Baker Hughes reports Nine (9), OPEC’s Monthly Oil Market Report (MOMR) says it is 28 and the local chapter of the International Association of Drilling Contractors (IADC) avers that there were 23 rigs drilling, cementing, casing and logging on locations (excluding workovers) in Nigeria in June 2014.
By Toyin Akinosho
Surely, the figures by these distinguished sources are wide apart and if your business was based on rig count size, whom do you believe?
From what I thought I knew, the figure Nine (9) could not adequately describe Nigeria’s drilling activity for June 2014. I also wasn’t comfortable with a rig count of 12 for Kenya, where active drilling sites at any one time in the last two years have not been more than eight. So I started asking questions.
Baker Hughes has been the world’s defacto rig count data keeper for 60 years. Bismark Rewane, Nigeria’s most cited economist, uses the company’s figure in his monthly economic review, which he presents to the country’s corporate elite at the Lagos Business School.
But is this figure always infallible?
“In June 2014, we had 13 rigs drilling and 11 rigs on completions in Nigeria minus workovers”, a Baker Hughes’ drilling service official responded to my emailed inquiry.
So how come that the number 9 was used? , I pursued.
“The active rigs being reported reference only rigs that were actually drilling as at the report time. In addition, rigs on completion were not included in that count”, she explained.
“Isn’t the ‘report time’ the whole of June 2014?”, I asked.
“That I cannot provide a response to as I did not prepare the report to which you are referring”, came the curt reply.
Baker Hughes takes its Rig Count credentials seriously. In less than 12 hours, I had received responses from at least five officials of this technically honed, oilfield service provider. The answers came in from locations as far apart as Luanda, Lagos and Houston.
Emil Ferenz, the company’s global Market Intelligence Resource Manager, weighed in from Houston, on a weekend morning, corroborating the response from Lagos.
“Just to be clear”, he wrote, “Baker Hughes counts ALL rigs that are actively performing a drilling function, whether they are using our drill bits or a competitor’s”. When I asked if ‘drilling function’ included completing and cementing jobs, Mr. Ferenz gave an emphatic NO, then referred me to a location on the company’s website; an FAQ section encountered by following the link http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview.
“Rigs that are in transit from one location to another, rigging up, or are being used in non-drilling activities including production testing, completion, and workovers are not included in the active rig count”, Baker Hughes says on its website.
But how could a completion job, being performed by a rig, not be referenced in a rig count? Sure, you have some completion jobs that are done by snubbing units, but the Baker Hughes definition does not differentiate between these and those performed by drilling rigs. “Everyone agrees that workovers don’t have to be included in rig count”, says a drilling engineer with an operating company who wishes anonymity, “but when we refer to a drilling activity we always say Drilling and Completion”, he argues, wondering why rig based completions are excluded by Baker Hughes.
“In international areas, rigs are counted on a weekly basis and deemed active if drilling activities occurred during the majority of the week”, Baker Hughes officially states on its website. “The weekly results are averaged for the month and published each month. A rig is considered drilling if it is turning to the right (i.e. the well is underway but has not reached the target depth or T.D.)”.
All very well. Perhaps the main problem is wrapping the entire rig activity in a country in one month around a figure. It doesn’t provide the context from which the figure emerges. “Baker Hughes field representatives maintain frequent contact with all operating rigs in their district, whether or not they are using Baker Hughes drill bits”, the company says.
In the past (not sure what obtains now), the OPTS (Oil Producers Trade Section) would capture and publish amongst members number of active rigs in the basin; rigs engaged in drilling operations as well as completion activities. It would also make special reference to workover activities. This issue (if it is indeed any) is a chicken-and-egg thing; the reader is looking for number of active rigs while Baker Hughes is technically focused in capturing the rigs that are in drilling operations only (which could be misleading). If all rigs in the basin spend all the time in a whole month completing their successful wells, it would be improper to reflect “no active rigs” in the basin. I believe it is only professional to provide as much information as available, as long as it is not confidential, to present a realistic picture to the global reader. For internal use, there is no problem with stricter classifications. That is a choice any organization can elect to make.
Interesting that I find my name mentioned in your article. I would like a bit more clarification as to the issue which appears one of interpretation of the definitions as well as understanding the rig counting process. I’m not sure variations possible from one source to another when reporting a ‘monthly’ rig count. are fully understood. Please give me a call to discuss and I’ll be happy to explain. 281-798-5507 or 713-879-4471.