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Gulf Coast Oil Production Characterized by Cautious Growth

By Faith Munsell | Uncategorized | Comments are Closed | 27 October, 2017 | 0

Oil and gas is growing in the Gulf South, but low prices and an increasing supply mean the operations we service are still watching every penny. Let’s take a look at the changing production landscape, then review how Keystone meets the industry’s need for high-quality parts at competitive prices.

Rig Count Continues Its Rise

There are nearly twice as many active rigs in North America as there were this time last year. The higher rig count means there are fewer underutilized assets, which puts oilfield services companies in a stronger position. The giant rig suppliers like Halliburton and Schlumberger are raising prices on oil producers in response.

This gives smaller suppliers (like Keystone Energy Tools) an opportunity to provide value and personal service where the big guys can’t. For us, more rigs mean more orders for consumable products (like float valves) and capital products (like elevators) for drilling rigs. Since float valves are replaced 10-15 times per well, and since elevators need to be replaced whenever they wear out, those of us in oilfield supply are working hard to meet the demand.

On top of everything else, oil prices remain low. After trading above $50 per barrel for much of the first and second quarter, West Texas Intermediate (WTI) prices fell sharply over the summer and are now back to where they were earlier in the year. Even though prices have been creeping up, they remain low enough to compel drilling operations to pinch pennies wherever possible.

Keystone has made a niche for itself servicing these drilling operations, particularly the ones who need to cut costs with (often) smaller orders of high-quality oilfield tools, including drill pipe float valves, stabbing guides, baffle plates/valves, valve pullers, rotating mouseholes and tong blocks. The larger suppliers often can’t be bothered with these smaller orders of specialty products, and they certainly can’t match our personal service and expertise.

The Boom Close to Home

Although Keystone services oil and gas operations around the globe, we don’t have to look far to see opportunities for partnership. Here in Louisiana, for example, an old fracking “hotspot” is popular again.

The Haynesville Shale, a giant natural-gas field in the northwest part of the state, was all but abandoned when prices fell a few years ago. But in 2017, companies like Chesapeake and QEP Resources Inc., as well as a few newcomers, are back in the Haynesville, where gas production is currently over 7 billion cubic feet per day.

There are 44 active rigs active in the Louisiana parishes and Texas counties that make up the massive dry natural gas formation. The most active areas are in Caddo, Bienville, Bossier, DeSoto, Red River and Webster Parishes, plus adjacent areas in southwest Arkansas and east Texas.

The Haynesville rebound has been part of an overall Gulf Coast recovery that has seen the construction of new petrochemical facilities, fertilizer plants and gas-export terminals. Chesapeake and the other operators there have been extracting more by drilling and fracking longer wells. New technology is being used to re-frack old wells where production was considered complete.

The U.S. Energy Department forecasts that between now and 2040, consumption of natural gas will increase more than that of any other fuel source, which means the boom times in our backyard should continue for years to come.

It’s not all great news, however. The weak price performance over the last few months has been enough to impact U.S. shale production and growth. Domestic operators put the brakes on drilling plans as their expectations for a recovery in oil prices were lowered.

With the world’s top oilfield services companies complaining that shale growth is decelerating, there is no doubt the industry is gun-shy about drilling themselves into another depressed market.

Keystone: Here for the Long Haul

As a leading manufacturer and distributor of oilfield equipment, Keystone offers consumable and hard-to-find tools and supplies to upstream oil and natural gas drilling companies. Our product line includes the following:

  • Handling tools are used for suspending, moving and rotating tubulars in and around the well center and on the drill floor;
  • Keystone’s dies and inserts provide the accuracy you need for critical applications, with dies that securely grip the hardest strings of casing, tubing, and drill pipe and inserts designed to maximize your drill’s rate of penetration;
  • Keystone Energy Tools also has safety products, including safety flex handles for slips, safety handles for manual tongs, mud buckets and iron roughnecks, tong die drivers, safety make-up stands and slip lifting devices.

If you’ve ever received the wrong piece of equipment because one of the big suppliers didn’t take the time to get your order right, you know how easy it is to feel like you’re being ignored. That won’t happen with us. Even on small jobs, Keystone takes the time and care to make sure you get the correct product.

Keystone carries quality oilfield tools at a price you can afford and at a level of quality that ensures consistent reliable operation. Keystone’s representatives provide fast turnaround on request for quotes. We carry the deepest “stocked” inventory of hard-to-find tools and equipment, and we specialize in helping service and drilling contractors get back on-line in the shortest amount of time.

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