U.S. Oil Drilling Slumps, but Production Near All-Time Highs

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Though production trends continue to hold up, U.S. drillers cut back on oil-related activity by the steepest level since November, data show.

Upstream services firm Baker Hughes Company (NASDAQ:BKR) (Houston, Texas) recorded 613 active drilling rigs in the U.S. during the seven-day period ending April 26. That's a 1% decline from last week and a near-20% drop from the same time last year.

Gas rigs declined by one, while oil rigs fell off by five for the largest weekly decline since November.

By state, Louisiana showed the sharpest week-on-week decline, with its 36 active rigs marking a 10% decline. The 40 rigs in service during the week was a 33% decline relative to year-ago levels.

No basin stood out, meanwhile, in terms of gains or losses in the weekly rig count, with the Permian and Niobrara among those posting a loss of one rig. In terms of percent, the Haynesville shale showed an 85% drop off from year-ago levels.

Haynesville straddles the border of Louisiana and Texas. Oil production there is negligible, but it's the third-largest inland gas producer with an average of 16 billion cubic feet per day (Bcf/d).

The U.S. remains a world leader in production of both crude oil and natural gas. It's also arguably among the most active in terms of exports of liquefied natural gas (LNG), which is supporting markets in both Europe and Asia.

Consultant firm Rystad Energy finds that the U.S. is the origin of about 7.7% of Asia's imports of LNG. The super-cooled gas may target the European market more heavily in the coming weeks as the Snohvit LNG facility in the Barents Sea reported a gas leak during routine maintenance last week.

That facility accounts for about 6% of European imports of LNG. The export potential from the U.S., however, is diminished somewhat due to lingering issues at the Freeport LNG facility in Texas.

Nevertheless, the U.S. Energy Information Administration (EIA), the statistical arm of the Energy Department, expects LNG exports to average 12 Bcf/d this year, unchanged from 2023 levels.

Inland oil production, meanwhile, continues to show incremental gains. EIA anticipates 9.8 million barrels per day coming from U.S. shale basins in May, a slight increase from the expected average for April.

By basin, the Permian is the largest crude oil producer. The EIA expects 6.1 million barrels per day (BBL/d) from the Permian in May, only a 0.2% increase from the expected average for April.

Total U.S. crude oil production is expected to average 13.2 million BBL/d this year, a 2.3% increase from last year should forecasts prove accurate. Gas production drops from 104 Bc/f to 103 Bcf/d by next year.

Baker Hughes itself turned in a good financial performance, with its $6.5 billion in first quarter revenues beating year-ago levels by 14% and by 5% when compared with the fourth quarter. Most of its gains, however, come from outside the U.S.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).