UPDATE 1-U.S. natgas rig count unchanged for week at 354 -Baker Hughes

Fri May 24, 2013 1:31pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Gas-directed rig count steady, just above 18-year low
    * Horizontal rigs fall for second straight week
    * Oil rig count also drops for second week

    NEW YORK, May 24 (Reuters) - The number of rigs drilling for
natural gas in the United States was unchanged this week,
hovering just four rigs above the 18-year low posted two weeks
ago, data from Houston-based Baker Hughes showed on
Friday.
    The gas-directed rig count stood at 354 for a second week
after sinking to 350 during the week ended May 10, its lowest
level since June 1995. 
    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 three weeks ago, stirred concerns
that producer hedging at higher price levels could keep dry gas
output flowing. Prices this week have climbed into the $4.20s.

    The oil-focused rig count fell for the second straight week,
dropping by six to 1,402 after posting an eight-month high two
weeks ago, Baker Hughes data showed. The oil count is up 19
rigs, or 1.4 percent, from the same week last year.
    Baker Hughes also reported horizontal rigs, the type often
used to extract oil or gas from shale, fell for a second week,
shedding nine to 1,087. The horizontal count is down nearly 9
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 down about 2 cents in the 
$4.24 area just before the Baker Hughes data was released,
showed little reaction to the report.