DB & Thread: Interesting piece that just came over AP wire. Regads, M2
u,f,13 - AM-TX--RECORDRIGCOUNT, 01-22 0730 papa- -
AM-TX--Record Rig Count,740
URGENT
Domestic rig count falls to all-time low
AP Photos LUB101, LUB102; AP Graphic
By PAULINE ARRILLAGA
Associated Press Writer
HOUSTON (AP) _ The number of rigs actively exploring for oil and natural gas in the United States plummeted to an all-time low 588 Friday in the latest sign of trouble for an industry crippled by collapsed oil prices.
''When it's as low as it is now, we're a pretty anemic industry,'' said John Bell, owner of a small independent oil company in the West Texas town of Kermit. ''We're about as unhealthy as we can get.''
The number of rigs operating this week dropped by nine from last week's 597 to surpass the previous low of 596 set on June 12, 1992, Houston-based Baker Hughes Inc. reported.
Baker Hughes has kept track of the count since 1940. The tally peaked at 4,530 on Dec. 28, 1981, during the height of the oil boom.
Tony McAloon, director of market research at Baker Hughes, said the record _ while not unexpected _ signifies that more bad news is on the way for domestic producers and oil service companies.
''We anticipate that the U.S. market will bottom-out sometime here in the course of '99,'' he said. ''To find oil in the United States is more expensive than to find it in various international markets, and so although international locations can survive with low oil prices, many U.S. producers cannot.''
Prices for oil have plunged to their lowest levels in more than a decade as demand withers from suffering Asian economies and oil-producing nations continue to churn out crude despite a huge oversupply in world markets.
In the United States, the world's second-largest oil producer after Saudi Arabia, the crisis has prompted companies to lay off workers, slash expenses and cut back or completely eliminate drilling projects.
In the Houston area alone, about 4,200 oil industry workers lost their jobs in 1998, including 2,500 positions in exploration and production, Texas Workforce Commission data show.
''Unfortunately, the number of rigs is directly linked to the number of jobs in the oil patch,'' said Morris Burns, executive vice president of the Permian Basin Petroleum Association, with 1,200 members in Texas and New Mexico.
''All of the service industries _ people selling pipe, mud, engineers, geologists _ all of these people are working when the rigs are running and they're not when the rigs stop,'' Burns said.
Many companies have joined forces in hope that merging will help them weather the storm. But for the country's smaller producers, cutting back is the only answer.
''I've cut every cost except laying people off, and I'm not saying that won't happen,'' said oilman E.W. Carter, who has 10 employees at his tiny company in Osage County, Oklahoma.
Carter, who has been in the business since the 1960s, said not a single rotary rig is operating in Osage County. During the oil boom as many as 40 were running, he said.
''It's just adding to a bleeding ulcer,'' Carter said of the record-low rig count. ''It's another story of how bad it is.''
Bell, in West Texas, said he usually drills as many as eight wells a year. Last year he drilled only one, and he's even less optimistic about the coming months.
''I don't know that I will drill a well this year for anybody,'' he said. Mexico.
''All of the service industries _ people selling pipe, mud, engineers, geologists _ all of these people are working when the rigs are running and they're not when the rigs stop,'' Burns said.
Many companies have joined forces in hope that merging will help them weather the storm. But for the country's smaller producers, cutting back is the only answer.
''I've cut every cost except laying people off, and I'm not saying that won't happen,'' said oilman E.W. Carter, who has 10 employees at his tiny company in Osage County, Oklahoma.
Carter, who has been in the business since the 1960s, said not a single rotary rig is operating in Osage County. During the oil boom as many as 40 were running, he said.
''It's just adding to a bleeding ulcer,'' Carter said of the record-low rig count. ''It's another story of how bad it is.''
Bell, in West Texas, said he usually drills as many as eight wells a year. Last year he drilled only one, and he's even less optimistic about the coming months.
''I don't know that I will drill a well this year for anybody,'' he said. |
