An oil pump operates in the Permian Basin near Midland, Texas – Reuters file
U.S. energy companies will shut down their oil and natural gas production facilities this week for the second time in three weeks, energy services company Baker Hughes said in its widely watched report on Friday.
The number of oil and gas rigs, an early indicator of future production, fell by two to 586 in the week ended August 16.
According to Baker Hughes, the total number of drilling rigs fell by 56, which is 8.7% less than in the same period last year.
According to Baker Hughes, the oil rig count fell by two to 483 this week, while the gas rig count rose by one to 98.
The number of oil and gas rigs declined about 20% in 2023 after increasing 33% in 2022 and 67% in 2021. This was due to falling oil and gas prices, higher labor and equipment costs due to rising inflation, and the fact that companies focused on paying down debt and increasing shareholder returns rather than increasing production.
U.S. oil futures are up about 7.1% so far in 2024 after falling 11% in 2023, while U.S. gas futures are down about 14% so far in 2024 after plunging 44% in 2023.
U.S. shale oil companies continue to increase production by using fewer rigs by focusing on improved drilling and fracking efficiency. Producers are extending their wells up to three miles, squeezing more wells onto a single drilling platform and fracking multiple wells simultaneously.
Ultra-high pressure oil wells are increasingly becoming the focus of major oil companies, who are using new technologies and drilling ships that can safely withstand the enormous forces. Using deep-sea drilling with extreme pressure could produce an additional 2 billion barrels in the Gulf of Mexico.
