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Why Count Rigs?

Industries usually measure economic impact by approximating a dollar value to represent their purchasing power.

The oil and gas industry measures economic impact by counting active rigs. A drilling rig requires many oilfield support services to drill a well. And after the well is complete, other oilfield services go to work to bring the well into production and to maintain it.

If the drilling fleet is busy, then the network of services that support rig activity is also busy. Each drilling rig working supports an additional 135 indirect jobs.

 

3 Ways to Measure Rig Activity

1. Rig Counts

A working drilling rig is labour intensive and generates jobs:

  • directly at the rig
  • indirectly in the oilfield service sector
  • in rural communities near oil and gas exploration and production.

2. Rig Utilization

Rig utilization is the percentage of active rigs. In Canada, rig utilization has a distinct annual cycle. Rigs are busiest in the winter.

In the spring, thawing roads and soft fields make it difficult to move equipment. Rigs shut down while industry waits for the ground to dry out. This period of low rig activity is called spring break-up.

The activity cycle is very prounounced for drilling rigs (fewer drilling rigs work in spring and summer) and slightly less pronounced for service rigs.

 Drilling Rig Utilization - Why Count Rigs graph

3. Operating Days and Operating Hours

Rig contractors charge for services based on operating days. Operating days reveal the strength of the rig sector better than well counts.

In western Canada, industry is drilling fewer wells than it did ten years ago. However, drilling and service rigs are as busy as ever.

Currently, oil and gas companies in western Canada are drilling and maintaining complex horizontal wells. This means drilling contractors are drilling fewer wells, but they're working as many operating days.

Operating Days vs Wells Drilled 2016 Forecast