860 Domestic Oil Drilling Rigs NOW--47 year Low

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There was a meeting in Okla City of the International Association of Drilling Contractors. Matt Overbeck, a marketing analyst for a unit of Slumberger, Ltd. spoke to the group. He stated that the present level of 860 domestic drilling rigs is a 47 year low; down from 1705 in 1998 and 5,644 in 1982. He further stated that the drop in available rigs over the years stems from factors like rigs being "cannibalized" and dismantled for parts or being shipped out of the country. The full story, reported in the Daily Oklahoman today: http://www.oklahoman.com/cgi-bin/shart?ID=388718&TP=getbusiness It was in the business section of the Oklahoman today. What does this mean to us? Flint would probably say we just can't tell. Decker would say it means nothing...somehow operational drilling rigs and qualified personnel would magically appear when "the price is right"....I say, we are in deep trouble for more than a year if our imports dry up even by 1/4. Our entire way of life is based on adequate supplies of energy..chemicals, fertilizers, transportation, not to mention electricity.

-- Bud (roughneck@oklahoman.com), October 13, 1999

Answers

Any oil people in Tx or La have an opinion on this report?

-- jeanne (jeanne@hurry.now), October 13, 1999.

There never seems to be a final straw for WC. This news on the heals of the pending strategic oil reserve sales by ol' blue eyes. God, what will it take? Just saw on our local news, that he signed 40 million acres into the ne(i)ther zone today. Neither you, I, or anyone else, will be able to trespass on our own lands. Makes the Solomon Brothers silver grab scheme look like Pokeymon traders.

-- Michael (mikeymac@uswest.net), October 13, 1999.

That blunder by OPEC back in 97 did a lot of devastation in the domestic oil patch for sure. I saw the same thing in Texas and California domestic as well. Lot's of those guys were mom and pop shops who by the time they realized how bad it was gonna get, it was to late and they got hammered pretty hard financially.

I think you are correct in that we are very vulnerable to disruptions in supply. Say a prayer this Christmas that some important regions make it through the rollover. First amoung your prayers should be the mid east and then the North Sea. I would ask you to say a prayer for west africa and the venz, but me thinks it won't do them much good at this late date. I think they will have some pretty serious problems in those two regions. On the good news front, much of that production is not necessarily dependent upon local remediation, ie it's being done by the majors. On the bad news, i'm not certain how good a job they're doing. At one API meeting I attended, I heard a multi national state that they we're going to "begin working on that country's (to remain nameless) platforms some time in December. This would put those platforms in question with such a late start. But by and large, I expect the big boy's haven't been slacking.....if I'm wrong, we're all in deep dip. I expect that the real disruptions will come from country specific logistics including ports, pipes and power as well as civil unrest.

Please note that the Asian's and Indians have been in buying more WAF than normal recently. However, my inclinations that countries would begin serious re-stocking by now has proved false. I'm still waiting for a ten point pop in WScales and 25 dollar wti. It's working back up, but I'm now concerned that this re-stocking hasn't taken place yet. We should be seeing it by now. This doesn't bode well for countries who import large amounts of crude. They should be buying like mad and getting long the physical. If they're just late, then it's gonna spike hard,,,,if they're slacking, then god bless them when they can't get barrels next year.

-- Gordon (g_gecko_69@hotmail.com), October 14, 1999.


One area that seems to be ignored is the preparedness of the oil refineries. So little has been mentioned about refineries specifically, that I have a feeling that they are in trouble. They are so huge, so complax and have so many, many imbedded chips that I find it incomprehensible that they will be able to operate efficiently come Y2K. Does anyone have any good info on this?

-- Beverley Bonner (bevbon@hawaiian.net), October 14, 1999.

Ditto Bud,

You might want to check out the bottom part of this thread: The Changing Y2K Argument by Ken Decker. http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001ZBW

Actually Decker said he might become a "wildcatter or ride a bike to work", but not to worry cause $$$ would cure everything. Don't believe that Flint stuck his toe in the oil discussion though. I've been concerned about Venezuela since Janet Abrams' multi-national forum, (or was it Kosiken's?)in Dec. '98, where it was stated that the US gets 17% of its oil from Venezuela's 5 refineries, and at that time it looked like 3 of the refineries wouldn't be Y2K Compliant/Ready by 1/1/2000. We can hope that remediation there has gone better than first forecast, and that there's no social unrest and communication/transportation/utilities don't go down the tubes there either. With the recent problems in other parts of So America, my anxiety meter is running a little high in those regards right now. But, hey....we can all just get bikes right, and when not using them to ride to work, we can hook them up some how and provide heat for our homes? ;-)

Best wishes to our Okie neighbors!

-- Cary Mc from Tx (Caretha@compuserve.com), October 14, 1999.



I agree the rig count has been dropping, what with the low price of oil for so long. But something bothered me about this top post when I read it yesterday.

