Photo by olle svensson (CC BY 2.0)

Some North Dakota companies have shut down 40 percent of their operations as plummeting oil prices render the industry far less viable than during the boom of the past five years.

The Guardian reports:

Rigs across the US are being deactivated at a rate of nearly 100 a week. In the final week of January, 94 were pulled offline – the most since 1987, according to oil services company Baker Hughes. The number of active rigs fell by from 1,609 in October to 1,223 in January and some experts predict fewer than 1,000 will remain by the end of the year.

… Oil companies big and small have been knocked by falling prices. Chevron last month reported a 30% fall in quarterly profits (its worst since 2009), while oil exploration company ConocoPhillips swung to a loss as its average realised price fell 19% to $52.88 per barrel. Continental Resources, one of the largest drillers in North Dakota’s Bakken shale, said late last year it would cut its active rigs by 40% this year, with three-quarters of cuts coming by April. North Dakota’s Department of Mineral Resources says the state’s producers need a wellhead price of around $55-$65 to sustain current output of 1.2m barrels per day.

… A collapse in US oil production – now at 12m barrels a day after rising from 5m in 2008 – is likely to have a big impact on the nation’s economy. The fracking boom has made millionaires out of landowners, strengthened the country’s energy security and created hundreds of thousands of well-paid jobs. It’s a very different story from 2012, when President Obama told the nation in his State of the Union address that fracking could create 600,000 jobs by the end of the decade.

The irony that the global economy and its managers have curtailed — for the time being, at least — a controversial industry is not lost on some readers. Keep reading here.

— Posted by Alexander Reed Kelly.


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