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US oil, gas rig count climbs 6 to 635 as oil drilling hits new post-pandemic high

Highlights

Oil rigs up one at 499

Gas rigs climb five to 136

Tellurian plans new Haynesville wells

The US oil and gas rig count climbed six to 635 in the week ended Sept. 15, as oil-focused drilling activity pushed to a fresh 17-month high.

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The number of rigs chasing primarily oil climbed one to 499, the highest since the week ended April 8, 2020, while the number basing mostly gas moved up five to 136, a three-week high but still down nine from its mid-August apex.

Despite the fresh high for oil-focused drilling activity, rig counts remain 27% behind pre-pandemic levels seen in early March 2020. Meanwhile the gas-focused rig count is down just 8% from the same period.

Drillers in the South Texas Eagle Ford basin added two rigs for a total 50, pushing the rig count there to a fresh 17-month high. Drilling activity in the basin appears to have broken out of its recent range following four consecutive weeks of rising rig counts. After having steadily climbed in late winter, the basin's rig count has hovered in the high 30s, low 40s range from April through early September.

Annual production in the Eagle Ford is expected to fall around 55,000 b/d in 2021, but then climb 140,000 b/d year-on-year in 2022, according to S&P Global Platts Analytics.

The Permian Basin rig count was also up two at 260, erasing a two-rig slide seen during the week prior.

Rig counts in the SCOOP-STACK basin also appeared to have broken out of their recent range after climbing two to 34, the highest since late March 2020.

Rig counts were steady across the other major named oil-focused basins. Rig counts in the Bakken were unchanged for a third week at 28, and the number of rigs active in the Denver-Julesburg play held at 13 for a fourth straight week.

In the Marcellus Basin, operators added two rigs for a total 34, both rigs were added in the basin's gas-focused dry portion pushing the total active there to 23. Meanwhile the number of rigs active in the basin's wet portion was steady at 11.

Rig counts in the nearby gas-focused Utica basin were steady at 12 for a third straight week.

The Haynesville basin rig count moved up two to 52, holding within a well-worn range that has persisted since early May.

Tellurian plans new Haynesville wells

Tellurian plans to drill 13 wells in the Haynesville shale next year that it will operate, as it looks to build sufficient feedgas supplies to support the first phase of its proposed Driftwood LNG export terminal in Louisiana, head of production John Howie said Sept. 14.

Based on wells that it is drilling and operating and wells that it participates in with other operators, Tellurian expects to have about 100 MMcf/d of output by the end of 2021, three times the volume it was producing at the end of 2020. That's still far short of the 1.5 Bcf/d it needs for the liquefaction facility.

With sufficient offtake agreements in place to support the first phase of the up to 27.6 million mt/year liquefaction project, Tellurian still must obtain financing for construction of the terminal. One component of those discussions is Tellurian securing enough drilling reserves to support its plan to produce the gas to feed the facility.

To get the rest of the way, Tellurian continues to consider acquisitions, Howie said during a podcast posted on the company's website.