U.S. May Need More Foreign Oil as Drilling Falls
Source: Reuters, Joshua Schneyer (3/24/09)
"I'd expect a sharp decline in U.S.-produced oil and gas a year or two from now."
U.S. oil output is poised to rise 8% this year to 5.4 million barrels per day - the first increase since 1991 after a six-year rally in prices fed exploration and production projects - according to the U.S. Department of Energy.
But the drilling spree has collapsed alongside a 65% slump in oil prices since last July, putting any increase in domestic output at risk and raising the specter of increased foreign dependence in years to come.
"Drillers are like farmers; we only increase activity when the future looks good," said Dewey Bartlett Jr., who chairs the National Stripper Well Association. "I'd expect a sharp decline in U.S.-produced oil and gas a year or two from now."
Since September, the number of U.S. rigs drilling for oil and natural gas has dropped almost 50% to 1,085 rigs, the quickest decline since 1986, according to data from oil services company Baker Hughes (BHI.N).
The U.S. rig count may fall by another 22% this year to 850, one U.S. government energy expert said, requesting anonymity since his forecast is not official, while oilfield services company Weatherford (WFT.N) sees the count bottoming out at about 900.
It can take months or years before a plunge in the rig-count cuts production, but investment in finding new reserves or maintaining marginal fields is falling, dimming the prospects for future output.
The White House says it aims to "eliminate our current imports from the Middle East and Venezuela within 10 years."