US oil, gas rig counts continue to climb across major shale basins in 2022

The active rig count increased in the week ending Jan. 19 in every major US oil and gas shale basin barring the Utica as operators take advantage of high prices and strong demand.

The US oil and gas rig count climbed to 725 for the week ending Jan. 19. It stands as the highest total since March 2020 when the pandemic crushed global prices and demand, according to data released Jan. 20 by Enverus. The prolific Permian saw the largest week-over-week jump as operators added four rigs to the field to total 304. Modest gains were also reported in the SCOOP-STACK, Eagle Ford, Williston and Denver Julesburg.

In the major gas plays, the Marcellus and Haynesville each added one rig to 40 and 67, respectively, while the Utica remained static at 11.

The total US rig count has increased by approximately 300 rigs year over year. Prices are up substantially over the same time frame. WTI was $31.55/b one year ago, but it is currently at $84.58/b, rising more than $4 in the last week. Global oil balances are expected to ease over the next few months but then tighten again in mid-2022 as demand recovery outpaces supply growth, according to Platts Analytics.

Gas benchmark Henry Hub spot is at $4.59/MMBtu, up nearly 50 cents week over week and up $2.60 from this time last year.

Record-level LNG demand is one reason for the strong Henry Hub prices. Total US LNG feedgas continues to reach new highs, with the most recent all-time high of 13.18 Bcf/d set on Jan. 16, according to Platts Analytics.

The new high was mainly a function of all six export facilities running near their all-time highs, including all six trains at Sabine Pass totaling 5.06 Bcf/d on the record day. Total feedgas to Sabine Pass, however, averaged above 5 Bcf/d from Jan. 12 to Jan. 16 indicating that the sixth train, which has not yet requested commercial service, was running fully utilized for multiple days. This may be an indication of a commercial request soon as historically, a new train will ramp up to full utilization for a few days, then pull fully offline and request to enter commercial service shortly after.

With these recent highs, total US LNG feedgas demand has averaged 12.38 Bcf/d this month, which if it holds, will be 270 MMcf/d above the December 2021 average. With Sabine Train 6 and Calcasieu ramping up, total feedgas is forecast to average 12.5 Bcf/d through Dec. 22, providing steady and stable demand for gas produced in the nearby Haynesville Shale as its rig count builds on multiyear highs.

The ever-climbing drilling activity in the Permian comes on the heels of a flurry of merger and acquisition activity in the basin. M&A activity in 2021 within the US reached an eight-year high at $59.6 billion, according to Platts Analytics. The Permian once again led all basins in M&A activity by a substantial sum, making up 62% of all deals in 2021. The Haynesville came in second with 12% of all deals, followed by the Denver-Julesburg and Appalachia, each making up around 6%.

The basins which featured the most M&A activity in 2021 are all showing the most substantial gains in drilling activity early in 2022.