HOUSTON -(Dow Jones)- The number of rigs drilling for oil and gas in the U.S. rose this week as producers ramped up drilling activity in response to higher prices.
The number of oil and gas rigs climbed to 1,069, up 21 rigs from the previous week, according to data from oilfield services company Baker Hughes Inc. (BHI). The number of gas rigs was 728, an increase of three rigs from last week, while the oil rig count was 330, an increase of 18 rigs. The number of miscellaneous rigs was unchanged at 11.
The number of rigs drilling for oil in the U.S. has increased as energy producers move to take advantage of oil futures prices, which have more than doubled since February.
Producers have curtailed natural gas drilling sharply over the past several months in response to declining prices. But the rig count has begun to stabilize as producers lock in prices on future production and bet on colder weather and an economic recovery that would spark demand for the fuel.
The number of natural gas rigs in the U.S. peaked in September 2008 at 1,606 rigs.
The biggest declines in natural gas drilling have occurred in vertical drilling rigs, which are used to drill straight down into conventional oil and gas reservoirs. The number of vertical drilling rigs has fallen by about 60% over the last year. Horizontal drilling has declined by 23% over the year as producers have continued to exploit prolific gas fields such as shales.
Gas production from shales has boomed, with new drilling technology that makes it easier to extract gas from dense rock formations. Shale formations, such as the Barnett Shale in Texas, have been largely credited with fueling a surge in domestic gas production. Producers must drill down to the rock, then horizontally through the formation, to break it apart and release the gas trapped within.
A flood of supply from these fields and weak demand for the fuel resulting from the economic downturn have contributed to falling natural gas prices.
Natural gas prices have fallen by more than 60% from their summer 2008 highs above $13 a million British thermal units. Gas supplies, however, have remained abundant.
Natural gas for December delivery on the New York Mercantile Exchange was recently down 6.2 cents, or 1.22%, at $5.00 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com