Donate Newsletters
Home » Climate + Energy » Low Oil Prices = Less Oil Drilling

Low Oil Prices = Less Oil Drilling

North Dakota oil drilling collapsed after oil prices fell.

SwatchJunkies

A few years back, when most oil industry analysts thought that oil prices would remain in the $100-per-barrel range for the foreseeable future, domestic oil companies found that they could earn a healthy profit by fracking “tight oil” out of shale rock formations. Drilling activity in North Dakota, home of the oil-rich Bakken Shale, shot through the roof, catapulting the Flickertail State (yes, that’s an actual nickname for North Dakota) into the #2 oil-producing state in the country, second only to Texas.

But starting in the summer of 2014, global oil prices began to collapse. Within a few months, US prices had fallen below $50 per barrel, and oil drilling activity in North Dakota collapsed. Take a look at the oil drilling trend for North Dakota, derived from the Baker Hughes North American rotary rig count.

North Dakota oil drilling collapsed after oil prices fell.
North Dakota oil drilling collapsed after oil prices fell. North America Rotary Rig County data by Baker Hughes

It’s perhaps a little early to see the drilling collapse in the state’s oil production statistics. But some Wall Street analysts have certainly noticed the drilling trend and are starting to speculate that the collapse in shale oil drilling could lead to a new round of oil price volatility.

For the Pacific Northwest—where the oil industry has proposed a host of oil-by-rail projects up and down the coast—the implications of this trend are clear: the oil business is fraught with uncertainty. For years, the oil industry thought that prices would stay high, and that fracking the Bakken would be a stable business. So they planned massive terminal projects to handle all of the new oil they expected to produce.

But if today’s rig count is to be believed, it’s not at all clear that Bakken fracking is economically sustainable. And that raises huge questions about the economic viability of Northwest oil-by-rail projects. Are we seeing the early stages of the same sort of economic uncertainty that have placed Northwest coal terminals in financial limbo? Could the collapse in Bakken fracking turn massive oil-by-rail proposals into “stranded assets“? Stay tuned!!

Talk to the Author

SwatchJunkies

Talk to the Author

Clark Williams-Derry

Clark Williams-Derry focuses on United States and global and energy markets, particularly issues affecting the Western United States.

About Sightline

Sightline Institute is an independent, nonpartisan, nonprofit think tank providing leading original analysis of democracy, forests, energy, and housing policy in the Pacific Northwest, Alaska, British Columbia, and beyond.

6 thoughts on “Low Oil Prices = Less Oil Drilling”

  1. “Volatility” is the key word.

    A lot of people have been banking on “peak oil” being synonymous with “high prices.” But what we’re finding is that the backside of Hubbert’s Curve is not a smooth descent, but rather a nasty, ragged sawtooth, that can cut you if you’re not careful and prepared!

    • Bingo.

      Volatility is making it very hard for the oil industry to figure out how to invest…and making it much more likely that many of its investments won’t pan out.

  2. All the more reason to wean ourselves off of our petroleum addiction ASAP. Shift to low-carbon modes: walking, bikes, transit and (ideally, shared) electric vehicles.

  3. The Bakken oil should be saved in the ground to store carbon to mitigate global warming. Someday after the atmosphere is stabilized it could help produce and deliver food and medicine for future generations. The slower it is developed the better. It also would help the price for the producers. Wasting huge amounts of fuel to export this oil to Asia is nuts.

Comments are closed.

For press inquiries and interview requests, please contact Martina Pansze.

Sightline Institute is a 501(c)3 non-profit organization and does not support, endorse, or oppose any candidate or political party.

You can power us forward on sustainable solutions.

See an error? Have a question?

Find the author's contact information on our staff page to reach out to them, or send a message to editor@sightline.org.

Privacy Overview
Sightline Institute

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognizing you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

3rd Party Cookies

This website uses Google Analytics to collect anonymous information such as the number of visitors to the site, and the most popular pages.

Keeping this cookie enabled helps us to improve our website.

Additional Cookies

This website uses social media to collect anonymous information such as which platform are our users coming from.

Keeping this cookie enabled helps us better reach our audiences.