Executive Summary: Rigs: The total US rig count decreased by 5 during the week of March 16 to 549. Infrastructure: While producers in the Permian Basin have guided to ~300 Mb/d of growth in 2025, the 1Q25 fundamentals tell a different story. Storage: East Daley expects a 919 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending March 28.
Rigs:
The total US rig count decreased by 5 during the week of March 16 to 549. Liquids-driven basins decreased by 2 W-o-W to 455.
- Permian (-3):
- Midland (-2): Exxon, SM Energy
- Delaware (-1): Mewbourne Oil
- Bakken (-2): Hess Corporation, ConocoPhillips
- Uinta (-1): Koda Resources
- Anadarko (3): American Warrior, Mad Operators LLC, Murfin Drilling Company Inc
- Eagle Ford (1): BP
Infrastructure:
While producers in the Permian Basin have guided to ~300 Mb/d of growth in 2025, the 1Q25 fundamentals tell a different story.
January and February 2025 saw harsh winter conditions in Texas, with Houston seeing up to 6” of snow in January. Due to the winter conditions, the Energy Information Administration (EIA) is showing a 2% (~160 Mb/d) drop in crude oil production from December ‘24 to January ‘25.
Winter production drops are not uncommon in the Permian. For example, January 2024 production declined 4.6% (-~350 Mb/d) from December 2023 due to inclement weather. What is uncommon is for rig counts to decline in tandem with winter output. January ‘24 saw a drop of 5 rigs (-1.6%); however, production returned to pre-winter freeze levels by March.
Permian rig counts have declined by 7 (-2.4%) this year, from an average of 286 rigs in December ‘24 to 279 rigs so far in March, according to our Rig Activity Tracker. Rigs in the Permian Basin haven’t been this low since COVID times prior to 2022.
East Daley believes the rig decline is due in part due to drilling efficiencies, but also reflects uncertainty in the market. President Trump threatened and later postponed tariffs on Canadian and Mexican crude oil imports in February. In March, the administration placed new tariffs on Russian and Iranian oil, on Chinese vessels used to export crude oil, and on Venezuelan crude oil imports. The policy shifts create unknowns that challenge the economics of drilling new wells. Producers are adapting to market conditions by pulling back at the margin.
Larger public companies and smaller independents are equally driving the recent rig reductions. Mewbourne Oil, ConocoPhillips (COP), Devon Energy (DVN), Matador Resources (MTDR), Ovintiv (OVV) and Crownquest Operating have all dropped a rig since February 1. Among the smaller E&Ps, we have seen a rig dropped by Blackbeard Operating, Firebird Energy, BTA Oil Producers, VTS Energy, and Ridgeway Operating.
Despite the challenging 1Q25 conditions, East Daley expects producers in the Permian Basin will return to previously stated guidance and support ~300 Mb/d average growth in 2025.
Storage:
East Daley expects a 919 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending March 28. We expect total US stocks, including the SPR, will close at 832 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, decreased 1.22% W-o-W across all liquids-focused basins. Samples increased 1.05% in the Williston and 0.77% in the Anadarko basins, and decreased 6.97% in the Eagle Ford, 4.44% in the Gulf of America, and 2.37% in the Permian. The Rockies and the Gulf of Mexico have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.
We expect US crude production to be 13.6 MMb/d. According to US bill of lading data, US crude imports decreased to 601 MMb/d. More than 60% of the supply originated from Canadian pipelines and vessels into the US, with the remainder largely coming from vessels carrying crude from Mexico, Brazil and Venezuela.
As of March 28, there was ~1,088 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude input into refineries to increase, coming in at 15.7 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast decreased W-o-W. There were 21 vessels loaded for the week ending March 28 and 24 the prior week. EDA expects US exports to be 3.2 MMb/d.
The SPR awarded contracts for 6.0 MMbbl to be delivered To Choctaw February – May and 2.475 to be delivered to Bryan Mount Jan – March 2025. The SPR has 396 MMbbl in storage as of March 28, 2025.
Regulatory and Tariffs:
Presented by ARBO
Tariffs:
NuStar Logistics, L.P. An initial base rate was established for movements Harvest Terminal, San Patricio County, TX to the Corpus Christi North Beach Terminal, Nueces County, TX with the agreement of at least one non-affliated shipper. FERC No 80.24.0 IS25-238 (filed February 26, 2025) Effective March 1, 2025.
Marketlink, LLC Market based rates were decreased and Temporary Volume Incentive rates were decreasedfor the month of April 2025. FERC No 2.85.0 IS25-237 (filed February 25, 2025) Effective April 1, 2025.
The above information is provided by ARBO’s Oil Pipeline Tariff Monitor. For more information on regulatory proceedings or tariff rates, please contact please contact Corey Brill via email at corey@goarbo.com or phone at 202-505-5296. https://www.goarbo.com/
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