The Slowdown Has Begun -- January 22, 2015

Active rigs in North Dakota:

	1/22/2015	01/22/2014	01/22/2013	01/22/2012	01/22/2011
Active Rigs	159	187	188	203	165

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The Slowdown Is Beginning

CNBC is reporting:

Drillers have begun reducing rigs in big shale regions, including the Permian Basin in Texas and New Mexico, the country's highest-producing region, as well as North Dakota's Bakken Shale and the Eagle Ford in south and east Texas. But shutdowns in other, less productive and emerging areas will likely be more widespread.

That's about all that was said about the Permian, the Eagle Ford, and the Bakken. The rest:

TMS:

The Tuscaloosa Marine Shale (TMS) has some of the nation's highest breakeven costs—about $70 to $90 a barrel for benchmark West Texas Intermediate crude. 

The TMS lies under a swath of the Deep South that runs along the border of Louisiana and Mississippi. While it is believed to hold 7 billion barrels of oil, that black gold is buried between 11,000 feet and more than 15,000 feet below the surface. That compares with depths as shallow as 5,500 feet in some parts of the Permian Basin.

Already, exploration and production companies are pulling out. Last month, Comstock Resources suspended drilling in the TMS, and Halcon Resources said in November it would wind down operations there.

Mississippian Lime:

Another area that will definitely see cuts is the Mississippian Lime. Located in Oklahoma and Kansas, the play is comprised of a basin roughly the size of West Virginia. Producers need oil at roughly $75 a barrel to break even there.

MS Lime wells produce a lot of water, and regulations connected to the water use create additional labor, transportation and power costs. 

Oklahoma City-based SandRidge Energy, the largest player in the MS Lime, said this month it was reducing its rig count and capital expenditure levels. The company's shares are down nearly 80 percent over the last six months, from just under $7 to little more than $1.

The upside is that SandRidge was able to buy property in the area on the cheap, perhaps for as little as a few hundred dollars an acre. That compares with tens of thousands of dollars per acre in parts of the Permian when oil prices were at highs.