US Rig Count Sees Biggest Drop in 6 Years

US Rig Count Sees Biggest Drop in 6 YearsUS Rig Count Sees Biggest Drop in 6 Years

Data released Friday indicates that that the number of rigs operating in the US was down 74 this week, the rig count’s biggest one-week decline in more than six years.

More than 40,000 upstream oil and gas jobs in Texas could be lost as energy sector activity here continues to slow, said Karr Ingham, the economist who compiles the monthly Texas Petro Index tracking the industry’s economic indicators, Interfax reported. “We’re now at the point where there’s likely to be some damage inflicted on the Texas economy,” Ingham said. “I’d sure be fine if I was dead wrong, but a turnaround in drilling activity is not on the horizon at this point.

Ingham said the industry suffered 40,000 upstream job losses in Texas when crude oil prices fell as low as $35 per barrel during the 2008-2009 downturn. The last time the rig count fell as dramatically as it did this week was in January 2009, when it fell by 98.

This time, Ingham said, the job losses might even be bigger because the drop in oil prices could be more prolonged. Texas, which has more rigs operating than any other state, also saw more rigs put down than any state in this week’s report. The state’s rig count was down by 44 to 766 rigs in this week’s report.

Last year’s Texas rig count peaked at 906, but Ingham said that figure could eventually fall in half. The impact could mean more than 200,000 job losses for the state, when positions indirectly connected to the industry are included. Nationally, this week’s plunge marked the third-biggest one-week drop in the history of the rig count, compiled by oilfield service company Baker Hughes since 1987.

The report was the sixth consecutive week in which the US rig count declined as oil prices have plunged more than 50 percent since their peak in June. The rig count could continue to decline weekly for most of the first half of the year. The declines were widely expected and occurred broadly across both public and private companies’ operations and through many different basins.

“What really needs to happen is production and volume to drop like a stone,” Ingham said. “But production is going to continue to increase -at a slower rate- for months into the future, until it finally peaks.”