Rig count is a standard measure of activity in the oil and gas industry. It refers to the number of active drilling rigs in operation at any given time. It is a key indicator for the health of the industry and also a good indicator for future production, investor confidence and the demand for energy support services, especially for drilling-related services and provision of equipment.
Rig count can be impacted by a number of external factors like international energy commodity prices, drilling costs, market expectations, capital allocation strategies and even technology changes and improvements.
Internationally, most of the drilling activity for both onshore and offshore, comes from the North American region (USA & Canada). In 2024, there were 787 active drilling rigs in North America versus 948 in the rest of the world. However, the North American drilling rigs are predominantly onshore.
When we look at offshore rig count, the Asia Pacific region has the most active rigs; in 2024 it increased to a 10-year high of 100 active rigs while the average number of active rigs is around 85, higher than any other region. The majority of offshore drilling in this region comes from China and India. The Latin American region (which includes Trinidad & Tobago, Guyana and Suriname) had 37 active rigs in 2024, compared to 62 in 2015.
It can be seen in the chart that drilling activity typically drops significantly when there were major price shocks, for example, post-2015 and 2020. Each time, there was some level of recovery, but the total number of active offshore drilling wells in 2024 is 82 rigs less than the high in 2015. The 2015 price drop marked a major shift in the oil and gas industry, and most major companies allocated significantly less capital to exploration and development after 2015, even in periods of higher prices (such as 2022). Readers in Trinidad & Tobago may remember that there were six drillships parked up in the Gulf of Paria after 2015; taken out of service because of the lack of demand.
The current fall in oil prices will likely impact future rig counts, especially if it is sustained over many months.
There have also been increasing costs of production for offshore drilling activity including supply chain issues leading to delays and cost increases. The current trade war between the USA and China will likely further disrupt supply chains. In the past few years some major energy companies shifted their investment portfolio to include more renewables and low carbon initiatives, though this has shifted back towards fossil fuels for many companies more recently. Nevertheless, the industry continues to be characterized by disciplined capital allocation and we may never see the heights of global activity recorded in 2015, being repeated.