UPDATE 1-U.S. natgas rigs fall to new 14-year low -Baker Hughes

Thu Mar 28, 2013 1:40pm EDT

Related Topics

* Gas-directed rig count slides to new 14-year low
    * Horizontal rig count falls to lowest in nearly 20 months

    NEW YORK, March 28 (Reuters) - 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 five
weeks.
    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 favor
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 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 firmed about 3 cents after the
report, are still trading down about 5 cents in the $4.02 per
mmBtu area.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article