Rigs targeting oil in the U.S. surged to a record as drillers ventured outside the nation’s biggest basins to search for crude in developing plays such as the South-Central Oklahoma Oil Province, known as SCOOP.
Oil rigs jumped by 15 to 1,588 this week, even as the counts in some of the most established basins, including the Permian of Texas and New Mexico, were either unchanged or down, data posted on Baker Hughes Inc. (BHI)’s website show. It was the most since Baker Hughes separated the oil and gas rig counts in 1987. Rigs targeting crude outside the major plays jumped by 19 to a record 399, the Houston-based field services company said. The count in Oklahoma rose to the highest level in almost six years.
Drillers are seeking new oil plays as hydraulic fracturing and horizontal drilling help them pull energy deposits out of shale formations across the U.S. The total U.S. rig count has gained by 151 this year as exploration has boomed, raising domestic crude production last month to the highest level in more than a quarter-century.
“People are looking for new oil in other areas,” James Williams, president of energy consulting firm WTRG Economics in London, Arkansas, said by telephone today. “The potential of return is good because the price of oil is still high and the cost of leasing outside of the major basins is low. If you can discover oil there and have a fairly large leasehold, the potential returns on your investment are high.”
West Texas Intermediate crude for September delivery rose 31 cents, or 0.3 percent, to settle at $97.65 a barrel on the New York Mercantile Exchange. Prices have averaged more than $100 a barrel this year.
U.S. oil production climbed 10,000 barrels a day, or 0.1 percent, in the week ended Aug. 1 to 8.45 million, Energy Information Administration data show. Output rose last month to the highest level since 1986.
Oil and gas rigs in Oklahoma gained by two to 211, the highest since Sept. 19, 2008, Baker Hughes data show. The strongest production growth that oil driller Continental Resources Inc. (CLR) saw in the first quarter came out of SCOOP, Harold Hamm, the Oklahoma City-based company’s chief executive officer, said in a call with analysts Aug. 6.
“We are just now revealing the value creation potential,” Hamm said.
Magellan Midstream Partners LP (MMP) said July 31 that it plans to restart a line that can carry condensate or crude to the Cushing, Oklahoma, oil hub from Healdton, Oklahoma, in the third quarter of 2015.
U.S. gas stockpiles climbed 82 billion cubic feet last week to 2.389 trillion, according to the EIA. Supplies were 20.3 percent below the five-year average and 18.4 percent under year-earlier levels.
Natural gas for September delivery increased 8.6 cents, or 2.2 percent, to $3.962 per million British thermal units today on the Nymex, up 20 percent in the past year.