Executive Summary: Rigs: The US rig count held steady W-o-W at 595 rigs. Infrastructure: Permian Basin crude oil production grew 10% in 2023 to a new record high, bucking a downward trend in rig activity. Storage: East Daley expects an injection of 4.025 MMbbl in commercial and SPR inventories for the week ending January 12.
Rigs:
The US rig count held steady W-o-W at 595 rigs. Liquids basins lost 1 rig over the December 31 week to total 479 rigs. The Bakken gained 2 rigs while the Eagle Ford and Powder River each gained 1. The Anadarko and Permian lost 2 rigs and the Uinta lost 1 rig. Within the Permian, the Delaware lost 3 rigs and the Midland Basin gained 1 rig.
Continental Resources and Stephens Williston, LLC each added 1 rig in the Bakken. Brazos River Exploration added 1 rig in the Eagle Ford, and EOG Resources added a rig in the Powder River. In the Uinta, XCL Resources dropped 1 rig. In the Permian, Chevron, Permian Resources, and Matador Resources dropped 1 rig each in the Delaware and Exxon (XOM) added 1 rig in the Midland.
Infrastructure:
Permian Basin crude oil production grew 10% in 2023 to a new record high, bucking a downward trend in rig activity.
East Daley Analytics forecasts Permian oil production exited the year at 6,185 Mb/d, up 560 Mb/d (10%) from YE22 production of 5,625 Mb/d and a record high. EDA’s production forecast is available by basin in the Production Scenario Tools available in Energy Data Studio.
Permian supply continued to grow despite declining rig counts through the year. Rig activity in West Texas and New Mexico fell 49 rigs (-14%) in 2023, exiting at 302 rigs vs 351 at YE22. The Permian rig count has not been this low since January 2022, when the basin’s production was at 4,977 Mb/d.
Mergers and acquisitions (M&A) have contributed to falling Permian rig counts. Private operators posted the largest yearly decline in basin rig counts, down 33% in 2023. Drilling by private operators fell 17% in the Delaware and 36% in the Midland sub-basins.
Despite fewer rigs, greater efficiencies in drilling and completion work are driving productivity gains from new wells and more than offsetting lower rig counts in our model. New natural gas processing infrastructure and gas pipeline expansions also supporting higher output. In Energy Data Studio, EDA models Permian crude production to grow 8% in 2024 while rig counts hold steady, up 2% at YE2024.
For detailed production and rig count data on other basins, please contact East Daley.
Storage:
East Daley expects an injection of 4.025 MMbbl in commercial and SPR inventories for the week ending January 12. We expect total US stocks, including the SPR, will close at 791.422 MMbbl.
The US natural gas pipeline sample, a proxy for change in oil production, decreased by 1.33% in liquids-focused basins. The Williston Basin saw a significant change, decreasing 4.23% W-o-W and the Rockies decreased 1.12% W-o-W. The Texas Gulf Coast increased 2.25% W-o-W. The Williston Basin and the Rockies each have very high pipeline sample coverage at ~100% and 88% respectively. Texas Gulf Coast does not have good pipeline sample coverage at ~40%. We expect US crude production to remain at 13.2 MMb/d.
According to US bill of lading data, US crude imports decreased by ~260 Mb/d W-o-W to 6.5 MMb/d. More than 60% of the supply originated from Canadian pipelines into the US, with the remainder largely coming from ships carrying crude from Mexico, Brazil and Argentina.
As of January 12, there was ~423 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude inputs into refineries to decrease by .03% W-o-W, coming in at ~16.51 MMb/d.
Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. There were 26 vessels loaded for the week ending January 13 and 18 the prior week. EDA expects US exports to be 3.5 MMb/d.
The Strategic Petroleum Reserve, SPR, awarded contracts for 2.73 MMbbl to be delivered to Big Hill SPR site in January 2024 and 2.1 MMbbl to be delivered in February 2024.
Regulatory and Tariffs
Presented by ARBO
Tariffs:
Seaway Crude Pipeline LLC. Temporary volume incentive rates were extended through February 29, 2024. (IS24- 152, filed January 11, 2023)
Grand Mesa Pipeline LLC Grand Mesa has announced an open season for an incremental interruptible rate of $1.95 for transportation from Weld County to NGL Energy Partners’ Cushing terminal, effective January 6, 2024. (IS24-149 filed January 5, 2024)
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/