[snip] the present level of 860 domestic drilling rigs is a 47 year low; down from 1705 in 1998 and 5,644 in 1982.. [snip]

I remember the rig count being in the 600's just a few years ago. Finally found the info:

[snip] Houston-based Baker Hughes has kept track of the count since 1940. The tally peaked at 4,500 in December 1981 during the oil boom. It dropped to a record low of 596 in the summer of 1993, exceeding the previous low of 663 in 1986. The rig count represents the number of rigs actively exploring for oil and natural gas. [snip]

(from http://www.careers.news-observer.com/ newsroom/ntn/biz/122697/biz5_20924_noframes.html)

-- argh (argh@nowhere.com), October 14, 1999.


argh,

Could it be that the snip you put stated the rigs that were exploring for oil and gas? I take that is looking for, not actually pumping and producing.

Don't really know the true count. All I can say is that after the big tornado that came through OKC this past May, I have seen a decrease in the number of pumping rigs. A few rigs were damaged during the tornado, and have since been taken down. There are no signs of them being rebuilt. I guess they thought it would be cheaper just to cap them than rebuild them. Just my thoughts. Oil's not really my bag.

-- (cannot-say@this.time), October 14, 1999.


Argh,

I think the difference in the figures/dates etc is due to the different groups doing the counting. Regardless, the point is... we ain't got the same capacity for drilling and exploration as we did in the past, and....there's the rub and no way to bring it back online in a hurry.

-- Cary Mc from Tx (Caretha@compuserve.com), October 14, 1999.


Cannot say & Cary Mc:

Yes, that's it. It's two different surveys, one by a unit of Schlumberger and the other by Baker-Hughes, which is the one posted in Barron's every week. I should have linked to the Daily Oklahoman article initially, which would have cleared up my confusion.

Agree with you also that if oil imports are affected, we are in big trouble.

-- argh (argh@nowhere.com), October 14, 1999.


If I wanted to criple the US economy, I would cut foreign oil, while limiting the amount of drilling that could be in within the US...

-- Mad Monk (madmonk@hawaiian.net), October 14, 1999.


Good informatiion in this area is so hard to come by that I don't know what to believe. Someone here talks about a 25% drop in imports, while someone in the Senate testimony from the oil industry expected no significant change in imports. Someone wrote last year that 17% of US oil comes from 5 Venezuelan refineries, 3 of which were being shut down. Yet in another article, someone wrote that we in fact don't import any refined oil from Venezuela, only raw crude.

I tried to dig and find out why those refineries were being shut down (y2k was in the early awareness phase at the time, and nobody had done any compliance assessments yet), but nobody seemed to know. Since then, this potential 17% loss fell entirely off the radar, so nobody seemed very concerned about it.

I don't remember ever reading any numbers about drop in oil consumption in the US during the 1973-74 OPEC cutback, so I have no feel for how elastic our oil demand might be. No question that a significant rise in oil prices will have far-reaching effects in the economy.

And there's no NERC-like association keeping published tabs on remediation within the industry that I know of. I can't form any opinion of where this stands when I'm in the dark.

-- Flint (flintc@mindspring.com), October 14, 1999.


Flint,

Just happened to be surfing and stumbled across this thread. I concur generally with your comments on this issue. To me, its become more unnerving than the status of Electricity or Telecoms because, while I've heard some inside negative reports on those utility types, the bulk of really disturbing information is coming out of the Oil patch.

Re: Venzuela. I just stumbled across a bunch of that data just the other day and now, I don't seem to have correctly bookmarked the data. Rats! What I saw were API statistics...I'll try to dig around for them again and post in a separate thread maybe, as I'm not sure how long it might take to find them again. Roughly though, the numbers you quoted are in the "ballpark." The refinery aspect now vaguely rings a bell, but if I recall, I could never get firm confirmation on that. I do know that I saw a media quote regarding the February change of the gov't there and the incoming folks stating that the previous gov't had done nothing to prepare for Y2K. Yet, I did find the Venezuela Monopoly OIl Co website stating that they are confidently compliant. NOW, how did they doooo that in 6 months? Oh, surely they didn't cut any corners did they? Nahhh, they wouldn't do that!

RE: 73-74 Oil Embargo supply drops as a %. I've read that it was 5%. I was really thinking that it was much higher than that? I was thinking more like 30%, but my I'm not very adept at Jeopardy or other Trivia games. Now you know why? I don't remember numbers that lose significance over time, only to later return as significant. I'll do some more research on this... MAYBE LINKMEISTER or other researchers can discover the historicals and can confirm the real percentage drop in supplies. Hint: Wasn't Oil Imports from OPEC running about 12% back then? That might be a clue as to size of % loss

Flint said: "And there's no NERC-like association keeping published tabs on remediation within the industry that I know of. I can't form any opinion of where this stands when I'm in the dark."

My Response: I agree and lament with you. Yes the API is sort of like NERC but they were never tasked by the gov't like the NERC was. API has a pitiful links page for oil companies, but then not every oil company is a member of API. Even then, some Oil companies are either not maintaining a website or they are not featuring anything with regards to Y2K on their website. Yeh, Flint, It's pretty dark in here...and look at that spilled gasoline. I need some light, any one gotta match?

-- R.C. (racambab@mailcity.com), October 15, 1999.


Flint & R C,

I agree. It would be very enlightening to have more information regarding the status of oil production/refining etc. from the OPEC nations and other oil producing countries. Any news regarding remediation and any projected effects the rollover will have on this sector would certainly give us more of an idea of what to expect. Keep digging and I will too, and please report what you are able to find.

-- Cary Mc from Tx (Caretha@compuserve.com), October 15, 1999.


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