Irreversible process: the number of drilling rigs in the US is declining despite the rise in oil prices

The number of drilling and operating wells in the US continues to fall. This news became commonplace and took the form of a dangerous trend. The situation became especially deplorable in the last days of July, when the cost of a barrel began to grow and fixed above the psychological level above $80, and the decrease in the number of wells continued without noticing the market stabilization. OilPrice columnist Julianne Geiger writes about this.

The total number of active drilling rigs in the US this week fell by 5 units, according to new data from Baker Hughes released on Friday. Their total number has decreased to 664, which is half as many as two years earlier.



The US mining industry has lost more than 100 active drilling rigs since the start of the year, the consulting and analytics firm estimates. Work on new deposits has also been reduced, and the pace of exploration has decreased. The indicators of the operating complexes in the fourth week of July were 411 units less than at the beginning of 2019, before the pandemic, Geiger emphasizes.

The trend seems to have grown into an irreversible process that will not be stopped by anything, not even an increase in the price of a barrel of oil to $100, although this is not expected in the foreseeable future. Many experts warned about such a development of the months-long situation with the extinction of exploration and drilling. Sooner or later, the cost had to start to rise, but the recovery of the industry became impossible.

If earlier the decrease in the number of drilling did not affect production, now the level of crude oil production in the United States began to fall and fell immediately by 100 barrels per day to 12,2 million barrels. This is higher than last year, but less than at the beginning of this year. The rollback has begun.

The US government promised to save Europe, which is getting rid of Russian gas, with its raw materials. But only private business, which is widely represented in the industry, does not agree to go against the laws of the market and achieve politically motivated goals at the cost of profit, and even more so losses. Shale oil companies are reacting to the global market in the way they should – cutting costs and investments, squeezing out existing capacities.