U.S. Energy Rigs Decline to Lowest Level in Six Months
Rigs targeting oil and natural gas in the U.S. fell by four this week to a six-month low of 1,739, according to Baker Hughes Inc. (BHI)
Oil rigs declined by six to 1,361, data posted on the company’s website show. The gas count rose by three to 372 and miscellaneous rigs dropped one to six, the Houston-based field services company said.
The total count, the lowest since April 5, is down from 1,763 at the end of last year as drilling in the Gulf of Mexico still hasn’t recovered from Tropical Storm Karen, which caused companies to shut down operations in the Gulf of Mexico. More efficient drilling has weakened demand for rigs even as oil prices gained about 10 percent this year and domestic output reached a 24-year high.
“We didn’t see a recovery yet from Karen,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “I do expect the Gulf to be coming back and a higher rig count next week.”
About 62 percent of Gulf of Mexico oil production and 48 percent of gas production was shut-in by Oct. 5, according to the U.S. Bureau of Safety and Environmental Enforcement. Karen passed through the Gulf of Mexico before breaking up south of Louisiana on Oct. 6.
Gulf of Mexico rigs were unchanged at 56 this week after dropping by seven last week to their lowest level in more than two months. Land rigs declined by six to 1,662. Directional drilling rigs increased by 11 to 239, vertical rigs declined by eight to 401 and horizontal rigs dropped by seven to 1,099.
Improving technology and familiarity with shale basins are enabling operators to shorten drilling times and use more wells off a pad. The number of wells drilled per rig in the U.S. increased to 5.37 in the third quarter from 5.07 a year earlier, Baker Hughes said last week.
The rising efficiency means “you’ve come to expect a modest decline each week as long as prices are reasonably stable,” Williams said.
West Texas Intermediate crude for October delivery rose 14 cents to settle at $100.81 a barrel on the New York Mercantile Exchange, up 9.5 percent in the past year.
U.S. oil output was 7.81 million barrels a day in the week ended Oct. 4, near the 24-year high of 7.83 million set in the week of Sept. 13.
Natural gas for November delivery rose 0.7 cent to $3.764 per million British thermal units on the Nymex, up 4.9 percent from a year ago.
U.S. gas stockpiles rose 90 billion cubic feet in the week ended Oct. 4 to 3.58 trillion cubic feet, according to EIA data released Oct. 10. Supplies were 1.6 percent below year-earlier inventories.
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