Kemp: California Oil Drillers Hit Hard By Tumbling Prices

Kemp: California Oil Drillers Hit Hard By Tumbling Prices
California's oil industry is being hit harder than any other state by falling prices because of the comparatively poor quality of its crude and its aging fields.

Reuters

John Kemp is a Reuters market analyst. The views expressed are his own

LONDON, Jan 14 (Reuters) - California's oil industry is being hit harder than any other state by falling prices because of the comparatively poor quality of its crude and its aging fields.

The number of active drilling rigs in the state has more than halved since June 2014, from 48 to just 21, according to oilfield services company Baker Hughes (http://link.reuters.com/ruz73w).

The California rig count is the lowest since October 2009, when producers were struggling with low prices in the aftermath of the global financial crisis and deep recession that began a year earlier.

California's high-cost and low-productivity oil industry has always been vulnerable to falling prices and exhibits deep especially cycles in activity rates.

It is still the third-largest oil producing state in the union, producing almost 560,000 barrels per day, according to the U.S. Energy Information Administration.

Oil fields in the Los Angeles Basin and around Bakersfield in Kern County were once among the largest and most productive in the United States.


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Dr. Tom Williams | Jan. 15, 2015
Where have you been for the last two years?? For over two years, Bakken crude can be delivered to LA, StaMaria, Bakersfield, and Benecia-SanPablo Bay for a cheaper prices than from California - and it is API30+ rather than 20- gravity. Since Dakotas dont have the refineries and since the TX crudes have glutted the TX refineries even at deep discounts, Dakotas really have only one market - California!!! Also if we can get congress to repeal the Jones Act and Crude Export Ban then Dakota crudes could go to Japan, Korea, Taiwan, and China...as terminals exist at most coastal refineries.... So the Saudi discounts, California premiums, and cheap railroad have already affected California producers who cant compete with the Dakota producers...


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