US Oil Went Back To Work in 2021

2020 was a year of turmoil for the upstream industry in the US, while 2021 proved to be a year of recovery.

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In what appears be a sign of the resiliency of the US oil and gas industry, the number of active rigs as of December was up by 67% year-over-year. This is according to the Baker Hughes rig count which reported 586 onshore drilling rigs were turning to the right in the US by the end of 2021.

The big uptick reflects the deep cuts made in early 2020 when much of the US onshore sector was forced to send rigs back to the yard as US oil prices fell into negative pricing territory for the first time in history.

In December 2019, just weeks before COVID-19 would become a global concern, the US boasted close to 790 active rigs.

Despite more activity, other data from the US Energy Information Administration (EIA) show that US oil output in 2021 was still down about 100,000 B/D from 2020 and down more than 1.1 million B/D from 2019.

As of November, the EIA estimated that total US crude production stood at around 11.7 million B/D and now forecasts that figure to rise to 12.1 million B/D by the end of 2022.

The declines seen over the past year are partially attributed to the Texas ice storm last February that knocked out production facilities and hurricanes that struck the US Gulf Coast in August.

However, the US EIA also cited a significant reduction in capital outlay for US crude projects as operators focused on paying down debts and returning cash to their investors. In 2020, the US saw 69 corporate bankruptcies in the energy sector, per the EIA.