Rig counts are plunging in the Permian Basin and fewer energy companies are looking to drill in Texas, yet another sign that the global coronavirus pandemic is taking a heavy toll on the Lone Star State’s vital oil and natural gas industry.
Texas Leads Nation’s Falling Rig Count
According to Baker Hughes, the nationwide rig count fell by 73 to 529 last week.
Texas – home to more than half of the nation’s drilling rigs — led the downturn with a decline of 40 to 282. During the same period, New Mexico’s count fell by 9 to 84.
The Permian Basin – the oil-rich region that stretches from west Texas to southeast New Mexico – saw its rig count sink by 33 to 283.
Texas Drilling Permits Down More than 1/3
Eddy County, Texas – where the rig count fell by two to 46 — remains the most active county in the Permian. Midland County recorded the greatest drop, with the number of active rigs falling from 39 to 42.
Meanwhile, just 71 new drilling permits were filed with the Texas Railroad Commission during the week of April 8th through April 14th – a 36% drop from the previous week. According to The Houston Chronicle, oil companies had filed an average of 230 new drilling permits each week during 2019.
Low Demand Drives Oil Below $20/Barrel
Much of the world has been in lockdown mode since March, when the novel coronavirus began ravaging countries outside of China.
With the global case count now well above 2 million, collapsing demand for oil has driven the price of crude below $20 per barrel. With prices so low and storage capacity shrinking, it’s all but impossible for most drillers to turn a profit.
Oil and Gas Industry Cuts Over 6,000 Jobs in Single Day
While rig counts fall, layoffs in the oil and gas sector continue to rise.
The most recent cuts were announced last week, when Texas energy companies shed more than 6,000 jobs in a single day. According to the Chronicle, the largest cuts came from Houston-based Weatherford International, which said on Wednesday that it be would be laying off one-fourth of its 24,000-person workforce.
That same day, Houston’s Baker Hughes and Halliburton announced they would be laying off a combined 400 employees at three locations in Oklahoma and Colorado. Haliburton had already furloughed 3,500 employees at its Houston headquarters through May, cut executive salaries, and cancelled an end-of-year contribution to employee retirement plans.
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