UPDATE 1-U.S. natgas rig count edges up for 2nd week -Baker Hughes

Fri Apr 19, 2013 1:35pm EDT

Related Topics

* Gas-directed rig count climbs slightly for 2nd week
    * Horizontal rigs slip, still above 20-month low
    * Oil rig count slides from 5-month high last week

    NEW YORK, April 19 (Reuters) - The number of rigs drilling
for natural gas in the United States edged higher for the second
straight week, stirring expectations that the recent rally in
gas prices might be tempting some producers to bring on more
supply.
    The gas-directed rig count rose this week by two to 379
after posting a 14-year low of 375 two weeks ago, data from
Houston-based Baker Hughes showed 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 40 percent run-up in spot gas prices since
mid-February, to a 21-month high of $4.429 per million British
thermal units this week, has stirred expectations that gas
output, still flowing near record highs, could increase in
coming weeks.

    The oil-focused rig count fell by 16 to 1,371 after climbing
to near a five-month high of 1,387 last week, Baker Hughes data
showed. The oil count is up 34 rigs, or 2.5 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, slipped by five
this week to 1,097 after dipping to a 20-month low of 1,084 two
weeks ago. The horizontal count is down 8 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 60 percent since peaking
in 2011 at 936, but so far production has not slowed much from
the record high hit last year.
    The associated gas produced from more profitable shale oil
and shale gas liquids wells has kept dry gas flowing at a brisk
rate. The U.S. Energy Information Administration expects
marketed gas production to edge up slightly in 2013 to its third
straight yearly record.
    Gas futures prices, which were down about a penny in the
$4.39 area just before the Baker Hughes data was released,
showed little reaction to the report.
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