(Reuters) – The land rush that drove thousands of roughnecks, drillers and leasing agents to North Dakota’s oilfields is cooling off, bringing down costs in the country’s most expensive major energy basin.
Service costs are falling as companies concentrate drilling in fewer locations, industry executives say, while equipment rents are down after demand evaporated due to a nationwide glut of natural gas.
This pricing squeeze has pinched oil service companies around North America from Halliburton Co (HAL.N) and Baker Hughes Inc (BHI.N) on down. But it has helped producers such as Continental Resources Inc (CLR.N) and Whiting Petroleum Corp (WLL.N), big players in the North Dakota-centered Bakken basin.
Leaseholders have a set number of years to start producing on a property or surrender the lease, and that pressure created a frenzy of drilling activity. North Dakota has become the No. 2 oil-producing U.S. state after Texas.