Rig Count Mean for the Oil and Gas Industry?

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At noon on Friday, the last day of the work week, Baker Hughes will continue a tradition began in 1944 when they release their weekly US rig count. Week after week, month after month, year after year, this metric is used by journalists, financial experts, and academics as the pulse of the domestic oil and gas industry. 

But what does the Baker Hughes rig count truly measure, and what do its rise and fall mean for the industry at large?

The Baker Hughes Rotary Rig Count

For 75 years, Baker Hughes, an oilfield products and services company owned by GE, has published a weekly count of the nation’s active rotary rigs. 

A rotary rig is the bit of machinery that “rotates the drill pipe from [the surface] to drill a new well (or sidetracking an existing one) to explore for, develop and produce oil or natural gas.” Hughes doesn’t take into account rigs with low production in this number, but the company will include specific non-rotary rigs in the US rig count under certain circumstances.

In other words, Baker Hughes believes the active rig count to be an accurate measurement of the future demand for oilfield products and services. In a very real sense, the US rig count is used by Baker Hughes to indicate how profitable their company (and other oilfield services companies) may be in the future.

Academics also use Baker Hughes’ count as a means to study long-term fluctuations in the industry.

How Important Is the Rig Count, Really?

In today’s oil and gas sector it would be easy to make the mistake of discounting the importance of the US rig count. Advancements in technology and improvements in the efficiency of extraction, for example, have created an industry that can flourish even when rig counts fall. As such, it has become impossible to judge the overall health of the domestic oil and gas industry using the Baker Hughes rig count alone.

In spite of the changes to the oil and gas industry, the US rig count remains a vital measurement, because it measures physical investment. Unlike other metrics which measure potential, the Baker Hughes count represents the genuine faith that investors have in oil and gas.

President Donald J. Trump . (Official White House Photo by D. Myles Cullen)

Trump Uses Houston Summit to Loosen the Reigns on Oil and Gas

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On Wednesday, Donald Trump visited Houston, Texas, the nation’s energy capital, to continue the fight for American energy dominance. 

On a hard-charging tour of the Lone Star State, the President took the time to speak to a room filled with oil and gas professionals. In his speech, Trump reasserted his commitment to the nation’s oil and gas industry, praising their past success while paving the way for future prosperity.

Building the Infrastructure of Tomorrow

While signing the pair of executive orders, Donald Trump spoke to an enthusiastic crowd about his administrations intentions.

“My action today will cut through destructive permitting delays and denials,” explained the President, “so that you can get to work producing the energy and the infrastructure our country needs to thrive and compete and to win. All over the world, we’re winning. Our country is respected again.”

In more practical terms, Trump’s latest executive orders will set about a robust program of infrastructure-building that will focus on erecting new pipelines. In the executive order itself, Trump wrote: 

“To fully realize [its] economic potential … the United States needs infrastructure capable of safely and efficiently transporting these plentiful resources to end users.  Without it, energy costs will rise and the national energy market will be stifled; job growth will be hampered; and the manufacturing and geopolitical advantages of the United States will erode.”

The Ongoing Battle

Donald Trump’s latest gesture is a step in the right direction for the United States’ embattled oil and gas industry. Even as the President takes strides to relieve the regulatory and legal pressure placed on the shoulders of the country’s oil producers, forces are at work to undo Trump’s work.

At the tail end of March, US District Judge Sharon Gleason determined that Trump’s attempt to revoke a ban on drilling in the Arctic and Atlantic oceans wasn’t legal.

In spite of the President’s repeated attempts to turn the tide for American oil and gas, it seems like the nation is destined to keep taking one step forward and one step back until everyone can get on the same page.

Reynold Brown for Universal Pictures/Public Domain/Wikimedia Commons

Interior Nominee Assailed By Swamp Creatures and Buzz Words

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On Thursday, during the confirmation hearing for the presumed next leader of the Secretary of the Interior, David Bernhardt, a pair of jokers in movie monster masks decided to drop by.

Though the “protestors” were few, their banal, little outburst has successfully stolen most of the attention away from Bernhardt’s confirmation — of course, that in and of itself is extremely telling.

Because We’re in a Swamp! Get It? A Swamp!

As David Bernhardt sat down for a confrontational Senate hearing, eyes immediately became drawn not to the longtime oilman, but to an individual dressed in a mask ripped from a Creature from the Black Lagoon film (or The Shape of Water if you’re under forty).

The allusion to Donald Trump’s campaign pledge to drain the Washington, DC swamp of its corruption was clear. The connection to Bernhardt was also direct. Since the former lobbyist took over the Interior Department for former Secretary Ryan Zinke, he’s been continuously attacked for his perceived connection to the oil and gas industry.

So, a swamp creature to photobomb a swamp creature. Hilarious. Or it would be if the protest in question wasn’t so off base.

Attacking a Trump Nominee Because He’s a Trump Nominee

Let’s be clear, here. In today’s wildly divided Washington, a horde of people would have lined up to take their shots at any nominee Donald Trump put forth. It was just a matter of finding the right tactics. In Bernhardt’s case, he spent time working as a lobbyist when he wasn’t putting in time for a previous presidential administration.

In fact, committee Chairwoman Sen. Lisa Murkowski raved about Bernhardt’s competence and knowledge, calling his level of experience “unparalleled.”

So, yes, David Bernhardt has spent time in Washington, DC working as a lobbyist. Apparently, that’s enough to immediately qualify Bernhardt as lacking a sense of ethics. The potential Interior Secretary also has years of experience working in the Interior Department during the Presidency of George W. Bush. In the eyes of Bernhardt’s opponents, “years of experience” translates to “agency insider,” which, when we’re talking about the American government, fails to amount to much of an insult.

The point is, the attack was coming. The real test would be Bernhardt’s handling of the assault.

Ethical Pursuit at a Higher Level

There’s a reason that Bernhardt’s opponents and the leftist media at large are placing so much importance on his career and this minute protest of his confirmation hearing: Bernhardt acquitted himself like a total pro.

Throughout the hearing, Bernhardt reminded the panel of his love of the outdoors, of his affection for nature, all while explaining an ambitious campaign to overhaul the Interior Department. Bernhardt’s particular focus: ethics.

“The reality is that the ethics program throughout the Department of the Interior has been sadly neglected for some time,” he wrote in a prepared statement.

Add to that the announcement that Acting Secretary Bernhardt launched, “the most comprehensive public lands management legislation in a decade” in supporting the solidification of the Dingell Act.

An overarching commitment to ethics and on-the-books examples of his zeal for conservation aren’t enough to convince Bernhardt’s opponents that he’s on the level. They insist on avoiding the obvious with explorations of his past and jokes about the swamp.