Energy Rigs Advance for Third Week, Baker Hughes SaysLynn Doan
Oil and gas rigs in the U.S. rose to the highest level in a month as the rate of well completions gained, drilling permits increased and producers were expected to boost activity in the second of half of this year.
The total rig count increased by 11 to 1,770, the highest since June 14, data posted on Baker Hughes Inc.’s website show. Oil rigs rose four to 1,395, the Houston-based field services company said on its website. Gas rigs advanced for the fourth straight week, gaining seven to 369, a three-month high.
The total U.S. count has gained three weeks in a row. Rising output from shale formations such as North Dakota’s Bakken and Texas’s Eagle Ford plays have boosted domestic oil production to the highest level since December 1990. The surge in output, driven largely by a combination of hydraulic fracturing and horizontal drilling, helped the nation meet 89 percent of its own energy needs in March.
U.S. onshore rig counts will “rise modestly” to an average of 1,720 rigs by the fourth quarter of 2013, an increase of about 30 between now and the end of the year, Peter A. Ragauss, Baker Hughes’ chief financial officer in Houston, said in a conference call with analysts today.
The company’s forecast for offshore rigs remains unchanged at an average of 52 rigs in the 2013, an increase of four deep-water rigs from a year earlier, he said.
Natural gas for August fell 2.3 cents, or 0.6 percent, to settle at $3.789 per million British thermal units on the New York Mercantile Exchange, up 26 percent from a year ago.
U.S. gas stockpiles gained 58 billion cubic feet in the week ended July 12 to 2.745 trillion, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday. Supplies were 13 percent below year-earlier levels.
U.S. oil output climbed 1.2 percent to 7.49 million barrels a day last week, EIA data show. Stockpiles fell 1.9 percent to 367 million barrels.
Crude for August delivery rose 1 cent to $108.05 a barrel today on the Nymex, up 17 percent in the past year.
Drilling permits for the 30 states monitored by Barclays Plc increased 4 percent in June, following a 2.7 percent rise in May, James C. West, oil services and drilling analyst for the London-based company’s investment-banking unit in New York, said in a research note July 16. The biggest advances were in Utah, Texas and Kansas, according to West.
“We believe the gradual increase in permit activity will lead to a continued rise in drilling activity, with an acceleration likely” in the second half, he said.
Producers drilled an average of 5.15 wells for every land rig in the second quarter of 2013, up from 5 wells in the first quarter and 4.98 in the same period last year, according to Baker Hughes. The company began releasing weekly well completion data today.
The number of wells per rig is rising as producers adopt new technologies and strategies to increase efficiency, James Williams, president of WTRG Economics, said by telephone from London, Arkansas.
“As they drill more in the same formation, they become more efficient,” Williams said. “They know where they’re going to encounter problems and at what depths to anticipate them.”
Directional rigs targeting oil, typically used to drill multiple wells on the same pad, rose by seven to 179 this week, the highest level since at least Feb. 4, 2011, according to Baker Hughes. Directional rigs targeting gas increased by five to 79, a 10-month high.
Texas gained the most rigs this week, adding nine to 845, a five-week high. Alaska, Arkansas, Louisiana and New Mexico each lost one. North Dakota was unchanged at 174 rigs.
Producers in the Bakken formation create wells by directionally drilling through underground formations and then shooting high-pressured bursts of water mixed with sand and chemicals to release trapped hydrocarbons.
While drilling typically takes 22 days, the hydraulic fracturing process has lengthened to about 92 days as poor weather slowed trucks carrying water and other materials, Lynn Helms, director of North Dakota’s Department of Mineral Resources in Bismarck, North Dakota, said July 15. Drilled wells waiting for fracturing rose by 10 to 500 in May, he said.
“There is some desire to add drilling rigs, but as long as we’re carrying such a large inventory of unfracked wells, I don’t think companies are going to be spending money on drilling rigs while they have so many wells waiting on fracs,” Helms said in a conference call.
Rigs on land jumped by 11 this week to 1,691. Rigs in inland waters were unchanged at 22. The offshore rig count was also unchanged at 57, while the count in the Gulf of Mexico declined by one to 54.
Oil and gas rigs in Canada advanced by 30 to 80, following a seasonal pattern.