Posted on 04/13/2015 5:14:59 AM PDT by thackney
The U.S. energy industry dramatically increased the pace at which it’s slowing activity, laying down 42 oil rigs this week after several weeks of more conservative numbers.
There are 760 oil rigs operating in the U.S. currently, down from 802 last week, according to data published Friday by oil field services company Baker Hughes.
The decline was the largest one-week drop in the count in a month.
Last week, the oil rig count fell by just 11, and the week before it was down by 12. Those were the smallest week-over-week declines in 2015 and may have suggested the oil industry’s rapid pullback was showing signs of waning.
The pace of the industry’s pullback also quickened in Texas, which saw a total of 29 land rigs go down this week. Last week, the number of land rigs in the state declined by 6, and the week before, the total dropped by just 3.
The U.S. oil rig count is now down 52.8 percent from last year’s peak on Oct. 10.
temporary
Of course, but 2 more months? 2 more years?
Can slowdowns accelerate?
Yes, initially this was the case.
Example, one week 10 rigs shut down.
Next week 20 rigs shut down.
Next week 30 rigs shut down.
There is obviously a limit to the "growth" of slowdown, but we thought we had turned the corner as the number of rigs shut down each week was getting smaller. It grew again.
I do believe, the large number of wells drilled but not completed is going to extend the rig work slowdown. Hard to tell how much, but it will slow down the price climb somewhat.
What’s your take on Cushing? Will they run out of space? And if so, what will they do with the excess oil?
yes, that only seems right as it is the low-hanging fruit when it comes to capital vs reward.
It will also ironically keep the rig count falling as production increases. The capital to complete is immense and costs more than the cost to drill, so operators will be stretched on cashflow to do both unitl prices rise.
another thing here is that there are tax laws coming into play.
Until a well is completed there is no ‘reserve’ of oil that ad valorem taxes must be paid on. These taxes are not insignificant, and are likely causing some operators to delay completion.
Activity here in WV is certainly decreasing, more from that never ending glorious program of Obomonomics and QE-49 from the fed. These elites are only making it much worse in the end.
Yeah!
Mother Gaia is saved!
I love paying $4.50-$6 for gas...
Cushing, run out of space?
They will, if they have not already, run out of "cheap" space, given the rise in the price of oil in the futures market. You can make more money putting oil in storage and selling a futures contract after paying current storage charges, than you can by selling the oil now.
As more do that, and space gets limited, the space to store will become more expensive. Down on the coast, the LOOP storage terminal has started putting storage up for bid.
More oil will get moved around, more trains, more barges, as they can find space to move it.
Rising oil storage smothers price gains; Massive complex at Cushing, Oklahoma, has 51.5 million barrels
http://newsok.com/rising-oil-storage-smothers-price-gains-massive-complex-at-cushing-oklahoma-has-51.5-million-barrels/article/5400876
Oil inventories have grown for eight consecutive weeks as of Feb. 27, the U.S. Energy Information Administration said Thursday.
The buildup has averaged 7.7 million barrels a week over the eight-week period, marking the largest such increase since at least 1982.
Home to the country’s largest storage facility, Cushing has been most directly affected by the storage rise. As of March 6, Cushing’s sprawling tank complex held more than 51.5 million barrels of oil, according to the EIA.
Storage is nearing operational capacity, up almost 25 percent over the past five weeks and 172 percent higher than the nearly 19 million barrels reported just over five months ago.
As Cushing fills, companies are sending oil to other storage facilities throughout the country, including the Gulf Coast and west Texas.
more at link
Weekly Cushing, OK Ending Stocks excluding SPR of Crude Oil
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_SAX_YCUOK_MBBL&f=W
Thx.
Did not know that.
I thought they were at 75% and Keystone was expected to fill the rest, if it ever came online.
Good for them.
“Of course, but 2 more months? 2 more years?”
the point here is that many who are not familiar with the O&G industry might take this rig fall to mean disaster, i.e - it will never recover. We who are familiar with it know better as it is a cycle.
If I knew the answer to your question, I would make a lot of money speculating on oil futures.
As it is, one can only get lucky knowing the answer.
The Keystone XL is to provide oil that replaces other heavy oil import, from Venezuela for example.
51.5 Million barrels, about 2 and a half days supply for US.
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