U.S. Gas Rigs Drop First Time in Three Weeks, Baker Hughes Says
The number of gas rigs in the U.S. fell for the first time in three weeks, declining by 13 to 366, according to Baker Hughes Inc. (BHI)
The U.S. gas rig count has dropped to less than a fourth of its peak of 1,606 in 2008 as energy producers abandoned natural- gas plays to drill for more lucrative crude and natural-gas liquids. The boom in tight-oil production helped the U.S. meet 84 percent of its energy needs last year, the most since 1991, according to the U.S. Energy Information Administration, the Energy Department’s statistical unit.
ConocoPhillips (COP), the largest independent U.S. oil and natural gas producer, has no plans to start “redirecting any capital toward gas assets until it’s significantly north of current prices,” Matthew Fox, an executive vice president at the Houston-based company, said in a conference call with investors yesterday.
The company’s fuel production in Texas’ Eagle Ford shale formation is about 60 percent oil, 20 percent natural gas liquids and 20 percent dry gas, Jeff Sheets, Conoco’s chief financial officer, said during the call. Its wells in North Dakota’s Bakken formation produce mostly oil, he said.
U.S. gas stockpiles increased by 30 billion cubic feet to 1.734 trillion in the week ended April 19, the EIA said yesterday. Supplies were 31.8 percent below a year earlier and 5.1 percent below the five-year average, down from a deficit of 4.2 percent the previous week.
Natural gas for May delivery fell 5.6 cents, or 1.3 percent, to $4.111 per million British thermal units on the New York Mercantile Exchange at 1:11 p.m. Futures have more than doubled in the past year and have been trading above $4 for three straight weeks.
Exxon Mobil Corp. (XOM) remains focused on liquids-rich drilling and has “the flexibility and optionality” to ramp up gas output should prices keep rising, David Rosenthal, vice president of investor relations for the Irving, Texas-based company, said in a conference call with investors yesterday.
“We don’t tend to take the last two data points and draw a trend line and react in that manner,” he said. “We tend to have longer-term approaches to the development of all of our resources.”
U.S. oil output reached 7.33 million barrels a day last week, a two-decade high, EIA data show. Stockpiles climbed to 388.6 million, near a 22-year high.
Crude for June delivery on the Nymex fell 66 cents, or 0.7 percent, to $92.98 a barrel. Prices have decreased 11 percent in the past year.
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