The oil and gas industry has gained gradually in recent weeks as the U.S. economy continues its recovery from the COVID-19 pandemic and subsequent economic downturn as public health advisories and stay-at-home orders across the country led to a decline in demand for fuel while the U.S. continued to meet record-breaking production levels.
The glut of oil supplies and lack of takeaway and storage capacity led the price per barrel to historically drop as low as -$38 per barrel, records show, on April 20.
Since the collapse, prices have steadily risen as production was curtailed and infrastructural capacity continue to grow.
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Oryx Delaware Oil Transport announced an open season last month, aiming to obtain volume commitments to expand the capacity of its pipeline system in Crane, Texas – about 32 miles south of Odessa in the Texas side of the Permian Basin.
“The open season process provides potential shippers the opportunity to obtain firm capacity on the expansion by making volume commitments to ODOT during the binding open season timeframe,” read an Oryx news release.
“Shippers that elect to execute a transportation services agreement and make volume commitments on the Expansion during the binding open season will receive firm capacity rights up to an amount equal to each shipper’s elected volume commitment.”
The open season began on May 18 and was scheduled to close on June 17.
But oil prices continued to struggle to cross the $40 per barrel threshold, as domestic crude was trading at about $37 per barrel as of Thursday, per data from the Chicago Mercantile Exchange, marking a slight climb from $35 per barrel at the end of May.
Price saw a dramatic growth from April’s historic lows, climbing to about $20 per barrel by the end of the month, and continuing to grow into June.
But significant recovery remained to be needed for the industry to return to its previous production levels.
Baker Hughes reported New Mexico’s rig count continued to fall in May, down to 61 rigs on May 29 from 66 at the start of the month.
In May 2019, New Mexico averaged 102 active drilling rigs and was averaging 106 at the start of this year in January 2020.
By February 2020, New Mexico had continued to grow in active rigs, averaging 114 that month and in March.
The drop off in New Mexico’s rigs began in April which started at 100 rigs but ended at a loss of 30 down to just 70 rigs by the end of that month.
And the trend continued in…
Read More: Oil and gas struggles to recover as rig counts drop in New Mexico