Rigs targeting oil in the U.S. gained this week as producers boosted horizontal drilling for crude in the Granite Wash play of Texas and Oklahoma.
Oil rigs rose by six to 1,388, data posted on Baker Hughes Inc.’s website show. Horizontal rigs targeting crude in the Granite Wash tight-oil play jumped by nine to 64, while gas rigs there slid by 10 to six. Total gas rigs in the U.S. declined by seven to 380, a five-week low, the Houston-based field services company said.
The U.S. rig count has gained by 13 this year, driven largely by a boost in crude-drilling following a surge in oil prices. The additional production helped the U.S. meet 87 percent of its own energy needs in the first five months of 2013, on pace to be the highest annual rate since 1986, according to the Energy Information Administration.
“If you’ve got oil out there, you sure want to be drilling for it,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “The Granite Wash is becoming a pretty hot spot for oil, and it’s obviously successful, because they keep drilling.”
The gain in drilling and an increase in producers’ capital expenditure plans are “good evidence that activity levels onshore will continue to improve for the remainder of the year,” James C. West, an oil-services analyst for Barclays Plc’s investment-banking unit in New York, said in a research note Aug. 27.
Private operators who don’t publicly release their budgets are more sensitive to short-term cash flows, and the climb in crude prices “could entice many of them to accelerate spending plans,” West said.
Crude for October delivery declined $1.15, or 1.1 percent, to close at $107.65 a barrel on the New York Mercantile Exchange. Futures settled at $110.10 on Aug. 28, a two-year high, and are up 14 percent in the past year.
U.S. oil output gained 91,000 barrels a day to 7.61 million in the week ended Aug. 23, the highest level since October 1989, according to the EIA, the Energy Department’s statistical arm. Stockpiles climbed by 2.99 million barrels to 362 million.
Natural gas for October delivery dropped 3.7 cents, or 1 percent, to settle at $3.581 per million British thermal units on the Nymex, up 30 percent from a year ago.
U.S. gas stockpiles rose 67 billion cubic feet in the week ended Aug. 23 to 3.13 trillion cubic feet, the EIA said yesterday. Supplies were 7 percent below year-earlier inventories, the agency said.
Rigs on land slipped by one to 1,691. Rigs in inland waters also lost one to 21. The offshore rig count, primarily in the Gulf of Mexico, gained two to 64, the most since January 2009.
Energy rigs in Canada advanced by 16 to 399.