OPEC Cuts 'Steady The Ship' For U.S. Oil Production

May 26, 2017

A rig drills for oil deep underground east of Williston. It's one of 50 rigs operating today, up from just 29 one year ago.
Credit Amy Sisk / Inside Energy

The Organization of Petroleum Exporting Countries will continue curbing oil output through March 2018, opening the door for more production in the United States.

 

Late last year, OPEC -- along with Russia -- agreed to cut production. 

The cartel wanted to boost oil prices amid an oversupply of crude on the global market. 

But OPEC's cuts gave the United States an opportunity to fill in the gap. Oil production here soared and prices have moved up, but more slowly than anticipated. 

As a result of all this, OPEC on Thursday decided to keep its cuts in place. 

"For North Dakota, it steadies the ship," said Lynn Helms, North Dakota's director of mineral resources.

OPEC’s decision helps ensure the price of oil stays around $50 per barrel, possibly climbing a bit in 2018, he said.

But that price doesn’t mean rig counts will continue to go up at the same pace they have the last year. Since May 2016, the number of rigs drilling for oil in the United States has more than doubled to 900. 

Helms predicts that pace will keep going in Texas’s Permian Basin. It’s a hot new play where oil companies have spent a lot of money on leases and land -- and have to drill to maintain those leases. 

"That’s going to force the other plays to kind of hold the course, so to speak," he said.

Older oil fields where plenty of drilling has already occurred, such as those in North Dakota, Wyoming and Colorado, are not likely to continue adding on more rigs like they did this past year.