Oil Rigs in U.S. Rise Most in Seven Weeks

Rigs targeting oil in the U.S. increased by the most in seven weeks as producers boosted drilling in Texas and Louisiana.

The oil count rose by 10 this week to 1,372, a one-month high, Baker Hughes Inc.’s website showed. Gas rigs gained two to 378. Horizontal and directional rigs targeting oil in the Permian Basin of Texas and New Mexico climbed by 10 to 217. Tight-oil plays in the Permian such as Wolfcamp and Bone Spring will be a driver in U.S. output growth through 2014, according to the Energy Information Administration.

A combination of horizontal drilling and hydraulic fracturing has allowed drillers to access long-unreachable shale oil and gas deposits, boosting domestic crude output to the highest level in 24 years. The production boom helped the U.S. meet 87 percent of its own energy needs in the first six months of 2013, on pace to be the highest annual rate since 1986, EIA data show.

“Oil drilling is maintaining its dominance, accounting for nearly 80 percent of total rig activity,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “As companies gain more experience drilling in the Wolfcamp formation of the Permian Basin, I expect we’ll see an even stronger oil rig count there.”

West Texas Intermediate crude for November delivery advanced 53 cents, or 0.5 percent, to settle at $103.84 a barrel on the New York Mercantile Exchange, up 13 percent in the past year.

Crude Production

U.S. oil output gained 7,000 barrels a day to 7.78 million in the week ended Sept. 27, near a 24-year high, according to the EIA, the Energy Department’s statistical arm. Stockpiles went up by 5.47 million barrels, or 1.5 percent, to 363.7 million, the most since July.

Natural gas for November delivery jumped 0.2 percent to settle at $3.506 per million British thermal units on the Nymex, up 2.9 percent from a year ago.

U.S. gas stockpiles rose 101 billion cubic feet last week to 3.487 trillion, the EIA said yesterday. Supplies were 4.3 percent below year-earlier inventories, the agency said.

The total U.S. oil and gas rig count gained 12 this week to 1,756, according to Baker Hughes, a Houston-based field services company. The total slid by 32 rigs last month, the biggest drop since December.

‘Modest’ Growth

“U.S. rig activity continues to lag expectations with rig efficiency and service intensity yielding modest oil-service demand growth in a flattish rig count environment,” Stephen Gengaro, an analyst at Sterne Agee & Leach Inc. in New York, said in a research note Sept. 30. “Looking ahead, we expect only modest rig-count growth near-term with likely improvement gaining traction in 2014.”

Anadarko Petroleum Corp. said in a statement yesterday that roads and bridges damaged in Colorado during flooding last month had affected the company’s ability to move rigs and compression units. The flood halted an estimated 12 percent of the state’s daily oil production.

Tropical Storm Karen has also curbed energy production in the Gulf of Mexico and is expected to cross southeastern Louisiana near Buras late tomorrow or early Oct. 6, on the way to final landfall near Mobile, Alabama.

Rigs on land gained by 11 this week to 1,674. Rigs in inland waters were unchanged at 17. The offshore rig count, primarily in the Gulf of Mexico, climbed by one to 65.

The count in Louisiana rose by four to 112, and rigs in Oklahoma increased by five to 171. Alaska dropped two rigs to seven.

Energy rigs in Canada declined by 29 to 361.

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