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Oil and gas drilling set for at least a 20-year low
The COVID-19 pandemic has stymied oil and gas activity, a phenomenon which has now affected the drilling market both in terms of wells drilled and in terms of related demand for drilling equipment. A Rystad Energy analysis shows the number of drilled wells globally is expected to reach around 55,350 this year, the lowest since at least the beginning of the century.
The decline is a staggering 23% fall from 2019’s number of 71,946 wells. Rystad Energy’s forecast, which extends to 2025, does not find it likely that last year’s number will be met or exceeded within the considered time frame. Drilled wells are expected to partly recover to just above 61,000 in 2021, as governments ease travel restrictions, boosting oil demand and prices. Then numbers will rise further to just above 65,000 in 2022 and remain just below 69,000 until the end of 2025.
North America is likely to be most affected, according to the market analyst, with the country’s rig count already down to historic lows just a few months into the downturn. Although modest recovery is possible in 2H2020, drilling activity will remain more than 50% below the levels seen at the same time last year.
From the 55,350 wells to be drilled in 2020, 2,238 are offshore and 53,112 onshore. Before COVID-19 struck, Rystad Energy had expected total wells to rise year-over-year to 74,575, of which 2,896 would be offshore wells and 71,679 onshore wells.
Overall, onshore markets are expected to recover as early as 2021 and grow at a rate of 7% annually towards 2025, while offshore markets will see some highs and lows and will maintain an overall flattish level towards 2025.