January 15, 2016 / 9:18 PM / 3 years ago

Canada oil and gas rigs jump in week but lag year ago: Baker Hughes

(Reuters) - The number of oil and natural gas rigs operating in Canada this week jumped as drillers returned to the well pad after shutting for the Christmas holiday, but lagged far behind prior years, data showed on Friday.

An oil rig drills near the Suncor Firebag in-situ oil sands operations near Fort McMurray, Alberta, September 17, 2014. REUTERS/Todd Korol

After adding 83 rigs in the week ended Jan. 8, drillers this week added 61, bringing the total count up to 227, oil services company Baker Hughes Inc BHI.N said in its closely followed report.

But that was just about half the 440 rigs operating at the same time last year and the 477 rigs at the same time in 2014.

Drillers in Canada, like their counterparts in the United States, have slashed the number of rigs operating over the past year as energy prices collapsed.

“The rig count is about half of what it was this time last year because oil prices are so low that it doesn’t make economic sense for producers to do much new drilling,” said Chris Cox, equity analyst at Raymond James in Calgary.

Cox has said low prices were expected to result in less production this year.

U.S. CLc1 and Brent LCOc1 crude futures both breached $30 a barrel on Friday and Brent briefly fell below $29 as the market braced for increased Iranian oil exports once international sanctions are lifted, possibly within days. [O/R]

Since trading near $110 a barrel in June 2014, Brent, the global benchmark, has mostly declined, falling over 70 percent on oversupply concerns and lackluster global demand.

Cox said the rig count in Canada is seasonal with a usual increase in January as producers start drilling after a Christmas break.

The rig count fell to 83 during the week ended Dec. 31 versus 208 at the same time in the prior year.

Cox said drillers also cut back on the number of active rigs in the spring when the snow melts and it becomes too muddy to operate. The industry calls that snow melt the spring break up.

The number of rigs fell to 72 in May 2015 versus a low of 145 in May 2014.

In the summer when the ground dries, Cox said Canadian drillers usually add to the number of rigs they operate.

But the increase last summer, which peaked at just 215 rigs, lagged well behind a peak of 409 seen during the summer of 2014, according to the Baker Hughes data.

Reporting by Scott DiSavino; Editing by James Dalgleish

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