What you will see when you look at the graph of the number of oil rigs in the United States is an upward
trend for five months in a row. After a drastic drop in 2015, the rigs are returning at the fastest rate seen
in the past two years. The number of active rigs right now is about 712 which is more than double what
was there at the same time last year. Better yet, the trend does not seem to stop anytime soon. The rigs
can only become more.
Main reasons for oil rigs increasing
Analysts are trying to come up with the reasons why there has been a steady increase of the rigs, and
some of them include the following.
- Stabilized prices
The historic drop in the prices of oil globally was more or less on top of the list for the fall of the number
of rigs in the first case. The crash led to the collapse of some of the oil and gas development firms that
could not stand the waves. With the drop in the number of rigs in the oil rich states came a massive loss
of jobs. The increase, however, raises hope for upstream jobs again with most companies invest in oil
- Hydraulic fracturing
The previously inaccessible reservoirs can now be mined thanks to hydraulic fracturing. The process uses
a mixture of hot water to extract natural gas or oil from the rocks. The latest technology that allows low-
cost production of oil has had many considering oil well investment. This has led to what is now
considered a revolution in the energy industry.
Also, the technologies allow the country to produce more oil than it did before and had enough reserves
for the output. Besides that, the International Energy Agency (IEA) said in a report that a forecast shows
that America could produce 14.2 million barrels per day in the next half decade. That would be a record
high compared to what Saudi Arabia is producing currently – slightly over 10 million barrels a day.
- The Permian Basin
The federal Energy Information Administration reported that most of the oil well drilling in the country
was mainly in the state of Texas. The concentration of oil development companies is in the Permian
Basin which covers mostly the Western part of Texas and the southeastern part of New Mexico. Matter
of fact, the basin has about as many fully functioning oil rigs as the rest of the United States combined.
As such, the area is one of the leading oil and gas production sites.
While other regions closed most of their rigs as a result of falling off the oil prices, the Permian had the
production of oil spiking since the beginning of 2015. What makes the area best suited for the
production of the black gold, is that its accessibility is relatively cheap. Furthermore, the refinery is not a
problem, thanks to the availability of refineries in the region.