Rigs targeting oil in the U.S. advanced to a 17-month high after a ramp-up in directional drilling in plays across New Mexico, Texas and Oklahoma.
Oil rigs rose by six to 1,422, the most since Aug. 17, 2012, data posted on Baker Hughes Inc. today show. The gas count advanced by two to 358, rebounding from a six-month low, the Houston-based field services company said. Horizontal rigs targeting oil in the Permian Basin of Texas and New Mexico gained by two while those boring directionally jumped by four.
The oil count has surged by 44 rigs in the past four weeks as energy producers use a combination of hydraulic fracturing and horizontal drilling to extract crude in shale formations across the middle of the U.S. The boom in shale-oil drilling has propelled domestic crude production to the highest level in a quarter century.
“We’re bringing a lot of wells on every quarter and continue to ramp that up,” David Rosenthal, Exxon Mobil Corp.’s vice president of investor relations, said in a conference call with analysts yesterday. “We’re testing new areas, new zones.”
U.S. oil output slipped 0.1 percent to 8.04 million barrels a day last week, the Energy Information Administration, the Energy Department’s statistical unit, said yesterday. Output reached a 25-year high of 8.16 million in the week of Jan. 10. Crude stockpiles jumped 6.42 million barrels, or 1.8 percent, to 357.6 million.
West Texas Intermediate crude for March delivery declined 74 cents, or 0.8 percent, to settle at $97.49 a barrel on the New York Mercantile Exchange, unchanged from a year ago.
Rigs drilling horizontally for crude rose by three in the Granite Wash of Texas and Oklahoma and by two in Oklahoma’s Cana Woodford this week, Baker Hughes said. The total U.S. rig count rose by eight to 1,785, the highest since August.
Exxon, based in Irving, Texas, is adding rigs in Texas’s Permian Basin, targeting conventional and unconventional liquids, and is increasing activity in North Dakota’s Bakken formation, Rosenthal said yesterday.
Chevron Corp., with headquarters in San Ramon, California, said today that growing volumes from shale and tight oil plays such as the Permian and the Marcellus formation in the eastern U.S. added 25,000 barrels a day last year.
“We’ve got 26 rigs working in the basins there,” John Watson, the company’s chief executive officer, said during a conference call. “I think you’ll see that we are ramping up activity pretty nicely.”
U.S. gas stockpiles dropped 230 billion cubic feet last week to 2.193 trillion, the EIA said. Supplies were 16.6 percent below the five-year average and 22.5 percent less than last year’s stocks for the week.
Natural gas for March delivery fell 6.8 cents, or 1.4 percent, to $4.943 per million British thermal units on the Nymex, up 48 percent from a year ago. A barrel of oil is trading at almost 20 times the price of natural gas, up from about nine times higher five years ago.
“Oil prices are still good, so you’re going to see drilling for crude go on,” James Williams, president of oil consulting firm WTRG Economics in London, Arkansas, said by telephone today.
About 85 percent of Exxon’s rigs are focused on drilling for liquids, Rosenthal said.
“We have been really orienting our rigs toward the more liquid areas,” he said. “The biggest places for us: the Bakken, the Permian and the Woodford Ardmore.”
The Bakken formation is primarily in North Dakota, and Ardmore Woodford is in Oklahoma.