Natural-Gas Drilling Rig Count Is ‘Misleading,’ Pioneer CEO Says

The number of U.S. natural-gas rigs is “misleading” because some are actually drilling for oil and liquids, Pioneer (PXD) Natural Resources Co. Chairman and Chief Executive Officer Scott Sheffield said.

There are probably only a couple of hundred drilling rigs exploring in pure or “dry” gas fields, Sheffield said in an interview at a Hart Energy conference in Fort Worth, Texas today. In Texas, some rigs are classified as drilling for gas because state rules allow operators to hold more acreage with a gas well, Sheffield said.

Pioneer has 12 rigs in Texas’ Eagle Ford and it’s reporting two oil rigs and 10 rigs drilling for gas, even though the company is primarily drilling for oil, he said. Texas Railroad Commission rules allow operators to hold 640 acres with a gas well and only 40 or 80 acres with an oil well, he said.

There were 631 rigs drilling for gas in the U.S. as of April 20, according to Baker Hughes Inc. (BHI) That was the first time in three weeks the number of gas rigs has increased. The rig count has dropped 33 percent since Oct. 14 as the price of gas has declined.

Gas settled at $1.975 per million British thermal units on the New York Mercantile Exchange. The futures have fallen 34 percent this year.

“When it says 600 gas rigs, I’m guessing there’s probably only a couple hundred true dry-gas rigs in that 600,” Sheffield said.

To contact the reporter on this story: Mike Lee in Dallas at mlee326@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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