Natural gas rigs in the U.S. advanced in November for the first monthly gain in more than a year with gas prices up almost 20 percent in 2012.
The count increased by eight this month as nuclear power plant refueling and maintenance helped support a rally in gas futures, which settled last week at the highest price since Oct. 31, 2011. Gas rigs fell by four to 424 this week after rising by 15 in the previous two weeks, according to oil-services company Baker Hughes Inc.
Gas rigs declined for the previous 12 consecutive months as energy producers moved away from gas plays to focus on more lucrative gas liquids and oil drilling. The total dropped to 413 on Nov. 9, the lowest level since 1999.
“Natural gas market fundamentals steadily improved” in August, September and October, Chesapeake Energy Corp., the second-largest natural gas producer in the U.S., said in a Nov. 28 presentation at the Jefferies Global Energy Conference in Houston. The company has cut dry-gas drilling to “almost the bare minimum” because of low prices this year, Jeff L. Mobley, vice president of investor relations, said at the conference.
The total U.S. energy rig count dropped by six to 1,811, Baker Hughes said. Oil rigs declined by two to 1,386.
“We’ve sort of gotten to that level in oil rigs that makes sense at the current price,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “Any major increases we see going into next year will come from newer plays.”
Natural gas for January delivery slipped 8.7 cents to settle at $3.561 per million British thermal units on the New York Mercantile Exchange. Prices are up 87 percent from this year’s settlement low of $1.907 on April 19.
“It takes about $4 gas to really bring folks back into exploration and we’re nearing that number,” Williams said. “We are at or at least near the bottom for gas rigs.”
Crude for January delivery on the Nymex increased 84 cents to settle at $88.91 a barrel. Oil prices are down 10 percent for the year.
Texas gained the most rigs this week, adding two to 855. New Mexico, North Dakota and Wyoming each lost two.
Rigs on land dropped by four to 1,741. Rigs in inland waters rose by one to 20, the highest level since August. Miscellaneous rigs, which primarily drill for geothermal energy, were unchanged at one.
Vertical rigs slipped by one to 508. Horizontal rigs declined by four to 1,110.
The offshore rig count lost three to 50, and rigs in the Gulf of Mexico slipped by two to 48.
Canadian energy rigs gained for a third week, rising by 12 to 399, the highest since March.