By Lynn Doan
Rigs targeting oil in the U.S. advanced for the first time in four weeks to a two-month high as producers increased drilling in the Permian Basin, the biggest oil-producing region in the U.S.
Oil rigs surged by 19 to 1,376, the highest since Aug. 30, data posted on Baker Hughes Inc.’s website show. Rigs targeting crude in the Permian Basin, spanning parts of Texas and New Mexico, gained seven to 442, with the vertical count jumping by 14, the Houston-based field services company said. Gas rigs fell 16 to 360, and the total count added four to 1,742.
While North Dakota’s Bakken and Texas’s Eagle Ford regions make up about 75 percent of U.S. oil output growth, the Permian Basin remains the nation’s biggest absolute crude producer, supplying a record 1.29 million barrels a day last month, the Energy Information Administration said. The boom in output helped the U.S. meet 86 percent of its energy needs in the first seven months of 2013, on pace to be the highest annual rate since 1986.
“The Permian really is the biggest play because the reserves are just phenomenally high,” James Williams, president of energy consultant WTRG Economics in London, Arkansas, said by telephone. “It makes the Bakken look small, but they’re still learning how to best produce out of it. They have formations stacked on top of each other there.”
U.S. oil output fell 0.5 percent to 7.85 million barrels a day last week, slipping from the highest level since March 1989, according to the EIA, the Energy Department’s statistical arm. Crude stockpiles climbed 1.1 percent to 383.9 million barrels, the highest level for this season in at least 10 years.
West Texas Intermediate crude for December declined $1.77, or 1.8 percent, to settle at $94.61 a barrel on the New York Mercantile Exchange, up 8.6 percent in the past year.
Natural gas for December fell 6.8 cents, or 1.9 percent, to settle at $3.513 per million British thermal units on the Nymex, down 5 percent from a year ago.
U.S. gas stockpiles rose 38 billion cubic feet in the week ended Oct. 25 to 3.779 trillion, the highest since December, the EIA said yesterday.
Advances in drilling technology “have opened up a hydrocarbon resource base dramatically larger than previous estimates,” the Energy Information Administration, the Energy Department’s statistical arm, said in an Oct. 28 report. “Natural gas production has steadily risen while the number of active rigs characterized as targeting natural gas has fallen dramatically.”
Producers drilled 5.37 wells for every rig on U.S. land in the third quarter, up from 5.27 last quarter and 5.07 a year ago, data compiled by Baker Hughes show.