US rig count dropped by four this week, Baker Hughes says

By Edward Welsch
Bloomberg News

Energy rigs in the U.S. declined by four to 1,778 this week, according to Baker Hughes Inc.

Oil rigs fell by three to 1,385, the Houston-based field services company said on its website. Gas rigs slipped two to 386. Miscellaneous rigs rose one to seven.

Rigs have gained with domestic crude output reaching the highest level since 1989 and U.S. oil reserves the most in two decades as producers use hydraulic fracturing and horizontal drilling to reach shale deposits. The resurgence in energy production helped the U.S. meet 87 percent of its energy needs in the first four months of 2013, on pace to be the highest annual rate since 1985.

U.S. oil production rose to 7.56 million barrels a day last week, the Energy Information Administration said Aug. 7. Output has risen 8.2 percent this year after a 19 percent gain in 2012.

Proved oil reserves in the U.S. increased for the third straight year in 2011, rising by 15 percent to 29 billion barrels, the highest since 1985, the Energy Information Administration, the Energy Department’s statistical arm, said last week. Tight oil plays accounted for 3.6 billion barrels, or 13 percent, of the total. Natural gas reserves rose by almost 10 percent to a record 348.8 trillion cubic feet.

Higher oil prices have driven more spending on drilling over the past three years, Mehdi Menouar, a Bloomberg Industries energy analyst in Princeton, New Jersey, said yesterday. Organic exploration and development spending by producers increased 68.9 percent to $422.4 billion from 2009 to 2012, following an 11.3 percent decline in 2009, according to data compiled by Bloomberg.

Rising Prices

Crude for September delivery rose $2.40, or 2.3 percent, to $105.80 a barrel at 12:42 p.m. today on the Nymex, up 13 percent in the past year.

Natural gas for September delivery rose 0.2 cent to $3.299 per million British thermal units, up 12 percent from a year ago.

U.S. gas stockpiles gained 96 billion cubic feet last week to 2.941 trillion, the EIA said yesterday. Supplies were 9.2 percent below year-earlier levels and 0.7 percent above the five-year average.