Gas rigs rise for second week to rebound from 21-year low


Gas rigs rise for second week to rebound from 21-year low


HOUSTON (Bloomberg) -- Rigs targeting natural gas in the U.S. rose for the second straight week, rebounding from their lowest level in 21 years, as an increase in prices tempted energy producers back into dry-gas plays.

The gas count added seven rigs to 323 this week, data posted on Baker Hughes’ website shows. The Marcellus formation in the eastern U.S. gained six rigs to 86, the most since Jan. 31, and the Haynesville play of Arkansas, Louisiana and Texas added two to 47, a two-year high.

The natural gas rig count is climbing after a 6.3% rise in gas futures this month. It follows three straight years of declines in the gas-rig count as energy producers stopped drilling for the fuel in favor of more profitable natural-gas liquids and shale oil.

“Marcellus rigs are now back up to January levels, and the Haynesville is the highest we’ve seen in a long time, so that’s encouraging,” James Williams, president of energy consultant WTRG Economics in London, Arkansas, said by telephone today. “It’s too soon to call this a trend, but with higher gas prices, this is what we’d expect to happen.”

Natural gas for May delivery fell 5.8 cents, or 1.2%, to settle at $4.647/MMBtu on the New York Mercantile Exchange. Prices have risen 12% in the past year and 9.9% in 2014.

Stockpiles Gain

U.S. gas stockpiles increased 49 Bcf in the week ended April 18 to 899 Bcf, Energy Information Administration data show. Supplies were 52.9% below the five-year average and 48% under year-earlier inventories.

“The real problem is whether we’re going to get enough drilling pulled away from oil to meet gas demand,” Williams said. “If we don’t see an indication of it pretty soon, it’s going to drive gas prices higher and drilling will follow.”

Pipeline expansions in the Marcellus should help ease growing gas supplies in the play, with projects coming online through 2015 that may add 3.5 Bcfd of takeaway capacity, Vincent Piazza and Gurpal Dosanjh, Bloomberg Industries analysts, said in a research report today.

Oil rigs in the U.S. surged by 24 to 1,534, the most since Baker Hughes separated the oil and gas rig counts in 1987, as producers added horizontally drilling ones to shale plays across the U.S., from the Cana Woodford of Oklahoma to Texas’s Eagle Ford. Oil rigs accounted for 82.4% of the total count, down from 82.9% on April 11.

More Rigs

Total rigs have gained by 104 this year to 1,861 as producers use horizontal drilling and hydraulic fracturing to extract record volumes of oil and gas from U.S. shale formations. The boom in output has helped boost domestic oil supplies to the highest level in more than 80 years.

Nabors Industries Ltd. expects the U.S. rig count to be “modestly higher” by the fourth quarter as growth in productivity from existing rigs moderates and demand for new equipment rebounds.

“We’re moving the rig count up and I think the overall market will continue to improve,” Joe Hudson, president of U.S. drilling for Nabors, said in a conference call with analysts April 23.

Total U.S. oil production rose 59,000 bopd in the week ended April 18 to 8.36 MMbopd, the most since 1988, according to data compiled by the EIA, the U.S. Energy Department’s statistical arm. Oil supplies rose 3.52 MMbbl to 397.7 MMbbl, the most since 1931 in EIA weekly data going back to 1982 and monthly government data going back to 1920.

West Texas Intermediate crude for June delivery fell $1.34, or 1.3%, to close at $100.60/barrel on the Nymex, up 7.4% in the past year.

Related News ///


Comments ///

comments powered by Disqus