Looking back at the past twelve months, our industry has revealed fantastic gains in the U.S. shale market. Overall drilling permits are up 63 percent in Texas and drilling rigs rose 88 percent, according to the Baker Hughes Rig Count. The Permian Basin field in Texas continues to be a major player, followed by the STACK and SCOOP fields in Oklahoma. Rig count in Oklahoma and Louisiana increased 48 and 29 percent, respectively. The decline in exports and the rise in crude demand resulted in reduced oil stockpiles, which in turn stabilized the market. As a result, the price of WTI crude oil hovered around $50 a barrel for most of 2017 and ended with just above the $60 mark.
However, while the market was stabilizing in 2017, many of the companies that directly support the oil and gas industry were still experiencing the effects of the prior three-year downturn, many had to merge with competitors to survive, some had to close, and several were still laying off employees to cut expenses. Experts also warn that if the U.S. increases rig count due to higher prices, another price collapse could result by the end of this year.
OPEC also through curves in the market and many of us watched closely as the cartel reached deeper into propping up oil. Russia along with several other non-OPEC producers agreed to cut oil exports by 1.8 million barrels per day, which expires in March. Last November, the group agreed to extend the cuts until the end of 2018. Although, they all signaled a possible early exit from the deal if the market overheats.
Recovering from the market downturn has brought advances in technology that will only improve as the industry rebounds. At OILMAN we’re excited to see machine learning, blockchain and IoT take a role in improving the health of the entire oil and gas sector, from engineering and services to exploration and production. We look forward to what the industry will bring us this year and we’re eager to report on key advances in the technology and software our industry relies on to thrive.
Happy New Year from the OILMAN Team!