Permian Basin Drilling Revival Underway in Texas, New Mexico
The Permian Basin is showing new signs of life in both Texas and New Mexico, including a growing rig count and an apparent increase in heavy oilfield truck traffic along the region’s rural roads and highways.
Permian Basin Accounts for Half of Nation’s Active Drilling Rigs
According to Baker Hughes, there were 351 active oil rigs operating in the United States as of December 30th, an increase of three from the previous week. While that figure represents a significant decline from the 796 operating rigs recorded during the same period in 2019, it appears most of the gains in recent months have come from the Permian Basin. In fact, the region now accounts for 175 of the active rigs currently operating in the United States.
Observers have also noted other signs of recovery in the Permian, including the return of heavy oilfield trucks to the region.
“You can see an increased movement of people and equipment,” New Mexico Mayor Sam Cobb recently told the Santa Fe New Mexican. “I drove through the community this afternoon, and I’m seeing a lot more activity.”
There are also signs that at least some laid-off oilfield employees are heading back to work.
“I do get the sense that more people are hiring, and they’re starting to open wells back up, and they need people to take care of them,” said one recently rehired Occidental Petroleum worker. “You get the feeling that it’s kind of coming back.”
Oil Went Negative Amid Coronavirus Shutdowns
While the number of Permian rigs is still significantly lower than the same period in 2019, the region’s rig count has seen steady improvement since the economic fallout from the coronavirus pandemic sent oil prices into negative territory in April. No longer able to turn a profit, Permian drillers shut-in hundreds of wells in Texas and New Mexico, and thousands of oilfield workers watched helplessly as their well-paying jobs disappeared.
Even before the coronavirus-related downturn, the Permian Basin and the rest of the nation’s energy industry were already suffering from an oil glut and persistently low prices. But according to the Houston Chronicle, the New Year began with prices for West Texas Crude hovering just under $50 per barrel, a level that allows Permian drillers to see a profit.
Oilfield Unemployment Remains High in the Permian
Unfortunately, the Permian Basin’s vital energy industry isn’t out of the woods yet. While some oilfield workers have been rehired, unemployment remains high across the region despite the recent production improvements.
The disappointing job numbers likely reflect the reality that many drillers are taking advantage of automation and shifting away from more labor-intensive production methods. That means fewer workers will be needed to extract the same volume of oil from the ground in the future..
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Our Undefeated Oilfield Accident Lawyers continue to monitor the economic impact of the coronavirus pandemic on Permian Basin energy production in Texas and New Mexico and will post additional updates as new information becomes available.
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