Tag Archives: oil and gas

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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.

Shale oil rig, MaxPixel.net

Jimsar Shale Discovery Could Kick Start a Shale Revolution in China

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As China continues to grow with an unmatched intensity, it’s leaders and people alike clammer for an ever-growing amount of oil and gas. This constant cry has lead China to become the world’s largest importer of shale oil. Though China boasts the world’s third highest technically recoverable deposits of shale oil, the energy-hungry nation has yet to find success tapping its vast reserves.

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Colorado Supreme Court Decision Ends the So-Called ‘Children’s Crusade’

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Just like to tragic historical happening for which it was named, the modern day “Children’s Crusade,” as it was dubbed, has concluded in defeat. Frankly, it’s about time.

Martinez v. COGCC

For those unacquainted with the long-running battle, the COGCC has been under attack since 2013, when Xiuhtezcatl Martinez filed a petition with the Colorado Oil and Gas Conservation Commission (or COGCC) that demanded the regulatory agency suspend all new projects until they could prove conclusively that oil and gas development was not harmful to the environment. For nearly six years, the national oil and gas industry has been threatened by anti-fracking activists whose primary selling point is that they’re too young to go into a bar.

Sure, on the surface, that sounds like a noble quest. The fact that Martinez was a kid also made for stylish headlines, as well. Regardless of the long-running debate surrounding it, Martinez’s petition never amounted to more than a poorly-executed ploy designed to shame one of the hardest working regulatory bodies in the country.

Building an Industry While Handcuffed

In the ruling, Justice Richard L. Gabriel pointed out that the primary role of the COGCC is to “foster the development” of Colorado oil and gas. Ceding economic growth to niche environmental concerns comes a clearly defined second. Even then, the COGCC mandate states that addressing environmental concerns should come, “only after taking into consideration cost-effectiveness and technical feasibility.”

Meanwhile, the COGCC finds themselves operating under regulations that are both wildly restrictive and self-imposed. 

In a statement from President & CEO of the Colorado Oil & Gas Association Dan Haley, the exec wrote, “The plaintiffs in the Martinez v. COGCC case ignored, and attempted to disrupt, decades of regulatory precedent and legal oversight. The Colorado Oil and Gas Conservation Act (Act) directs the COGCC to consider multiple factors in making its decisions, including environmental priorities. Following the Act, which is existing Colorado law, the COGCC has enacted the most extensive and stringent regulations for the oil and natural gas industry in the country.” 

Still, however, Colorado oil and gas finds a way to thrive.

The Battle the Continues

The Supreme Court ruling handed down early this week is an undeniable victory for the state’s energy companies. That said, there’s little time for Colorado oil and gas to revel. Opponents of hydraulic fracturing, including the newly elected governor of Colorado, have voiced their disapproval at the decision. In short, it’s only a matter of time before the state’s, and the nation’s energy interests are threatened once more.