BISMARCK, N.D., Dec. 14 (UPI) -- Despite a steep drop in crude oil prices, the number of rigs engaged in exploration and production in North Dakota is showing stability, state data show.
The North Dakota Industrial Commission reports 65 rigs in active service for Monday, an increase of one from last week, but relatively stable. The rig count one month ago was 64, near the six-year low.
Crude oil prices below the $40 per barrel mark are prompting energy companies to spend less on exploration and production, a trend reflected in declining rig counts. Last week, U.S. supermajors Chevron and ConocoPhillips each announced plans to cut their budgets for 2016 by more than 20 percent.
In its much-watched report, oil services company Baker Hughes reported 709 rigs in active service across the United States, a 2.5 percent decline from the previous week and 62 percent lower than last year. North Dakota state data show the rig count is lower than last year by 64 percent.
North Dakota is the No. 2 oil producer in the country behind Texas. State data show 1.16 million barrels of oil produced per day in September, down 2 percent from August and 5.3 percent below the all-time high recorded in December 2014. In a monthly report, the U.S. Energy Information Administration expects output will decline in all but the most resilient shale basins in the country next month. None of the shale reserves areas with expected growth is in North Dakota.
A January report from the Federal Reserve Bank of Minneapolis said low crude oil prices were matched historically by lower rig counts, but looked to history for forecasts of a rebound. It notes crude oil prices fell from $145 per barrel in July 2008 to near $30 per barrel by December. From November 2008 to May 2008, rig counts in the Bakken reserve area dropped 63 percent. Rig counts recovered once oil moved back about $60 per barrel.
The World Bank was among those last week forecasting an oil market recovery by late 2016.