Record low rig counts are a sure sign of an energy industry incrisis, according to the Independent Petroleum Association ofAmerica (IPAA). The Baker Hughes rotary rig count dated Jan. 22 forNorth America was at 942, a steep drop from the count one year agoof 1,508.

Last week’s rig count dropped to an all-time low of 588 rotaryrigs in the United States, surpassing the previous record low of596 in April 1992. One year ago the U.S. rotary rig count was 996.

“The U.S. oil and gas industry is in a state of emergency and[last week’s] rig count report is just one more symptom of thecancer that is eating this industry alive – low oil prices causedby foreign oil flooding the world market,” said IPAA President GilThurm. He said the low rig count suggests producers are not onlybeing forced to shut down production, but they are also unable tokeep drilling to meet the country’s future energy demands.

Of the 588 rigs active in the United States last week, 122 werein pursuit of oil, and 465 were seeking natural gas; one was filedunder miscellaneous. A year ago, 396 U.S. rigs were seeking oil and595 were seeking gas, with five filed under miscellaneous. Whilethe overall number of rigs has dropped precipitously, the ratio ofrigs drilling for gas in the U.S. relative to those drilling foroil has increased, from 1.5 gas rigs for every oil rig a year agoto 3.8 gas rigs for every oil rig last week.

“It is important to understand that the oil industry is directlytied to the gas industry,” Thurm said. “We share the sameinfrastructure, meaning the same rig hands, roustabouts, engineers,geologists and scientists. When there is a crude oil downturn, itwill inevitably slow the natural gas business as well, as thesenumbers indicate.

“These dreadful statistics reinforce what we’ve been tellingCongress and [the] administration for the last 13 months. The moststrategic industry in our country is dying on the vine, and we needhelp fast. Now is an awful time for independent oil producers. Ifpolicymakers don’t step up to the plate and take immediate action,they are going to witness the meltdown of our U.S. production baseand the demise of domestic producers.”

IPAA expects to release “in a few weeks” results of a survey ofindependent producers that will show damage done to independents bylow commodity prices.

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