Gas rig count declines to near 14-year low

By Lynn Doan
Bloomberg News

The number of gas rigs in the U.S. declined to near a 14-year low, according to Baker Hughes Inc.

Gas rigs dropped by 29 to 389, while oil rigs climbed by 30 to 1,354 this week, data posted on Baker Hughes’ website show. Total energy rigs increased by two to 1,748, the field-services company based in Houston said. The rig-count figures were released a day early this week because of the Good Friday observance tomorrow.

The U.S. gas rig count has shrunk to almost a fourth of its peak in September 2008 as a glut of domestic supplies pushed prices of the fuel down to 10-year lows and drove energy producers toward more profitable oil and liquids-rich plays. Improvements in drilling technologies have also weakened total demand for additional rigs in the U.S.

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Schlumberger Ltd. (SLB), the world’s largest oil-services company, said last week that first-quarter drilling in North America “is coming below expectations,” with customers reactivating fewer rigs than initially planned.

“The outlook for rig activity and pricing levels in North America continues to be uncertain,” Paal Kibsgaard, the Houston-based company’s chief executive officer, said at the March 18 Howard Weil Conference in New Orleans.

Oil and gas producers’ capital expenditures will be “little changed” this year from 2012, according to a Bloomberg Industries analysis of 44 operators’ plans. Of the 44, 21 companies plan to increase investments by an average of 13 percent, and 17 are cutting spending by about 22 percent, the analysis shows. Six will spend about the same as last year.

Gas Supplies

Gas stockpiles were 3.5 percent above the five-year average last week, according to the Energy Information Administration, the Energy Department’s statistical arm. Supplies fell 5.1 percent to 1.781 trillion cubic feet in the seven days ended March 22. They reached a record high of 3.929 trillion cubic feet on Nov. 2.

Natural gas for May delivery fell 5.3 cents, or 1.3 percent, to $4.015 per million British thermal units on the New York Mercantile Exchange at 1:22 p.m. Futures were are up 83 percent from a year ago.

U.S. oil output climbed 1,000 barrels a day to 7.15 million in the week ended March 22 and, earlier this month, reached a 20-year high, according to EIA data. Stockpiles rose 3.26 million barrels to 385.9 million last week and reached a 22-year high of 387.3 million in June.

Crude for May delivery on the Nymex rose 22 cents to $96.80 a barrel. Prices have increased 5.4 percent this year.