U.S. Rig Count Declines by 14 to 1,768, Baker Hughes Says

Rigs targeting oil and natural gas in the U.S. fell by 14 this week to 1,768, according to Baker Hughes Inc.

Oil rigs declined by 16 to 1,395, data posted on the company’s website show. The gas count rose by three to 372, the Houston-based field services company said.

The total count has increased six out of the past eight weeks, rising from 1,738 on Oct. 25, as producers increasingly use a combination of horizontal drilling and hydraulic fracturing to reach shale deposits of crude and gas in places like Texas, Pennsylvania and North Dakota. The technological improvements have helped drive domestic oil production to the highest level in a quarter-century.

“A lot of this may have been weather-related,” James Williams, president of WTRG Economics in London, Arkansas, said by phone. “I would put most of this to week-to-week variations and not a trend. My expectation is for oil and gas drilling to stay relatively flat.”

Texas lost three rigs, to 845. The rig count in Texas and applications for drilling permits both declined this year compared with 2012, according to the Texas Alliance of Energy Producers. Oil-well completions this year through October increased by 89 percent to reach 16,276 and gas-well completions were up 48 percent to 4,594.

Monetizing Assets

“These trends indicate that Texas producers have become focused more on monetizing current assets by getting wells on production than drilling new prospects,” Karr Ingham, an economist who created the Texas Petro Index for the alliance, said in a Dec. 18 statement. “In the current economic climate, gas wellhead prices are increasing and natural gas is regaining importance to the state.”

The Marcellus shale formation, which covers much of Pennsylvania and parts of surrounding states, added three rigs to 88.

Pennsylvania has become the fastest-growing gas producer in the U.S. and is set to become the second-largest supplier of the fuel this year as drilling in the Marcellus ramps up, according to the Energy Information Administration, the Energy Department’s statistical arm. From 2011 to 2012, the state’s marketed natural gas, including liquids, output surged by 72 percent.

U.S. gas stockpiles dropped 285 billion cubic feet last week to 3.248 trillion, the EIA reported yesterday. Supplies were 13 percent smaller than year-earlier inventories and 7.4 percent below the five-year average.

Natural gas for January delivery declined 4.2 cents, or 0.9 percent, to $4.418 per million British thermal units, up 28 percent in the past year.

U.S. oil output fell from a 25-year high to 8.06 million barrels a day last week, the EIA said Dec. 18. Crude stockpiles fell 0.8 percent to 372.3 million barrels.

West Texas Intermediate crude for February delivery rose 28 cents, or 0.3 percent, to settle at $99.32 a barrel on the Nymex, up 10 percent in the past year.