Energy Rigs in U.S. Cap Longest Streak of Gains in Two YearsLynn Doan
Rigs targeting oil and natural gas in the U.S. gained for the fifth straight week to the highest level this year as producers boosted natural-gas plays in the Marcellus Shale formation on the East Coast.
Total rigs gained six to 1,782, the most since Dec. 14, according to data posted on Baker Hughes Inc.’s website. The count is in the longest streak of weekly advances since July 2011. Gas rigs surged by 19 to 388, a four-month high, the Houston-based field services company said on its website. Oil rigs declined by 13 to 1,388. West Virginia added 11 rigs this week to 38, the most since at least May 2010.
Rigs are rising with domestic crude output reaching the highest since 1990 and U.S. oil reserves the most in two decades as producers use hydraulic fracturing and horizontal drilling to reach shale deposits. The resurgence in energy production helped the U.S. meet 87 percent of its energy needs in the first four months of 2013, on pace to be the highest annual rate since 1985.
“Most of this week’s increase was in the Marcellus shale in West Virginia, and that’s not surprising,” James Williams, president of energy consulting firm WTRG Economics in London, Arkansas, said by telephone. “You can make money at this price in the Marcellus.”
The Marcellus stretches across areas of New York, Pennsylvania, Ohio, Maryland, West Virginia and Virginia.
Barclays Plc described the Marcellus play in a July 24 research note as “hotter than ever” as a pipeline and new processing plants allow more wet-gas volumes to leave the area. Gas production from the southwest Marcellus and Utica regions could rise by 3.5 billion cubic feet a day by the end of 2014, Biliana Pehlivanova, a Barclays analyst in New York, said in the note.
Proven natural gas reserves in the U.S. rose by almost 10 percent in 2011 to a record 348.8 trillion cubic feet, the Energy Information Administration, the Energy Department’s statistical arm, said yesterday. Oil reserves in the U.S. increased for the third straight year in 2011, rising by 15 percent to 29 billion barrels, the most since 1985.
“Higher oil prices helped drive record increases in crude oil reserves,” Adam Sieminski, EIA’s administrator, said in a statement yesterday. “Natural gas reserves grew strongly despite slightly lower natural gas prices in 2011.”
Natural gas for September delivery fell 4 cents to settle at $3.347 per million British thermal units on the New York Mercantile Exchange, up 15 percent from a year ago.
U.S. gas stockpiles gained 59 billion cubic feet last week to 2.845 trillion, bigger than the five-year seasonal average increase of 47 billion, the EIA said yesterday. Supplies were 11.5 percent below year-earlier levels.
“A declining gas production rate coupled with a $4 per mcf gas price may boost demand for drilling rigs,” Mehdi Menouar, a Bloomberg Industries energy analyst in Princeton, New Jersey, said July 31.
U.S. oil output slipped 13,000 barrels a day to 7.54 million after rising to the highest level a since December 1990 a week earlier. Stockpiles gained for the first time in five weeks, adding 431,000 barrels to 364.6 million.
Crude for September delivery dropped 95 cents, or 0.9 percent, to $106.94 a barrel today on the Nymex, up 23 percent in the past year.
U.S. rigs on land rose by three this week to 1,699, the most since March 15. Rigs in inland waters climbed by three to 25, a two-month high. The offshore rig count, primarily in the Gulf of Mexico, was unchanged at 58.
Oil and gas rigs in Canada advanced by 12 to 341, following a seasonal pattern.