Rigs targeting oil in the U.S. advanced to an 18-month high as drilling surged in the Permian Basin of Texas and New Mexico.
Oil rigs rose by five to 1,430, the most since August 2012, data posted on Baker Hughes Inc.’s website show. The gas count dropped by seven to 335, a 19-year low, the Houston-based field services company said. Rigs in the Permian, the largest onshore oil basin in the U.S., jumped by six to 493, with those drilling horizontally for oil gaining seven to 255, the highest since at least February 2011.
Hydraulic fracturing and horizontal drilling have unlocked shale deposits of oil across the U.S., and drilling efficiencies have helped boost rig yields to record volumes from the Permian to North Dakota’s Bakken play. The surge in output helped the U.S. meet 86 percent of its energy needs in the first 11 months of 2013, the highest level since 1986, EIA data show.
“We’re getting far more output for far less input,” Ed Breiner, chief executive officer at West Chester, Pennsylvania- based rig-maker Schramm Inc., said yesterday in an interview at Bloomberg’s Houston office. “It’s a matter of margin enhancement.”
The Permian Basin is now home to 29 percent of all onshore oil and gas rigs, the most in any play, Baker Hughes data show.
“They’re learning more about how to best optimize production out of the various formations that they’re taking oil out of in the Permian,” James Williams, president of energy consulting firm WTRG Economics in London, Arkansas, said by telephone. “They’re keeping their market share of the oil rigs.”
U.S. oil output dropped 89,000 barrels a day, or 1.1 percent, in the week ended Feb. 21, to 8.06 million, data compiled by the Energy Information Administration show. Crude stockpiles climbed 68,000 barrels to 362.4 million.
West Texas Intermediate crude for April delivery rose 19 cents to settle at $102.59 a barrel on the New York Mercantile Exchange, up 12 percent in the past year.
U.S. gas stockpiles dropped 95 billion cubic feet last week to 1.348 trillion, EIA data show. Supplies were a record 34.5 percent below the five-year average and 40.2 percent below year- earlier levels.
Natural gas for April delivery increased 9.8 cents, or 2.2 percent, to $4.609 per million British thermal units on the Nymex and has surged 32 percent in the past year.
“We’re probably going to see the gas rig count level out here in another month or two as it starts to reflect the somewhat higher prices in gas,” Williams said.