Skip to comments.ND drill rig activity lowest in 18 months
Posted on 12/19/2012 5:19:50 AM PST by thackney
The number of rigs drilling for oil in North Dakota is at the lowest level in a year and a half.
The State Department of Mineral Resources reports that just more than 180 rigs were drilling this week...
218 rigs were drilling in western North Dakotas oil patch in late May...
(Excerpt) Read more at fuelfix.com ...
Is this a matter of high production costs vs. price per barrel, or is it a matter of not being able to tap into Keystone XL and get the crude to the refineries?
North America Rotary Rig Counts Current Week Data (and Historical Data)
The country in the same time period has declined rotary rig count from 1986 to 1799. Texas declined from 934 to 848.
Drilling typically follows commodity pricing with a couple month lag. Late Feb had WTI at ~$110 a barrel, now down to ~$86.
Cushing, OK Crude Oil Future Contract 1
High cost of drilling/completing into tight formations combined with lower price paid per barrel.
Lack of pipelines to meet demand lowers the interior price of crude compared to the prices at the coast.
Today’s price of West Texas Intermediate is now more than $20 discounted to Brent Crude brought in from the North Sea. During the Summer of 2008, these two were within a dollar or so of each other. The increased interior US production without sufficient pipeline capacity has decreased the price while higher transportation cost like Railroad must be used.
“Is this a matter of high production costs vs. price per barrel, or is it a matter of not being able to tap into Keystone XL and get the crude to the refineries?”
Both. Drill/Completion costs, although on the way down, have yet to recognize the softer market due to falling oil prices.
As to pricing, it has been hit by a two-fisted hammer: first, overall commodity pricing is down represented by West Texas Intermediate(WTI). Secondly, the differential of Bakken Crude relative to WTI remains stubbornly high, caused by the absence of sufficient capacity to send it to refineries.
One can always take crude away, but one must accept a higher transportation cost in doing so. Current transporation costs are excessively high in comparison to quality of ND crude.
It’s North Dakota guys, it frigging COLD in the WInter.
THIS isn’t the Eagle Oil field in South Texas which is probably where everyone (Snowdrillers) have gone for the winter.