Natural gas rigs in the U.S. tumbled to the lowest level in 19 years as freezing weather slowed drilling and producers focused on targeting more lucrative oil and liquids-rich plays.
The gas count slid by 14 this week to 337, the lowest since May 19, 1995, data posted on Baker Hughes Inc.’s website show. Oil rigs gained by seven to 1,423, the most since August 2012, the Houston-based field services company said.
The total rig count has fallen by 21 in two weeks as a series of storms dumped snow and ice on the Gulf Coast and the eastern U.S., slowing oil- and gas-drilling operations in major plays. The Energy Department cut crude-output forecasts by 120,000 barrels a day for this year and 100,000 for 2015, citing “severe weather.” Oil rigs now account for a record 80 percent of the total count as crude trades 19 times higher than gas.
“The storms have likely had an impact on drilling, but the main thing is that folks are still targeting liquids areas where profits are higher,” James Williams, president of energy consulting firm WTRG Economics, said by telephone from London, Arkansas. “We should see gas exploration pick up within three or four months if prices remain high.”
Natural gas for March delivery rose 0.9 cent to settle at $5.214 per million British thermal units on the New York Mercantile Exchange, up 65 percent in the past year.
U.S. gas stockpiles tumbled 237 billion cubic feet last week to 1.686 trillion, the Energy Information Administration, the Energy Department’s statistical arm, said as freezing weather boosted demand for the heating fuel. Supplies were a record 27 percent below the five-year average and 34 percent below year-earlier levels.
U.S. oil output climbed for the first time in four weeks in the seven days ended Feb. 7, increasing 1.1 percent to 8.13 million barrels a day, the EIA said. Crude stockpiles rose 3.27 million barrels to 361.4 million.
West Texas Intermediate crude for March delivery fell 5 cents to settle at $100.30 a barrel on the Nymex, up 3.1 percent in the past year. Oil was trading at more than 19 times the price of gas, up from an 8-to-1 ratio five years ago.
The EIA cut oil production forecasts on “indications that severe weather this winter has caused temporary slowdowns in completing new wells” in its Short-Term Energy Outlook released Feb. 11.
“The impact of winter weather on drilling and completion activity is not materially different than the impact upon commercial travel,” Michael Peterson, energy analyst at investment bank MLV & Co., said by e-mail yesterday. “The more extreme the conditions, the greater the imposition.”
Texas lost the most rigs this week, dropping five to 840. California gained five to 36, Baker Hughes said.
Rigs on land declined by four to 1,692. Rigs in inland waters slipped by three to 18. The offshore rig count, primarily in the Gulf, was unchanged at 54.
Miscellaneous rigs, which usually drill for geothermal energy, were also unchanged at four.
Energy rigs in Canada rose by three to 624, following a seasonal pattern that rises in the winter.