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Why North America Will Have Dry Oil Rigs In 2020?

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Demand for oil will be the lowest for North America in the coming months, an analysis by Rystad Energy has determined. The number of oil and natural gas wells to be drilled around the world is being seen as the lowest in North America.

It is been estimated that demand is going to be low this year, owing to the Covid-19 situation that has slowed consumption and demand for oil worldwide. The estimated drop is as much as 23 percent (from 71,946 wells in 2019 to 55,350).

The report also confirms that the United States would remain the “hotspot” for onshore drilling tools, while Norway is expected to top offshore spending.

A modest recovery is only going to be seen by the end of the year. However, drilling activities will continue to be lower than 50percent of what they were in 2019. Additionally, looking at the current scenario due slow down led by the pandemic, most exploration and production (E&P) companies are likely to continue to sharply reduce their activity for 2020 because of the pandemic and the pullback in demand.

According to Rystad’s Reza Hassan Kazmi, energy services analyst “Both new wells and drilling lengths will be pared down as E&Ps scale down investments, affecting the entire supply chain associated with these services. This includes drilling tools, which will decline by 35% in 2020 compared to 2019.”

Drilling tools is referred to as blowout preventers, downhole tools, drill bits, drill pipe, jars, drill collars and other equipment except for downhole pumps used for artificial lift.

Again in the purchase segment, drilling tools will be hit. The purchases are forecast to decline to $10 billion in 2020 from what they were at $16 billion in 2019. North America spends will also take a big hit, with spending in Africa down by 36%, and Russian spending off 27%.

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