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Rig count: Permian down 7, while oil production grows in New Mexico

The Permian Basin dropped seven oil rigs in the last week, as the U.S. total fell by eight.

Rig count declines were also observed in the Anadarko Basin near the Texas-Oklahoma border, which dropped by five, along with the Fort Worth and Powder River basins which each dropped two rigs, per a Thursday report from DrillingInfo.

The Haynesville and Williston basins dropped by one rig each, records show, but the losses were met by gains in other regions.

Eagle Ford in southern Texas and the Denver Julesburg Basin in Colorado grew by three rigs, while offshore drilling added two, and the Marcellus/Utica basin added one rig, read the report.

U.S. total petroleum inventory posted a decrease of 6.4 million barrels, records show, while U.S. crude oil production grew by about 300 million barrels per day last week.

The price per barrel, based on West Texas Intermediary, was reported at $68 as of Wednesday, read data from the U.S. Energy Information Administration (EIA).

The EIA reported monthly crude oil production was 11.3 million barrels per day in August, per a Thursday news release, up from 10.9 million in July.

August was the first time U.S. production surpassed 11 million barrels per day and was higher than the Russian Ministry of Energy’s estimated August production of 11.2 million.

Thus, the U.S. was deemed the leading crude oil producer in the world.

Several states saw record production levels, read the EIA release, with Texas at 4.6 million barrels per day, the highest in the nation, and New Mexico at 724,000 barrels per day in August, per EIA data.

The Permian Basin, read the report, accounts for 63 percent of Texas crude oil production, and 95 percent of production in New Mexico.

From January to August, Texas’s crude oil production grew by 683,000 barrels per day, while New Mexico saw an increase of 182,000 barrels per day.

“The growth in Texas and New Mexico since the start of 2018 surpassed EIA’s previous expectations, which assumed that pipeline capacity constraints in the Permian region would dampen production growth,” read the report.

“However, industry efficiencies in pipeline utilization and increased trucking and rail transport in the region have allowed crude oil production to continue to grow at a higher rate than EIA expected.”

Robert McEntyre, spokesman for the New Mexico Oil and Gas Association, said the Permian Basin region’s “take away” capacity is in need of growth during the boom.

He said more infrastructure investments are coming into the area to address the need.

That means more pipelines, processing plants, and facilities between the actual extraction of the oil, and the market.

“We can expect production to continue to grow,” McEntryre said. “We’re experiencing some growing pains on the midstream side. Given the enormous increases in production we’ve seen, it only makes sense that we need additional capacity.”

McEntyre said he expected several regional infrastructure projects to come to fruition by 2019 that could help alleviate some of the pressure.

While rig counts go up and down over the months, he said New Mexico has maintained the 100-rig range in recent months, and the state could reach 200 million barrels of production by the end of the year.

“For New Mexico, it doesn’t appear that we’ve slowed down at all,” McEntyre said. “Infrastructure is incredibly important.”

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.

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