UPDATE 1-US natgas rig count edges up from 18-yr low -Baker Hughes
* Gas-directed rig count climbs slightly from 18-year low * Horizontal rigs fall for first time in three weeks * Oil rig count drops after three straight weekly gains NEW YORK, May 17 (Reuters) - The number of rigs drilling for natural gas in the United States rose this week by four after posting an 18-year low the previous week, stirring concerns that some producers were wading in to dry gas drilling. The gas-directed rig count edged up to 354 this week after sliding to 350 the previous week, its lowest since June 1995, 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 gas prices, which hit a 21-month high of $4.444 per million British thermal units just over two weeks ago, may have offered some producers a hedging opportunity that could keep dry gas output flowing. Prices this week have slipped to the $3.90s. The oil-focused rig count fell for the first time in four weeks, dropping by four to 1,408 after posting an eight-month high the previous week, Baker Hughes data showed. The oil count is up 26 rigs, or 2 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 three this week to 1,096. The horizontal count is down 8.1 percent from the record high of 1,193 set in May 2012. Drilling for natural gas has mostly been in decline for the last 18 months. The count is down about 62 percent since peaking in October 2011 at 936, but so far production has not slowed much, if at all, 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 recently raised its estimate for domestic natural gas production in 2013, expecting output this year to be up about 1 percent from last year. If realized, it would be the third straight year of record production. Gas futures prices, which were up about 3 cents in the $3.96 area just before the Baker Hughes data was released, climbed about 3 cents after the report.
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