UPDATE 1-US natgas rig count falls, 3rd drop in 4 weeks -Baker Hughes

Fri Mar 22, 2013 2:03pm EDT

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* Gas rig count slips to 418, just above 14-year low
    * Horizontal rig count falls to lowest in 19 months

    NEW YORK, March 22 (Reuters) - The number of rigs drilling
for natural gas in the United States fell this week for the
third time in four weeks, as producers  continued to tamp down
dry gas drilling, despite strong price gains over the last five
weeks.
    The gas-directed rig count, which fell this week by 13 to
418, is hovering just above the 14-year low of 407 posted two
weeks ago, according to data from Houston-based oil services
company Baker Hughes Inc on Friday.
    Producers have mostly been curbing dry-gas drilling in favor
of more profitable oil and liquids-rich plays such as Eagle Ford
in Texas and Marcellus in Appalachia.
    But a 25 percent run up in spot gas prices since mid
February to an 18-month high of about $4 per million British
thermal units has stirred expectations that gas production,
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, fell by 17 to 1,324, Baker Hughes data showed.
The oil count is up 11 rigs, or just under 1 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, tumbled 31 this
week to a 19-month low of 1,100. The horizontal count is down
8.5 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 55 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 U.S. Energy Information Administration
expects marketed gas production in 2013 to hit a record high for
the third straight year.    
    Gas futures prices, which showed little reaction to the
report, are currently trading down about a penny in the $3.92
per mmBtu area.
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