Roundup: U.S. oil industry undergo reshuffle to keep edge amid low prices

The U.S. oil industry, which has been reeling from the pinch caused by lower prices of the commodity on the international market, has been striving hard to adapt to the changing scenario so as to remain in the black.

Grant Nuelle, oil & gas economist with the U.S. Energy Information Administration (EIA), predicts that the year of 2015 will be "the worst" for the country's oil industry as the lower international oil price has reduced the profits of the sector, especially that of the tight oil companies.

"I will say 2015 will be the worst," Nuelle told Xinhua at the two-day 2015 EIA Energy Conference held here. "We expected the ( oil) production will start falling. If it didn't fall last month it will start falling this month." The conference ended Tuesday.

Tight oil is a kind of unconventional oil resources. The exploitation of tight oil is more expensive compared with conventional oil resources, making tight oil industry more sensitive to the oil price changes and suffer more when the international oil prices have seen a free-fall since the summer of 2014, from more than 100 U.S. dollars a barrel to about 50 dollars per barrel at present.

The U.S. oil output increased by 80 percent to over 9 million barrels per day from 2008 to 2014. Tight oil had been a major driver behind the U.S. oil output surge in the past years.

The growth rate of tight oil, however, has continued slowing down since January because of low oil prices on the international market. In April 2015, the United States produced 4.5 million barrels of tight oil per day, almost no increase from the level in March, according to the report released by Nuelle at the 2015 EIA Energy Conference.

The tight oil production started to fall in May. The daily reduction was expected to reach about 75,000 barrels in June compared with May and the falling will speed up in July, with 100, 000 barrels less per day compare with June, if the current low oil price continues, said the report.

Most U.S. tight oil companies cannot bear prices lower than 40 dollars a barrel at present, even though they have tried hard to continue reducing the cost by applying better technology, said Nuelle.

The sharp falling oil price has seriously drained the profits of tight oil companies, forcing some of them to leave the market or to opt for changes such as reducing the output.

Capital expenditure started dropping along with the falling oil prices, given capital expenditure growth once reached its peak in the first quarter 2014, over 60 percent higher than the same period of 2013. In the first quarter of 2015, capital expenditure has been reduced to over 20 percent less than the same period of 2014.

Rig counts have begun a sharp drop since the end of 2014, according to Nuelle.

The United States had only 859 rigs on June 12, less than half of 1,854 registered on the same day of 2014, according to the data of Baker Hughes, the world's third largest oilfield services company.

Narrowing profits and lower output have also forced oil companies to lay off more workers since the November last year, and the trend has become more serious in 2015. In March, oil industry has cut more than 2 percent of jobs than February.

Nuelle predicted the falling trend of oil prices will last to the middle of 2016 when they pick up, as more offshore oil output will be put on line and oil companies continue cutting their cost by applying new technology.

"It will be modest and slow growth of onshore side but largely been picked up by Gulf of Mexico decisions that were made two, three, five years ago to start production," said Nuelle. Endite