U.S. oil producers appear to be scaling back in the face of low
crude prices, with the onshore drilling rig count falling by 37
last week, according to new data released Monday by
oilfield-service company Baker Hughes Inc. (BHI).
It was the third week the drilling rig count fell, but the first
significant drop seen since crude-oil prices started to tumble in
June. Analysts say energy companies operating in the U.S. will need
slow down their oil production to help bolster international crude
prices.
Rigs drilling for oil in the U.S. last week dropped by 37 to
1,499, Baker Hughes said. This follows a 10-rig drop the previous
week and a 29-rig decline the week before that.
"We think it will fall every week for the next three months,"
analysts at Credit Suisse said of the U.S. rig count. "We expect
the market to lose at least 200 vertical and 200 horizontal rigs
and it could easily be more than that."
Vertical rigs drill down thousands of feet to access traditional
oil reservoirs, while horizontal drilling rigs are often used in
combination with hydraulic fracturing to tap unconventional oil
reserves trapped in shale-rock formations.
Taking oil rigs out of service means fewer wells will be
drilled, but the energy industry more efficiently produces crude so
more oil can be wrung from fewer wells. U.S. oil output during the
week hit 9.14 million barrels a day earlier this month, marking the
highest American production on record since the U.S. Energy
Information Administration started tracking it in 1983.
The EIA is projecting that U.S. oil production will continue to
rise to 9.3 million barrels a day during 2015, despite depressed
crude-oil prices.
Nearly 95% of new oil production in the U.S. between 2011 and
2013 came in seven key regions where fracking is common, including
North Dakota's Bakken formation, the Eagle Ford Shale in South
Texas and the Permian Basin of West Texas and New Mexico, the EIA
said.
Write to Dan Molinski at dan.molinski@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires