U.S. oil rigs rise to record as drillers focus on Texas

7/12/2014

U.S. oil rigs rise to record as drillers focus on Texas

LYNN DOAN

HOUSTON (Bloomberg) -- Rigs targeting oil in the U.S. hit a record for the fifth straight week as companies ramped up drilling in shale formations across the South.

Oil rigs increased by one to 1,563, the most since Baker Hughes Inc. separated its oil and gas counts in 1987, the company’s website showed. They rose the most in the Granite Wash shale formation of Texas and Oklahoma and the Eagle Ford in South Texas. The gas count was unchanged at 311, the Houston-based field services company said.

Total rigs in the U.S. have jumped by 118 this year, driven by a surge in horizontal drilling that’s drawing record volumes of oil out of shale formations across the middle of the country. The boom has raised domestic crude production to the highest level in more than a quarter-century.

“We’re in the development phase in most of these areas, where they know where the oil is, they’ve optimized ways to produce and are now just developing them at a major pace,” James Williams, president of energy consulting firm WTRG Economics in London, Arkansas, said by telephone.

U.S. oil production climbed 72,000 bpd in the week ended July 4 to 8.51 million, the highest level since 1986, EIA data show. Oil supplies slipped 2.37 MMbbl to 382.6 million.

West Texas Intermediate crude for August delivery fell $2.10, or 2%, to settle at $100.83 a barrel on the New York Mercantile Exchange. Prices have risen 2.4% since the beginning of the year.

Both the Granite Wash and the Eagle Ford added five rigs this week, rising to 218 and 75, respectively. The Permian basin of Texas and New Mexico, the largest onshore oil play in the U.S., gained three to 563. The gas-rich Barnett shale in Texas lost two to 24.

U.S. gas stockpiles rose 93 Bcf last week to 2.022 trillion, EIA data show. Supplies were 24.4% below year-earlier inventories.

Natural gas for August delivery rose 2.6 cents, or 0.6%, to $4.146 per million British thermal units on the Nymex, up 15% in the past year.

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