Energy Rig Count in U.S. Seen at Bottom as Drilling Rebounds
Energy rigs in the U.S. gained this week as producers deployed more horizontal and directional equipment to cut drilling times and boost crude production.
Oil rigs advanced by seven to 1,413, data posted on Baker Hughes Inc. (BHI)’s website showed. The gas count fell by one to 353, the Houston-based field-services company said. Total rigs rose by six to 1,771.
The rig count, which has declined for five straight quarters, may have hit a bottom as producers respond to a rebound in oil and gas prices this year. The count is up 23 this quarter. Drilling permits in the 30 U.S. states monitored by Barclays Plc (BARC) climbed 2.7 percent in May after a 7.9 percent drop in April.
“We’re at the bottom, and we’ve turned the corner,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone today. “As long as oil prices hold anywhere near their current level, we’ll see incentive for drilling from Oklahoma on north to the big plays in North Dakota.”
U.S. oil output slipped 1 percent to 7.22 million barrels a day last week, EIA data show. Production reached 7.37 million barrels a day in the week ended May 3, the most since 1992. Stockpiles gained 2.52 million barrels to 393.8 million.
Crude for July delivery rose $1.16, or 1.2 percent, to settle at $97.85 a barrel on the New York Mercantile Exchange. Prices have increased 17 percent in the past year.
Oil-targeted directional rigs, used by producers to produce multiple wells off the same drilling pad, rose by three to 176 this week, the highest level since Baker Hughes began keeping the statistic on Feb. 4, 2011. Horizontal rigs focused on oil rose by three to 840, and vertical rigs climbed by one to 397.
“Most of the increases are coming from horizontal and directional drilling, and you don’t have to move those rigs as far to get them redeployed,” Williams said. “That means we’re seeing generally more productive wells because you can do more in the same amount of time.”
“We believe the increase in permit activity represents a consistent rise in U.S. land drilling activity which we expect to accelerate into” the second half of the year, James C. West, an oil services and drilling analyst at Barclays’s investment-banking unit in New York, said in a research note yesterday.
Natural gas for July delivery declined 8.1 cents, or 2.1 percent, to settle at $3.733 per million British thermal units on the Nymex, up 50 percent from a year ago.
U.S. gas stockpiles gained 95 billion cubic feet in the week ended June 7 to 2.347 trillion, 2.4 percent below the five-year average, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday. Supplies were 20 percent below year-earlier inventories.
Louisiana gained the most rigs this week, adding three to 109. West Virginia lost the most, falling by two to 22.
Canadian energy rigs climbed for the fifth straight week, adding 24 to 176, following a seasonal drilling pattern.
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