NEW YORK (Dow Jones), Nov. 25, 2009
The number of rigs drilling for oil and natural gas in the U.S. climbed this week as producers ramped up drilling in response to higher prices.
The number of oil and gas rigs climbed to 1,137, up 24 rigs from the previous week, according to data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 748, an increase of 22 rigs from last week, while the oil rig count was 379, an increase of four rigs. The number of miscellaneous rigs fell by two to 10.
Total gas rigs in use peaked at 1,606 in September 2008. Producers have cut natural-gas drilling dramatically 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 boost demand for the fuel.
The largest 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 slipped about 60% over the last year. Horizontal rigs have dropped by a smaller amount. Horizontal drilling has declined by 26% over the year as producers have continued to tap into high-output gas fields known as shales.
A surge in supplies from these fields and weak demand for the fuel resulting from the economic downturn have pushed 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. 20 was a record 3.835 trillion cubic feet--11.8% above last year's level and 13% above the five-year average.
Natural gas for January delivery on the New York Mercantile Exchange was recently up 35.2 cents, or 7.39%, at $5.118 a million British thermal units.
Copyright (c) 2009 Dow Jones & Company, Inc.
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