Saturday, June 27, 2009

Rig Count at 843 for Natural Gas

NEW YORK, June 26 (Reuters) - The number of rigs drilling for natural gas in the United States resumed its downward track, falling 5 to 687 this week, according to a report on Friday by oil services firm Baker Hughes in Houston.
U.S. natural gas drilling rigs have been in a mostly steady decline since peaking above 1,600 in September, but last week the count unexpectedly rose by 7 to 692, the first gain since November 2008.

Sources said new rigs in some prolific shale plays, such as Haynesville in Louisiana or Marcellus in Appalachia, may have been the reason for the unexpected gain.

The number of operating gas rigs now stands at 843 rigs, or 55 percent, below the same week last year, when there were some 1,530 active rigs looking for gas.

Near record-high gas production last year and a deep recession that sharply cut demand led to a severe oversupply that pressured gas prices this spring below the $4 per mmBtu level from their peak above $13 last July.

The 75 percent slide in natural gas prices over the past 11 months and tighter access to credit have forced many producers to scale back drilling operations.

With the natural gas drilling rig count still below 700, most analysts expect to see year-on-year output declines soon, probably early this summer, which should help tighten the overall supply-demand balance. (Reporting by Joe Silha; Editing by Walter Bagley)

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