The Baker Hughes Inc. count of active U.S. rotary rigs as of June 12 fell to less than 600 the first time since that tally began in 1940.
The previous modern record low was set at 610 the previous week (OGJ, June 15, Newsletter). Baker Hughes reported about 1,400 rigs idle in the U.S. last week.
Using a different criteria, the Smith International count of U.S. active rigs fell seven units to 653 the week ended June 12, compared with a count of 910 the previous year.
Baker Hughes predecessor Hughes Tool Co. began keeping monthly records of active U.S. rigs in January 1940. The lowest monthly count that year was 857. It changed to a weekly count in January 1949.
The milestone was met with calls for relief for the U.S. upstream sector from industry and government officials in Washington.
RIG COUNT LOW
The Baker Hughes tally of active rigs fell 14 units to 596 the week ended June 12, down one-third from 871 the same time a year ago.
The Baker Hughes 4 week and cumulative year to date average rig counts fell by comparable percentages.
Texas accounted for most of the weekly decline, dropping nine units.
Of the key producing states, the only one posting a noteworthy increase for the week was New Mexico, up seven units.
Lagging oil prices and gas prices have generally pulled down the rig count most weeks since early December 1991. Since the week ended Dec. 6, 1991, the tally of active rigs drilling for oil has fallen 163 units to 335 and for gas 57 to 242. But the gas rig count, apparently buoyed by a surprising recent turnaround in gas prices, has leveled off since late March-early April. A count of miscellaneous drilling has remained at 12-24 rigs during winter and spring.
The Baker Hughes U.S. rig count in recent months has shown its worst performance since the oil price collapse of 1986, when it plunged to a post-1940 low of 663. It slipped below that level the last week of January and has fallen every week except seven since then.
IPAA CALLS FOR RELIEF
Denise Bode, Independent Petroleum Association of America president, said, "The industry is at a standstill. This all time low rig count is a national tragedy. This horrible news is a battle cry for action,.
"I don't know how low it can go, and I don't want to wait to find out. Now is the time for leadership by our elected officials. Congress must act now on national energy strategy legislation."
"Each week that passes, more and more Americans lose their jobs in an industry that is vital to our nation's economic stability and energy security.
"In the last 10 months, 45,000 people lost their jobs in this industry. More than 400,000 people have been put out of work since 1982."
IPAA brought an idle drilling rig to Washington last week and erected it in the shadow of the Capitol Building to dramatize the plight of the domestic industry.
BUSH VIEW
President Bush called the rig count "discouraging news."
He said, "We cannot allow conditions in the U.S. oil and gas industry to continue."
Bush plans to meet with key advisers to determine what can be done to help the industry.
"In addition, I urge Congress to act promptly on the energy legislation now before it. That legislation includes nearly $850 million in alternative minimum tax relief, which is desperately needed by beleaguered independent oil and gas producers. It is time to put rigs and roughnecks back to work.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
