The pace of oil drilling could slow in the Bakken formation in North Dakota and also in the Eagle Ford shale in South Texas if US prices were to drop below $80/bbl for a sustained period, said Baker Hughes Inc.’s president and chief executive officer.
“I think the shoe’s dropping in South Texas, no doubt about it,” Martin S. Craighead said during a July 20 second-quarter Baker Hughes earnings conference call. “I’m a little bit more concerned about the Bakken than I am (about) the Permian [basin],” he said.
Separately, Barclays Capital analyst Amrita Sen wrote in a July 10 research note that North Dakota might be experiencing a slowdown after the state has repeatedly reported record drilling. Both the Bakken and Eagle Ford have contributed to the US rig count and oil production statistics.
“The largest drillers in the Bakken are all reducing their rig counts this month, although none acknowledge a change in drilling plans,” Sen said, citing a sharp drop in oil prices during June. That oil price drop cast doubts about the viability of shale production at prices below $80/bbl.
“Horizontal drilling is expensive, as drilling levels must be maintained sufficiently to veil the effect of steep decline rates,” Sen said. “The technique is particularly intensive in the use of fracturing crews and other oil service industry inputs.”
North Dakota's Industrial Commission showed 210 rigs operated in the state during early July, down by 5 from June levels. State oil regulators have said they do not expect a constant climb in the rig count.
“What we expect is a bit of a saw-tooth pattern in our rig count as newbuilt rigs are brought in,” Lynn Helms, director of NDIC’s oil and gas division, told Reuters earlier this month. “Once they're up and operating, then older, inefficient rigs will be moved out.”