Sunday, 31 March 2013

US natural gas rigs’ number falls to14-year low: Baker Hughes

REUTERS

NEW YORK

THE number of rigs drilling for natural gas in the United States fell this week to the lowest since May 1999, as producers continued to pull back from dry gas drilling despite strong price gains over the last fiveweeks.

The gas-directed rig count, which slid this week by 29 to 389, easily eclipsed the previous 14-year low of 407 posted three weeks ago, according to data from Houston-based oil services company Baker Hughes Inc on Thursday.

The data this week was released a day early due to the Good Friday holiday.

Producers have mostly been curbing dry-gas drilling in favour of more profitable oil and liquids-rich plays such as Eagle Ford in Texas and Marcellus in Appalachia.

But a near 30 percent run up in spot gas prices since mid-February to a 19-month high of $4.12 per million British thermal units this week has stirred expectations that gas output, still flowing at or near record highs, could increase further.

The oil-focused rig count, which hit a 10-month low of 1,315 two months ago, jumped by 30 to a 3-1/2- month high of 1,354, Baker Hughes data showed. The oil count is up 36 rigs, or 2.7 percent, from the same week last year.

Baker Hughes also reported that horizontal rigs, the type often used to extract oil or gas from shale, fell by 1 this week to a 20-month low of 1,099.

The horizontal count is down 7.9 percent from the record high of 1,193 set last May.

Drilling for natural gas has mostly been in decline for the last 18 months. The count is down about 58 percent since peaking in 2011 at 936, but so far production has not shown any significant signs of slowing.

The associated gas produced from more profitable shale oil and shale gas liquids wells has kept dry gas flowing at or near an all-time high.

The US Energy Information Administration expects marketed gas production in 2013 to hit a record high for the third straight year.

Gas futures prices, which firmed about 3 cents after the report, are still trading down about 5 cents in the $4.02 per mmBtu area.

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