DRILLING OUTLOOK
10,000 Capable Fleet ( S upply)
upply )
70,000 Rigs Operational (Demand
Demand)) Wells Drilled
Rig Utilization
100% 90%
60,000 9,000
80% 8,000
50,000 Number of Wells
Number of Rigs
7,000 6,000
5,000 4,000
3,000 70%
60% 40,000
50% 30,000
40% 30%
20,000 2,000
20% 10,000
1,000 10%
0 0%
0 Left: The outlook for global onshore rig demand is improving with elevated commodity prices spurring increased drilling activ-
ity in many regions . Westwood Global Energy Group estimates that there will be 5,050 operational land rigs globally by the end
of 2026, representing an increase of 24% compared with 4,070 rigs this year. Right: Westwood projects the number of onshore
wells drilled to increase year-on-year, reaching 60,000 in 2026, compared with 49,600 in 2022. By 2024, the number of wells
drilled is expected to exceed 2019 levels.
Besides the Permian, the industry can
also look to the Haynesville Shale for some
additional drilling activity next year. Mr
Spears projects a 15% increase in rig count
there, from 66 rigs in 2022 to 76 in 2023,
and a similar increase in wells drilled,
from 700 in 2022 to 800 in 2023.
Like with the Permian Basin, growth in
Haynesville depends heavily on takeaway
capacity. The basin has already seen an
increase of 1.3 billion cu ft/day in take-
away capacity over the past two years,
according to the EIA.
This can be attributed in part to three
pipeline projects that were completed in
2021: The Enterprise Product Partners’
Gillis Lateral pipeline and its associated
expansion of the Acadian Haynesville
pipeline, along with Enbridge Midcoast
Energy’s CJ Express pipeline. These pipe-
lines have allowed producers to reach
industrial demand centers and LNG ter-
minals on the Gulf Coast, making the
Haynesville a more attractive drilling loca-
tion. “The Haynesville is all about gas, and
the fact that gas prices this year are going
to average $8 means it makes sense to drill
gas wells there, so the region can accept
more rigs. It’s well positioned with regards
to access to pipelines, and as a supply
basin to both export markets for LNG as
well as domestic industry,” Mr Spears said.
20 While pipelines and LNG terminals are
helping to spur growth in some of the big
shale plays in the US, the lack of this mid-
stream infrastructure is hindering onshore
drilling growth in Canada.
Mr Spears said he expects just a 2%
growth in Canada’s onshore rig count next
year, from 178 rigs in 2022 to 182 in 2023.
The country has hit a bottleneck, he noted,
where it cannot export enough oil and
gas to justify an increase in production
because of issues with approving new
pipelines into the US, along with the high
cost of oil sands development and a lack
of LNG terminals. The country’s first two
LNG terminals, the Shell-led LNG Canada
project and the McDermott-led Woodfibre
project, are not expected to come on stream
until 2025 and 2027, respectively.
“The issue for Canada is that, on the
land side, their big market for oil and gas
exports has been the US. With US produc-
tion growing for both oil and gas, plus the
lack of LNG terminals Canada has in place,
it’s tough. They’re not going to have an
LNG terminal up and running for a while.
It’s going to be that way for another two or
three years.”
Global onshore outlook
Outside of North America, China and
the MENA (Middle East and North Africa)
regions are expected to be among the key
drivers of onshore rig activity in the near
term. In China, NOCs that operate the coun-
try’s largest oil fields are aiming to increase
both oil and gas production, leading to
increased activity in the country’s shale
oil deposits. In July, Sinopec announced
a major oil discovery in the Subei Basin,
and PetroChina sanctioned a development
plan for shale gas extraction at the Yang
101 Block in the Sichuan Basin. Over the
next three to four years, Westwood fore-
casts these two projects will help drive
onshore rig count from 1,210 in 2022 to
1,440 in 2026, and the onshore wells drilled
over that time period should jump from
14,200 in 2022 to 16,120 in 2026.
In the Middle East, Westwood forecasts
onshore rig count to increase from 580 in
2022 to 730 in 2026, while onshore wells
drilled are forecast to go up from 3,310
in 2022 to 3,900 in 2026. Saudi Arabia
and the UAE will be the main drivers of
activity growth, with their NOCs announc-
ing ambitions for increasing production
capacities by 2030.
“When you look at the Middle East and
China, the high oil prices we’ve seen this
year certainly helped solidify their long-
term national strategies,” said Ben Wilby,
Senior Analyst at Westwood Global Energy
Group. “Saudi Arabia wants to get to 13
million barrels, the UAE wants to get to 5
NOVEMBER/DECEMBER 2022 • DRILLING CONTRACTOR