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Oil, Gas Rig Count in U.S. Little Changed for Second Week

Feb. 22 (Bloomberg) -- The oil and gas rig count in the U.S. was little changed this week as oil producers’ demand for additional equipment weakened and a yearlong decline in natural gas drilling bottomed out.

The total rig count slipped by one to 1,761, data posted on Baker Hughes Inc.’s website show. Oil rigs dropped by eight to 1,329, the field-services company based in Houston said. The gas count increased for the first time in four weeks, rising by seven to 428.

“I don’t expect any strengthening in the gas rig count, and oil rigs are near their top,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “What we’re seeing is a couple of pretty flat markets.”

The total oil and gas count has dropped by one since the beginning of the year as producers become more familiar with unconventional plays and are able to complete more wells in less time and with fewer rigs. More efficient drilling has helped drive U.S. crude production to the highest level in more than 20 years, weakening the country’s dependence on foreign oil.

Philadelphia Energy Solutions will receive two trains daily carrying oil, including Bakken from North Dakota, at its refinery in Pennsylvania by the third quarter of this year, Philip Rinaldi, the company’s chief executive officer, said during an energy forum in New York late yesterday.

The company is set to become the world’s single largest consumer of Bakken oil by the end of the year, he said.

U.S. Production

U.S. oil output climbed 54,000 barrels a day to 7.12 million in the week ended Feb. 15, the highest level since July 1992, the Energy Information Administration, a division of the Energy Department, said yesterday. Stockpiles rose 1.1 percent to 376.4 million barrels last week and reached a 22-year high of 387.3 million in June.

Oil for April delivery gained 29 cents, or 0.3 percent, to settle at $93.13 a barrel on the New York Mercantile Exchange, down 12 percent from a year earlier.

Gas stockpiles fell 127 billion cubic feet in the week ended Feb. 15 to 2.4 trillion, according to data compiled by the EIA. They reached a record high of 3.929 trillion cubic feet on Nov. 2.

Gas prices increased 4.5 cents, or 1.4 percent, to settle at $3.291 per million British thermal units on the Nymex. Prices have risen 25 percent in the past year.

Shale Play

Permitting in the Eagle Ford shale play in south Texas slowed in the fourth quarter, declining 5 percent sequentially to 1,028, according to a Bloomberg Industries analysis. Permits for oil fell by 7 percent and gas by 14 percent.

Oklahoma lost the most rigs this week, falling by nine to 185. Pennsylvania gained the most, adding six to 72.

Rigs on land slipped by two to 1,689. Rigs in inland waters rose by three to 19. The offshore rig count, primarily in the Gulf of Mexico, dropped two to 53.

Vertical rigs lost 5 to 424, the lowest level since January 2010. Horizontal rigs added one to 1,140.

Canadian energy rigs jumped for an eighth week, increasing by 11 to 662, following a seasonal drilling pattern.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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