• 2 days Iraq Begins To Rebuild Largest Refinery
  • 2 days Canadian Producers Struggle To Find Transport Oil Cargo
  • 2 days Venezuela’s PDVSA Makes $539M Interest Payments On Bonds
  • 2 days China's CNPC Considers Taking Over South Pars Gas Field
  • 2 days BP To Invest $200 Million In Solar
  • 2 days Tesla Opens New Showroom In NYC
  • 2 days Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 2 days Venezuela Sells Oil Refinery Stake To Cuba
  • 3 days Tesla Is “Headed For A Brick Wall”
  • 3 days Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 3 days IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 3 days Goldman Bullish On Oil Markets
  • 3 days OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 3 days Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 3 days Syria Aims To Begin Offshore Gas Exploration In 2019
  • 3 days Australian Watchdog Blocks BP Fuel Station Acquisition
  • 4 days Colombia Boosts Oil & Gas Investment
  • 4 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 4 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 4 days Aramco On The Hunt For IPO Global Coordinators
  • 4 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 4 days India Feels the Pinch As Oil Prices Rise
  • 4 days Aramco Announces $40 Billion Investment Program
  • 4 days Top Insurer Axa To Exit Oil Sands
  • 5 days API Reports Huge Crude Draw
  • 5 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 5 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 5 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 5 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 5 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 5 days Exxon To Start Reporting On Climate Change Effect
  • 6 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 6 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 6 days Forties Pipeline Could Remain Shuttered For Weeks
  • 6 days Desjardins Ends Energy Loan Moratorium
  • 6 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 6 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 6 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 9 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 9 days Mexico Blames Brazil For Failing Auction

Breaking News:

Iraq Begins To Rebuild Largest Refinery

The Trillion Dollar Industry That Boosts Oil Consumption

The Trillion Dollar Industry That Boosts Oil Consumption

Rapid growth in mobility services…

Saudis To Slash Oil Exports To Asia By 100,000 Bpd

Saudis To Slash Oil Exports To Asia By 100,000 Bpd

Saudi Arabia’s Energy Ministry announced…

US Oil Rig Numbers Plunge, Especially In Bakken

US Oil Rig Numbers Plunge, Especially In Bakken

The number of oil rigs in the United States has dropped to its lowest since 2013, thanks to oil selling at below $50 per barrel, and most of that deficit occurred in the US portion of Bakken formation, where the American boom in shale oil began.

There were 49 fewer oil rigs operating in the United States in the week ending Jan. 23, bringing the total down to 1,317, according to Baker Hughes Inc., which follows such trends on its website. It said most of those rigs were taken out of service in North Dakota, the center of the Bakken shale field, which straddles the US-Canada border.

This is part of a larger trend brought on by the collapse in the price of crude oil. The number of US rigs has dropped by a record 258 in the past seven weeks, Baker Hughes reported. Suddenly the United States may no longer be the world's largest producer of fossil fuels.

Related: Market Mayhem Has Some Way To Go

And it may indicate that Saudi Arabia's price war against US shale production is working. American oil was causing a market glut, driving down prices. But on Nov. 26, OPEC, meeting at its headquarters in Vienna, decided to maintain production at 30 million barrels per day, starting a price war to reclaim market share lost to US producers. The strategy was conceived by Saudi Oil Minister Ali al-Naimi.

Al-Naimi has since explained, in the Middle East Economic Survey that his plan was to drive inefficient oil producers from the world market so that OPEC producers could return to profitability. Al-Naimi didn't specify US producers, but extracting oil from shale is more expensive than conventional drilling and therefore becomes less profitable as the price of crude declines.

This is not good news to David Roberts, the CEO of Penn West Petroleum Ltd., who predicted that 800 rigs may be decommissioned in the United States in the first half of 2015. Michael Wittner, head of global oil research at Societe Generale, agreed.

“If you go down to operating cost levels in the $30-$40 [per barrel] West Texas Intermediate range, and stay there, you will start to lose production in the highest-cost fields in North America,” Wittner said Jan. 19 at a conference in Calgary.

“You’re already seeing the rig counts coming down,” Wittner said. “Drilling will come down. Well completions will come down. In the end, it’s the steep [price] decline rates that are going to do the job.”

The effect is being felt acutely in Crosby in northwestern North Dakota, a town of about 1,300 souls about five miles south of the Canadian border. Its plight is probably best expressed by a 230-acre strip of gravel, empty except for streetlights and idle utility hookups on the south side of this once-prosperous oil town.

Related: IEA Provides First Sign That Tide May Be Turning For Oil Prices

The strip was supposed to have been filled with offices and other businesses involved in and supporting oil field services. Several years ago Crosby's municipal government spent $1.7 million to buy the land, and the state spent an additional $9 million on it. The town's leaders even discussed building 300 housing units in the area because its population was expected to double or even triple.

But the gravel strip resembles nothing more than a ghost town, or perhaps the grin of an old man whose gums display a single tooth. There is, after all, just one building on this road, and its lonely presence shows how quickly hopes can be dashed, says Cecile Krimm, editor of The Journal, the newspaper for Divide, N.D.

“The year they proposed this they could have gotten quite a bit of commerce in there,” Krimm told The Christian Science Monitor. “But now? It’s like a street to nowhere. You’ve got streetlights on and nobody’s home.”

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News