While many American families are no doubt excited about the prospect of lower prices at the pump, those in the energy industry are bracing for the changes that falling prices will inevitably bring. While states like Texas and North Dakota will certainly be affected, RigZone reports that California oil drilling companies will be among the hardest hit.
At its current standing, the California rig count is at its lowest since October 2009, according to oilfield services company Baker Hughes. The number of active rigs has fallen from 48 to 21 since June 2014. However, it remains the third-largest oil state, producing approximately 560,000 barrels per day, according to the U.S. Energy Information Administration.
Los Angeles Basin oilfields once ranked among the most productive in the country, but the combination of the high-cost of production and falling demand have made the state less attractive to producers. California wells produce a viscous oil that requires the injection of large amounts of water or steam to bring to the surface. However, this has not deterred all organization.
Ensign Energy Services said that although market conditions have changed, they will restructure and continue production efforts.
"We are not exiting California," an Ensign spokesperson told the Calgary Herald. "Just looking at the low oil price environment we're in, we're anticipating there will be less demand for drilling services in the future, hopefully not, but we don't know."
The current volatility in the market necessitates that producers be ready to quickly adjust to changing conditions. Oil and gas strategy consulting can help organizations remain agile and ensure that resources are being utilized in a manner that provides the highest return on investment.