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Oil rigs in U.S. extend record as Eagle Ford drilling surges

LYNN DOAN and RICHARD STUBBE

HOUSTON (Bloomberg) -- Rigs targeting oil in the U.S. jumped to a record as energy producers used the most in a year to drill for crude in Texas’ Eagle Ford shale formation.

Oil rigs increased by 14 to 1,487, the highest level since Baker Hughes Inc. split the oil and gas counts in 1987, data posted on the company’s website show. Rigs drilling for oil in the Eagle Ford of South Texas jumped by nine to 209, matching a record set in May 2013, according to the Houston-based field services company.

Hydraulic fracturing and horizontal drilling are helping producers extract record volumes from shale formations across the middle of the U.S., boosting domestic crude output to the highest in a quarter-century. The nation met 87% of its energy needs in 2013, the most since 1985, according to data from the Energy Information Administration.

“The Eagle Ford is doing well, reflecting higher oil prices and pipeline connections that are moving more of the light crude into refineries that can use it,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “This has all certainly helped” drive up drilling in the play.

Tight-oil production averaged 3.22 MMbpd in the fourth quarter, enough to lift total U.S. output to 7.84 MMbpd, accounting for more than 10% of world production, the EIA said in a report March 26. Last month, almost two-thirds of the tight-oil output came from the Eagle Ford and the Bakken shale in North Dakota and Montana.

Royal Dutch Shell Plc reversed the flow of its Ho-Ho pipeline in December to deliver crude to U.S. Gulf Coast refineries from inland oil plays in the Eagle Ford, Bakken and other shale regions. The company planned to increase capacity on the system this year.

Total U.S. oil output slipped 25,000 bpd, or 0.3%, in the week ended March 21 to 8.19 million, after climbing a week earlier to the highest level since 1988, data compiled by the EIA, the U.S. Energy Department’s statistical arm, show. Crude stockpiles rose 6.62 MMbbl, or 1.8%, to 382.5 million.

West Texas Intermediate crude for May delivery rose 39 cents, or 0.4%, to settle at $101.67 on the New York Mercantile Exchange, up 4.6% in the past year.

U.S. gas stockpiles dropped 57 Bcf last week to 896 billion, the lowest since 2003, EIA data show. Supplies were a record 50.8% below the five-year average and 50.1% below year-earlier levels.

Natural gas for May delivery fell 5.3 cents, or 1.2%, to $4.485 per million British thermal units on the Nymex, up 11% in the past year.

The number of rigs drilling for gas this week declined by eight to 318, the lowest level since 1995, according to Baker Hughes. The total U.S. rig count climbed by six to 1,809.

03/29/2014

 

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