Although the number of rigs drilling for natural gas and oil continues to plummet nationally, Louisiana’s rig count remains roughly the same as it was in 2014.
In large part, that’s because the state’s rig count took a massive hit around 2012. That’s when booming production in the Haynesville Shale in northwest Louisiana and other natural gas formations drove prices from a high of $13 per thousand cubic feet to about $1.80.
The count fell from 139 rigs working in the Haynesville in March 2010 to the 20s in 2012 and has remained there, according to the Louisiana Oil and Gas Association.
When natural gas prices fell, drillers turned their sights on $100-a-barrel oil in other, more prolific crude-producing areas of the country. But oil prices — though stabilizing in recent days — are down by more than 50 percent since mid-2013.
The U.S. rig count has dropped as well, falling 98 rigs this week alone to 1,358, according to oilfield service giant Baker Hughes. That’s a 23 percent drop from a year ago.
But the falling rig count is not expected to trigger a dramatic increase in oil prices.
“The rig count by itself doesn’t tell you a lot anymore,” said Bernard Weinstein, an oil and gas economist and associate director of the Maguire Energy Institute at Southern Methodist University.
That’s because of advances in drilling technology.
Between 2012 and 2013, domestic oil production jumped by 3 million barrels a day, while the rig count remained relatively constant.
“So we were able to squeeze twice as much oil out of these shale formations with the same number of rigs,” Weinstein said.
Drillers’ improved efficiency is a major reason that the U.S. Energy Information Administration expects domestic oil production to continue increasing through 2016. Weinstein said drilling expenses — from labor to the sand used in fracturing formations — have decreased.
A report from Bloomberg says 200 more rigs will have to be idled before U.S. shale production flattens.
“Costs aren’t falling as much as prices, but that’s why even at today’s prices, we will see an increase in total production over last year,” Weinstein said.
Weinstein said it’s difficult to say how long it will take for oil’s price collapse to make a dent in production.
The Energy Information Administration expects 2015 production levels will peak during the second quarter and decline during the second half of the year. But 2015 production levels will still be higher than 2014.
The weak oil price could benefit the natural gas-bearing Haynesville Shale.
Patrick Courreges, a spokesman for the Louisiana Department of Natural Resources, said part of the reason for the state’s rig count stability is that recent natural gas prices haven’t fallen by as great a percentage as oil.
Companies with leases in both the Eagle Ford Shale, an oil-bearing formation in Texas, and the Haynesville would rather drill in the Haynesville. Energy companies would rather produce natural gas at about $3 per thousand cubic feet than oil at $40 or $50 a barrel, he said.
Among the country’s major oil- and gas-producing states, Louisiana gained a rig this week, Baker Hughes reported Friday.
It said Texas’ count plummeted by 56, New Mexico fell 12, North Dakota fell nine, Colorado lost six, Oklahoma lost five, Wyoming fell three, Ohio and West Virginia each lost two and Arkansas fell one.
Alaska, California, Kansas, Pennsylvania and Utah were unchanged.