NEW YORK (Dow Jones), Dec. 4, 2009
The number of rigs drilling for oil in the U.S. climbed slightly this week as oil producers ramped up drilling activity in response to higher prices relative to last year.
The number of oil and gas rigs climbed to 1,141, up four rigs from the previous week, according to data from oil-field services company Baker Hughes Inc. (BHI). The number of gas rigs was 748, unchanged from last week, while the oil rig count was 383, an increase of four rigs. The number of miscellaneous rigs was unchanged at 10 rigs. Oil prices have more than doubled since last December's lows, while gas futures have risen about 93% from lows reached this September.
Oil and gas rig counts slumped over the past year in response to weak demand, but counts have started to recover as energy prices rebound amid signs of economic recovery in the U.S.
The most substantial decline in rig counts has occurred in vertical gas-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.
Natural gas for January delivery on the New York Mercantile Exchange was recently up 18.3 cents, or 4.1%, at $4.642 a million British thermal units. Nymex light, sweet crude oil for January delivery was down 84 cents, or 1.1%, at $75.62 a barrel.
Copyright (c) 2009 Dow Jones & Company, Inc.
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