Highlights

Total US oil rig counts dip by two to 861

Permian rigs down one to 485

Gas rigs as percent of total operations move to highest level since June



New York —
Continued declines in the Permian Basin saw total US oil rig counts dip by two to a four-week low of 861 this week.

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Permian rig counts fell to 485, down by one from 486 last week, as pipeline constraints limited new production potential. Permian rigs are now comfortably back in the well-worn mid-480s range they have held since early August.

The Permian currently has 3.5 million-3.6 million b/d of takeaway capacity. Production in the basin is expected to reach 3.43 million b/d during September and edge up to 3.46 million b/d during October, according to US Energy Information Administration data.

The decline comes even as the long-term takeaway picture brightened this week.

EPIC Midstream said Friday that it will temporarily move Permian crude oil to the Gulf on its NGL pipeline by third-quarter 2019. The pipeline, which originates in Crane and Wink, Texas, will supply NGLs to EPIC’s 100,000 b/d fractionator in Corpus Christi. But the pipeline will be completed in Q3 2019, well ahead of the processing unit, which is expected to come online in 2020.

In the meantime, EPIC said it will flow up to 400,000 b/d of Permian crude to coast. The pipeline will revert to NGL service once the EPIC oil pipeline is completed in January 2020. The company also announced that its planned crude pipeline from Orla, Texas, to Corpus Christi will be upgraded to 30-inch-diameter from 24-inch-diameter and its capacity will be 600,000 b/d.

Last week, Plains All American announced its 500,000 b/d Sunrise Pipeline expansion will come online November 1, six months ahead of schedule. S&P Global Platts Analytics estimates that 100,000 b/d will flow on Sunrise in November, 175,000 b/d in December, and 235,000 b/d in January, when it becomes fully operational.

Rig counts in the Mississippian Basin rose by three for a total of seven, the highest level since August 2017. But rigs in the adjacent Cana Woodford play fell to 66, down one from the week before.

Natural gas rigs held steady from last week at 189, bringing the combined US oil and gas rig count to 1,052, down two. Gas rigs as a percentage of total US operations were at 18%, the highest level since June. The relative gain is in line with EIA estimates that October natural gas production will be 1.33% higher than during September, compared with a 1.05% uptick for oil production over the same period.

The bulk of this new production is expected to come from the Permian, EIA said, but Permian gas production is pressured by takeaway constraints. Eastbound capacity out of the basin is about 96% utilized, up from around 83% in early August, Jefferies Financial Group analysts said in a note. “Available capacity remains on west/south/northbound pipes, but incremental flows in those directions are limited by gas demand downstream,” they added.

— Chris van Moessner, christopher.vanmoessner@spglobal.com

— Edited by Valarie Jackson, newsdesk@spglobal.com

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