I’m seeing quite a few search requests asking questions about the drop in the North Dakota rig count. The count as of today sits at 183 the highest ever was 218 so over all we are looking at about a 16% drop from the peak.

Why did the rig count drop?
There are probably several reasons. The economy and oil prices are the #1 factor of course, but climate is another big reason. We are unlikely to see record rig numbers this far north during the winter. The fact of the matter is that most rigs are not built to handle temperatures below zero and after – 20 there is almost nothing they can do to keep things from breaking. Any of the rigs that came up from the south for the summer will require too much retrofitting to make it worth their time.

The brutal winter of 2010 provided some hard lessons to rigs that came up from the south. Companies do not want to get burned twice. In addition, oil prices are not great and there is a lot of action in Texas right now so the current rig drop probably is not anything to worry about. Drilling companies are trying to save their men and equipment from dealing with brutal conditions that can occur in the Williston Basin. If oil prices are above $80 the spring I expect to see our rig count come back up, but there will be more competition in the south than there has been the last few years. The Eagle Ford shale and several other formations are competing for drilling resources. Companies will send the rigs were they can make the most money.

Oil demand will be the real driving factor. Oil in the 70 dollar range would definitely not be good for North Dakota Drilling.

Filed under: BakkenEnergyNews

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