U.S. oil rig count at 1,592 sets record on drilling in Bakken to Permian

HOUSTON (Bloomberg) -- Rigs targeting oil in the U.S. surged to a record as producers accelerated drilling in some of the nation’s biggest crude plays, from North Dakota’s Bakken formation to the Permian basin of Texas and New Mexico.

Oil rigs rose by eight to 1,592, the highest count since Baker Hughes separated its oil and gas rig counts in 1987, data posted on the company’s website show. The Permian basin added the most, rising by four to 561. North Dakota’s Williston basin, home of the Bakken, climbed to the highest level since January 2013.

The total energy rig count has almost doubled from five years ago as producers use horizontal drilling and hydraulic fracturing to draw record volumes of oil and gas out of shale formations across the middle of the country. The boom has raised domestic crude production to the highest level in 28 years, shrinking oil imports to the U.S.

“The Permian Basin continues to grow because of multiple formations with very thick pay zones stacked one on top of the other,” James Williams, president of energy consultant WTRG Economics, said by telephone today. “Williston is also coming up, and the increased pipeline and rail infrastructure there may encourage drillers, who will be able to get better prices.”

Pipeline, rail and refinery projects may boost the amount of oil that can be moved out of the Bakken to 3.27 MMbpd by 2016, Genscape Inc., an energy data company based in Louisville, Kentucky, said in a report today. Pipeline projects alone are expected to add 1.46 MMbpd of capacity, the company said.

Better Place

Rigs in North Dakota, where the Bakken and Three Forks shale formations have propelled the state’s oil production to more than 1 MMbpd, have risen to almost 200, the most since 2012, Lynn Helms, the state’s director of mineral and natural resources, said in a call today. In McKenzie County, North Dakota, the count is 5% below its record.

“The industry is realizing there is no better place to make money than in the core of the Bakken and the Three Forks,” Helms said.

Oil production slipped by 40,000 bpd in the week ended Sept. 5 to 8.59 MMbpd after rising last month to the highest level since 1986, Energy Information Administration data show. Oil supplies dropped 972,000 barrels to 358.6 million.

Oil Prices

West Texas Intermediate crude for October delivery dropped 56 cents to $92.27/bbl on the New York Mercantile Exchange, down 15% in the past year.

Natural gas for October delivery rose 0.9% to $3.857/MMbtu on the Nymex, up 6% in the past year. The gas rig count in the U.S. slipped by two to 338 after rising a week earlier to the highest level since March, Baker Hughes said.

U.S. gas stockpiles rose 92 Bcf last week to 2.801 Tcf, according to the EIA. Supplies were 14.2% below the five-year average and 13.7% below year-earlier levels.