The two biggest shale plays in Texas saw another seven oil and gas rigs shut down this week as the overall rig continued its descent to a 17-year low.
The Eagle Ford Shale in South Texas saw four more rigs go dark this week, while the Permian Basin in West Texas lost another three rigs, according to Baker Hughes data.
The number of rigs drilling for oil in the U.S. dipped by five from last week down to 510 rigs, while the rigs seeking gas dropped by eight down to only 127 rigs. The oil rig count is now down more than 68 percent from its peak of 1,609 in October 2014 before oil prices began plummeting.
Texas lost seven total rigs, falling below 300 to 294 rigs. A year ago, Texas had more than 750 active rigs. The Permian Basin still leads the nation at 199 active rigs, while the Eagle Ford is second in the U.S. with 64 rigs.
The gas rig losses likely came from Louisiana’s Haynesville shale and the northeastern Marcellus shale play. The Haynesville went from 23 active rigs to 18 rigs this week, while the Marcellus lost three rigs and dropped down to 35 active drillers.
The first half of 2016 likely will continue to see the depletion of the nation’s rig count, said Bill Herbert, an analyst at energy investment bank Simmons & Company International.
“The duration of this purgatory really remains the threshold question,” Herbert said.
The U.S. benchmark for oil rebounded Friday but still hovers just above $31 a barrel, dramatically below the $100 per barrel heyday of as recently as 2014.
The focus is more on the slope of the eventual recovery than the floor for oil prices, Herbert said. Everyone expects a difficult 2016 for the energy sector, he said, but a “slow and labored” recovery could carry a lot of pain into 2017 as well. The oil price failing to rebound to $50 a barrel by the end of the year won’t cut it, he said.
“That’s not going to be sufficient for this industry,” Herbert said.