Oil rigs in US at 2-year low as shale drillers bail

Rigs targeting US oil slid to the fewest in two years as explorers retreated from North Dakota’s Bakken formation at the fastest pace since the nation’s shale boom took off.

The US oil rig count dropped by 49 last week to 1,317, the lowest since January 25, 2013, Baker Hughes Inc. said on its website Friday. The total count fell by 43 to 1,633. North Dakota, home of the Bakken play that doubled its crude output within two years, lost the most rigs since at least 2008, with prices under $50 a barrel.

Oil rigs have dropped by an unprecedented 258 in seven weeks, threatening to end the surge in domestic oil production that has turned the US into the world’s largest fuel exporter.

The booming production, out of shale formations across the country, has OPEC and other foreign suppliers fighting to preserve their market share.

Read also: US oil rigs tumble again

Eight hundred rigs may be pulled out of US fields during the first half of 2015, Penn West Petroleum Limited CEO David Roberts said at a conference Thursday.

“If you go down to operating cost levels in the $30-$40 West Texas Intermediate range, and stay there, you will start to lose production in the highest-cost fields in North America,” Michael Wittner, head of global oil research at Societe Generale, said at a conference in Calgary. “You’re already seeing the rig counts coming down. Drilling will come down. Well completions will come down. In the end, it’s the steep decline rates that are going to do the job.”

West Texas Intermediate for March delivery dropped 72 cents to settle at $45.61 a barrel on the New York Mercantile Exchange on Friday.

The Organisation of Petroleum Exporting Countries, of which Saudi Arabia is the largest producer, has resisted calls to curb production amid an expanding surplus of global supply.
Saudi Aramco will maintain its maximum sustained crude-output capacity, Chief Executive Officer Khalid Al-Falih said at the World Economic Forum in Davos, Switzerland.
The slump in oil rigs has yet to put a dent in US production, which reached 9.19 million barrels a day in the week ended Jan. 9, the most in weekly data since at least 1983, Energy Information Administration data show.

The Williston, a basin that stretches across parts of Canada and the US Midcontinent and includes the Bakken formation, lost more rigs than any other play in the country this week. The count there is at its lowest since at least February 2011, Baker Hughes data show.