Statewide oil rig count down 48 percent, refining activity holds

Colorado has lost 36 rigs exploring for oil and natural gas since October, a 48-percent decline that ranks the state as having the highest percentage rig count decrease of eight oil-producing states, according to a report from analyst firm IHS.

The state’s rig count dropped to 39 on March 6 from 75 October 31, according to Englewood-based IHS, which also looked at rig counts in Texas, Oklahoma, North Dakota, New Mexico, Louisiana, Pennsylvania and Ohio. U.S. oil producers have cut capital budgets and laid off workers amid an oil price downturn.

IHS also reported that capital spending by oil and gas producers in Colorado had fallen 26 percent to $5.5 billion this year from $7.4 billion last year.

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“In Colorado, the state’s nascent oil plays have also been stymied by the price declines,” reads the IHS report.

“The falling rig counts are too recent to show up yet in the state economic data, but their impacts will appear as the year progresses, as fewer operating rigs translates into fewer jobs,” the report adds.

At 42 percent, North Dakota had the second-highest percentage drop in its rig count, IHS reported. Texas, which accounts for nearly half of total U.S. land rigs, lost the most rigs, to 537 from 900, a 40 percent decline during the period.

Despite plummeting oil exploration this year, oil production still will increase as companies continue to extract oil from existing wells and step up drilling in the most efficient plays, IHS said.

“The negative impacts of low oil prices this year will be concentrated in the upstream activities –drilling and exploration – with downstream activity – refining, petrochemicals, etc. – holding up well and in some instances benefiting from lower oil prices,” IHS said.