Rigs targeting gas in the U.S. advanced to the highest level since April, boosted by an increase in directional-drilling activity, as the count was seen reaching a bottom and set for a rebound.
Gas rigs gained for the third straight week, adding seven to 362, the most since April 26, data posted on Baker Hughes Inc.’s website show. Oil rigs declined by four to 1,391, and miscellaneous rigs slipped one to six, the Houston-based field services company said on its website. The total energy rig count increased by two to 1,759.
The total rig count was unchanged in the second quarter after five consecutive declines, and June was the most active month for U.S. land drilling permits in more than a year, suggesting a rebound in activity, according to Barclays Plc. Producers are boosting output by using more efficient technologies such as pad-drilling, helping the U.S. met 89 percent of its own energy needs in March, the highest monthly rate since April 1986.
Oil and gas wells increased about 10 percent in the first quarter and probably rose again in the second, “suggesting that rig count moves are severely lagging well count improvements and overall increases in industry capacity,” James West, an analyst for the Barclays investment-banking unit in New York, said in the note July 8.
Directional gas rigs, typically used by producers to bore multiple wells at different angles off a single drilling pad, jumped by five this week to 74, the highest since December.
Natural gas for August delivery rose 3.1 cents to settle at $3.644 per million British thermal units on the New York Mercantile Exchange, up 27 percent from a year ago.
“Gas prices need to be at least $4.50 before we get some significant increases in gas drilling,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “We’ve reached a bottom, and it’s always good to see a little bit of recovery. But I think we’re going to bounce around 350 to 360 rigs for a while.”
U.S. gas stockpiles gained 82 billion cubic feet in the week ended July 5 to 2.687 trillion, above the five-year average injection for the week of 74 billion, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday. Supplies were 14 percent below year-earlier levels.
U.S. oil output climbed 1.8 percent to 7.4 million barrels a day last week, the most since January 1992, EIA data show. Stockpiles fell 2.6 percent to 373.9 million barrels.
Crude for August delivery rose $1.04, or 1 percent, to $105.95 a barrel on the Nymex, up 23 percent in the past year.
New Mexico gained the most rigs this week, adding three to 81. Oklahoma lost five to 169, a two-year low.
Rigs on land increased by four to 1,680. Rigs in inland waters were unchanged at 22. The offshore rig count, primarily in the Gulf of Mexico, declined by two to 57 after rising last week to its highest level since 2009.
Oil and gas rigs in Canada jumped by 80 to 294, following a seasonal pattern.