NEW YORK (Dow Jones), Nov. 13, 2009
The number of rigs drilling for oil in the U.S. climbed this week, but the gas rig total slipped as producers curbed output in response to low prices.
The number of oil and gas rigs climbed to 1,101, up 23 rigs from the previous week, according to data from oil-field services company Baker Hughes Inc. The number of gas rigs was 728, a decrease of six rigs from last week, while the oil rig count was 361, an increase of 29 rigs. The number of miscellaneous rigs was unchanged at 12 rigs.
The number of gas rigs in use peaked at 1,606 in September 2008. Producers have reduced natural-gas drilling sharply over the past several months in response to falling prices, but the rig count has stabilized in recent weeks as producers bet on colder winter weather and an economic recovery that would spark demand for the fuel.
The most substantial decline in rig counts has occurred in vertical drilling rigs, which are used to drill straight down into conventional oil and gas reservoirs. The number of vertical drilling rigs has fallen by about 60% over the last year. Horizontal rigs have dropped by a lesser amount. Horizontal drilling has declined by 26% over the year as producers have continued to exploit prolific gas fields known as shales.
Gas production from shales has surged with new drilling technology that makes it easier to extract gas from dense rock formations. Shale formations, such as the Barnett Shale in Texas, have been largely credited with fueling a surge in domestic gas production. Producers must drill down to the rock, then horizontally through the formation, to break it apart and release the gas trapped within.
A boom in supplies from these fields and weak demand for the fuel resulting from the economic downturn have driven gas prices lower.
Natural gas prices have fallen by more than 60% from their summer 2008 highs above $13 a million British thermal units. Gas supplies, however, remain ample. Total gas in U.S. storage for the week ended Nov. 6 was a record 3.813 trillion cubic feet - about 12% above last year's level and 10.1% above the five year average.
Natural gas for December delivery on the New York Mercantile Exchange was recently down 2.8 cents, or 0.64%, at $4.342 a million British thermal units.
Copyright (c) 2009 Dow Jones & Company, Inc.
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