The number of rigs operating in the state has long been seen as an indicator of production.
The weekly rig count from Baker Hughes, along with commodity prices and oil and gas inventories, still offers clues as to what is happening on the front lines. More recently, the number of rigs in Wyoming has been used to demonstrate the staggering effects of the current commodities bust.
But technology has changed, and the rig count might not be as indicative of production as it once was.
In a call with analysts last week, the CEO of Halliburton said the counting game has changed, as rigs operate with better productivity, speed and efficiency.
“In the next North America rig cycle, 900 is the new 2,000,” David Lesar said.
The average rig count in Wyoming for July was eight. That’s the lowest anyone has seen it. It’s a fraction of July 2015’s average of 21, which was a record low, and the previous year’s 52.
But 7.4 million barrels of crude were produced last July in Wyoming, compared with 6.4 million the year before and 5.3 million in 2013, according to the EIA’s data.
“The rig count is still important. But you can’t compare it to 20 years ago,” said Mark Watson, agency supervisor for the Wyoming Oil and Gas Conservation Commission.
Technology has changed with hydraulic and horizontal drilling. Rigs are more efficient, he said.
“In my time, it took us six months to drill 10,000 feet. Now a rig can do that in a week and a half,” he said.
Production consistently declined yearly in Wyoming beginning in the mid-80s, when oil last went belly-up. About 130 million barrels of oil were produced in the state in 1985, a height Wyoming hasn’t reached since.
The rig count hasn’t seen single digits since 1993, when the count fell to eight rigs in March. It rose to 61 that September.
The rig count didn’t spike when the price of oil surpassed $100 per barrel in the late 2000s, though the production decline leveled off in those years thanks to secondary and tertiary drilling. Production spiked in 2015 despite a low rig count and low oil prices. About 86 million barrels of oil was produced last year, the highest since the early ‘90s.
This year, for the first time since about 2010, the production curve will turn down again, Watson said.
All the same, Wyoming is still watching that weekly report.
“The rig count is still something that people look at more than anything else,” Watson said. “Because it still tells you they are drilling.”
For Bruce Hinchey, president of the Wyoming Petroleum Association, the rig count is still the best indicator of industry movement in the state, he said.
“As far as new jobs, new taxes and wealth to the state, it’s not good. We have just low production and a low number of wells being drilled,” he said. “We are really down on the totem pole when it comes to new drilling rigs operating right now.”