Gulf Rig Count Up By 1 Following Toughest Week In 2 Years

The previous week saw the count plunge by seven, or 30 percent.

The number of rigs exploring for oil and gas in the Gulf of Mexico rose by one last week after taking its biggest plunge in more than two years the previous week.

The Gulf rig count, a key barometer for Houma-Thibodaux’s oil-based economy, stood at 17, according to figures released Friday by Houston-based oilfield services company Baker-Hughes.

The previous week saw the count plunge by seven, or 30 percent. It was the worst week since mid-March 2015, when it dropped by 11 to total 36.

The count is now the same as a year ago but down 70 percent from the 56 rigs working in August 2014, when a three-year bust that has stripped an estimated 14,000 jobs from Houma-Thibodaux’s offshore-oil-based economy began.

Across the country, the rig count dropped by five to 949 for the week ending Friday, according to Baker-Hughes. That’s nearly double the 481 drilling a year ago. Of last week’s total, 768 rigs sought oil and 181 natural gas. Texas lost seven rigs and Louisiana one.

The U.S. rig count peaked at 4,530 in 1981 and reached a low of 404 in May 2016.

West Texas Intermediate crude, the U.S. benchmark, closed Friday at $48.82 per barrel, down about 1.5 percent for the week. Brent crude, the international benchmark, closed at $52.10 a barrel, down less than 1 percent for the week.

Shale drilling in places like Texas, New Mexico and the Dakotas has far outpaced the Gulf in recent months largely because the break-even costs are lower in the inland fields than they are offshore, analysts and economists have said. Shale drillers have said they can break even with prices at $40 a barrel or lower. In contrast, the break-even price has been about $60 a barrel in the Gulf’s deep waters, though analysts have said that’s dropping as innovation and increased efficiency lower costs.

But shale drilling has slowed in recent weeks, and many analysts cite the persistent worldwide crude glut that has kept prices down as a main reason.

Some analysts blamed last week’s slight decline in oil prices, in part, on a report from the International Energy Agency that says OPEC and other nations are exceeding their agreed-upon production cuts by 470,000 barrels a day.

“The compliance rate with OPEC’s output cut fell again in July to a new low of 75 percent from June’s revised figure of 77 percent. For those non-OPEC countries acting in support, their compliance rate in July was 67 percent,” the report says.

“The re-balancing of the oil market desired by the leading producers has been a stubborn process and it takes time for the numbers to confirm what many observers instinctively feel has already happened,” the report says.

Global oil supply continues to outpace demand, and stockpiles are likely to remain well above their five-year average through next year, the agency said.

The U.S. Energy Administration, in a report last week, forecast that Brent crude will average $51 a barrel this year and $52 a barrel in 2018. West Texas Intermediate will average $2 a barrel less.

The report also forecasts:

U.S. crude oil production will average 9.3 million barrels a day this year. It will rise to 9.9 million barrels a day in 2018, the highest annual average in U.S. history, surpassing the previous record of 9.6 million barrels a day set in 1970.

Global oil and liquid fuels inventories will remain largely unchanged through this year and increase by 200,000 barrels a day, on average, in 2018.

Annual U.S. regular gasoline retail prices will average $2.33 a gallon in both 2017 and 2018.

Source: Houma Today