* Gas-drilling rig count hits highest since early March
* Horizontal rigs jump sharply, set new record high.
(Adds price reaction, details, background)
NEW YORK, Aug 12 The number of rigs drilling
for natural gas in the United States climbed to its highest in
more than five months, rising by 13 this week to 896, data from
oil services firm Baker Hughes showed on Friday.
The gas-directed rig count, which has gained in four out of
the last five weeks, is at its highest since early March, but
the count is down nearly 10 percent from its 2010 peak of 992
last August, its highest since February 2009, when 1,018 rigs
were drilling for gas.
Horizontal rigs -- the type most often used to extract oil
or gas from shale -- jumped by 24 to a record high 1,123,
eclipsing the previous record of 1,102 hit three weeks ago. It
was the fourth gain in the horizontal count in the last five
(Rig graphic: r.reuters.com/dyb62s )
Analysts estimate that 57 percent of horizontal rigs are
drilling for natural gas, down about 7 percentage points so far
this year, with the rest drilling for oil.
Horizontal gas rigs comprise part of the overall gas rig
Front-month U.S. natural gas futures NGc1, which were
down 0.6 cent at $4.102 per million British thermal units just
before the data was released at 1 p.m. EDT (1700 GMT), slipped
nearly 3 cents to $4.075 shortly after the report.
Some firms have shifted spending away from gas to more
profitable liquids or oil-related ventures due to relatively
low gas prices. The changes have yet to be reflected in
industry data, which still show production at record levels.
In its Short-Term Energy Outlook on Tuesday, the Energy
Information Administration said it expected marketed natural
gas production this year to climb 3.68 bcf per day, or 6
percent, to a record high 65.51 bcf, easily eclipsing the
previous high of 62.05 from 1973. [ID:nN1E7780ZD]
Despite plenty of record heat this summer, traders noted
that high domestic gas production has easily offset the surge
in cooling demand and some storm-related supply cuts.
The gas rig count of 896 remains well above the 800 level
some analysts say is needed to cut production significantly and
tighten overall supplies.
Most analysts expect no major slowdown in domestic gas
output until early next year.
The gas rig count is about 44 percent off its record peak
of 1,606 from September 2008, and 96 rigs, or nearly 10
percent, below the same week last year.
Rising output from shale gas has been the primary driver of
increased gas production in the last few years, and most
traders agree it will be difficult to tighten the loose gas
market unless horizontal gas drilling slows sharply.
Without serious production cuts or a stronger economic
recovery to boost industrial demand, which accounts for about
30 percent of gas consumption, few traders expect much upside
in gas prices near-term.
(Reporting by Joe Silha;editing by Sofina Mirza-Reid)