Horizontal rigs, their weapon of choice for reaching oil deposits in tight-rock formations such as North Dakota’s Bakken shale and Texas’s Permian Basin, slid by 35. It was the biggest single-week drop since a drilling boom touched off six years ago that propelled domestic production to the highest level in three decades and eventually helped trigger the global price war that the U.S. and OPEC find themselves in today.
The decline, the largest in a decade and the seventh in a row, threatens to halt U.S. oil production growth by slowing drilling in tight-oil plays that make up virtually all of the nation’s new output. Bending to the pressure of crude below $50 a barrel, the country’s explorers idled the most rigs last quarter since 2009.
“The message from the market, that drillers need to start changing their behavior, has now been received by the big boys in the shale plays,” Harold York, vice president of integrated energy at consulting company Wood Mackenzie Ltd., said yesterday by telephone from New York. “The tight-oil players have received the message, and they’re taking action.”
Horizontal rigs made up more than half of this week’s decline in the U.S. oil count, which fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website yesterday. The 61-rig drop was the largest since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War.
Read more at Oil Drillers Bail on U.S. Boom, Idle Most Rigs Since 1991
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