The oil boom isn’t dead after all. For the first time in five months, a rig in the Williston Basin, where North Dakota’s Bakken shale formation lies, sputtered back to life and started drilling for crude once again.
And then one returned to the Permian Basin, the nation’s biggest oil play, field services contractor Baker Hughes Inc. said Friday.
Shale explorers including EOG Resources Inc. and Pioneer Natural Resources Co. say they’re preparing to bounce back from the deepest and most prolonged slowdown in U.S. oil drilling on record. The country has lost more than half its rigs since October, casualties of a 49 percent slide in crude prices during the last half of 2014.
Futures rallied above $60 a barrel earlier this week, and a sudden return to oil fields would threaten to end this fragile recovery.
“You’re inviting a lot of pent-up supply to come back into the market -- not only do you have people drilling again, but you have this fracklog of over 4,000 uncompleted wells,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by phone.
“And then we’re in a situation where the market could easily go back into the mid- $50’s.” While rigs are returning to some fields, the total U.S. count has continued to decline, losing 11 this week to reaching a four-year low on Friday.
The drilling slowdown won’t reach a real bottom for about another month, James Williams, president of energy consultant WTRG Economics, said by phone from London, Arkansas.One rig at a time. Reuters at Rigzone is reporting:
After weeks of idling rigs on slumping crude prices, U.S. oil drillers added rigs to the Permian Basin for the first time this year.
Energy companies increased by one each the number of oil rigs in the Permian basin of West Texas and eastern New Mexico - the biggest and fastest growing U.S. shale oil field - and in the Barnett in Texas. That was the first increase in the Permian since December and the first in the Barnett since March.
Overall, the number of active oil rigs declined for the 22nd week in a row, but the rate of that decline has slowed in recent weeks, suggesting the collapse in drilling may be coming to an end as prices recover after falling 60 percent from June to March.
The number of rigs drilling for oil fell by 11 this week to 668 - the smallest drop since early April - after declining 24 and 31 in the prior two weeks, Baker Hughes said. With the oil rig decline this week, the number of active rigs has fallen to the fewest since September 2010, according to Baker Hughes data going back to 1987.