Drilling in Texas picks up quickly
Drillers have quickly returned to the Texas oil fields, a week after last week’s arctic blast disrupted operations.
Producers added five new rigs this week, including four in Texas, to cross another milestone in the recovery from one of the worst industry downturns. There are 402 operating rigs, according to oil-field services company Baker Hughes and research firm Enverus, which provide the weekly tally.
The increase comes as the Energy Information Administration revealed the depths of last year’s oil bust: U.S. crude production in 2020 decreased for the first time in four years amid the coronavirus pandemic, which slashed global demand.
The rig count, a leading indicator of the nation’s oil and gas production, has been steadily recovering from the downturn during the past three months. But its slow return took a hit last week when the winter storm and frigid temperatures knocked out power to oil wells and iced equipment.
The storm caused the largest disruption to U.S. oil production in history and pushed crude prices over $60 a barrel. In the wake of the storm, the nation’s oil production fell by at least a third, or an estimated 3.5 million barrels per day, according to Norwegian energy research firm Rystad.
The Permian Basin — the nation’s most productive shale play — endured some of its coldest weather in more than a half-century as temperatures fell more than 30 degrees below average. The West Texas play was without power for much of the week, while other areas experienced rolling blackouts.
As temperatures returned to normal this week, oil companies added four rigs in the Permian, bringing its count to 208. Texas has 197 rigs in operation, nearly half of the nation’s total.
Producers still have a steep road ahead of them, however, as they recover production lost during 2020. Crude output in the states averaged 11.3 million barrels a day last year, down nearly 8 percent from 2019, the EIA said. It was the largest annual percentage decline since 1949.
Drillers halted oil field operations across the country after the health crisis sapped demand for gasoline, diesel and jet fuel derived from crude. At the peak of the market crisis in April, WTI futures settled at -$37.63 a barrel, marking the first time in history that the commodity closed below zero.
Last year, America’s shale oil engine, Texas, saw output fall by more than 200,000 barrels a day compared with the year before, according to EIA data. Production in the Gulf of Mexico slumped to 1.7 million barrels a day last year, from 1.9 million in 2019, as 2019 also delivered a record hurricane season.
West Texas Intermediate, the U.S. benchmark, settled at $61.50 on Friday, down $2.03.