Middle East, Africa standouts in rig activity

Exploration and production progress sputters in most global energy sectors.

By Daniel J. Graeber

HOUSTON, July 8 (UPI) -- Activity in the exploration and production side of the energy sector increased only in the Middle East and Africa last month, Baker Hughes said Wednesday.

The oil services company said in its report for June the number of rigs deployed in the Middle East increased by two to 401, while Africa added three rigs to 103. All other regions of the world posted declines.


Rig counts provide an indication of the health of the energy sector focused on exploration and production, a sector struggling in an era of lower crude oil prices.

Energy companies during latter half of 2014 and first half of 2015 announced cuts in spending targeting exploration and production. In Latin America, Baker Hughes found rig deployments were down about 4 percent from May to 314, while Asia-Pacific rig numbers dropped about 1 percent to 215.

In the United States, where shale oil production pushed the global market heavily toward the supply side, rig deployments fell more than 3 percent to 861. For onshore work, activity in the exploration and production sector dropped about 2.8 percent, while offshore deployments were down 12.5 percent.


Most of the gains in total U.S. oil production came from inland shale basins. In a short-term market report, the U.S. Energy Information Administration said total U.S. crude oil production declined 50,000 barrels per day in May and the trend should continue through early 2016.

EIA Administrator Adam Sieminski said that, despite the decline, the expected 2015 average of 9.5 million bpd is the highest production level in 45 years.

"The forecast decline in U.S. monthly oil production through early 2016 is the result of low oil prices, which pushed oil companies to reduce their investment in drilling that resulted in the lowest number of rigs drilling for oil in nearly five years," he added.

The Organization of Petroleum Exporting Countries has said it was keeping its production levels static in an effort to shore up its market share during the shale era.

David Porter, a member of the Texas Railroad Commission, the state's energy regulator, sent a letter last month to state lawmakers describing OPEC's decision as an act of aggression.

Preliminary data from March show crude oil production in Texas averaged 2.31 million barrels per day, down from the 2.34 million bpd reported in February.


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