Global Drilling Slowdown On The Way.
- Baker Hughes rig count statistics show how drilling reacted to earlier falls in the oil price. There is always a time lag of months between an oil price event and a change in drilling. There are faint signs of US drilling starting to turn down and quite clear signs that Middle East OPEC drilling has turned down.
- Drilling in Iraq is down significantly from 94 oil rigs in July to 56 rigs in October, but there are likely other reasons for that.
- The oil industry in the USA and the Middle East has changed markedly in the last decade and I believe the production response to reduced drilling will be much more pronounced in both areas than before. History doesn’t repeat itself, but it does rhyme (Joseph Anthony Wittreich).
Figure 1 Baker Hughes rig count for the USA and oil price described in the text. Note how peaks and troughs in drilling lag the oil price. Also some uncertainty in drilling strategy the last three years as oil price fluctuated within narrow bounds. But the oil price has now broken down and I believe it is inevitable that drilling follows. Never before has US oil production been so heavily linked to drilling activity.
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