US natural gas rig count down to near 6-1/2 yr low
Fri May 22, 2009 2:01pm EDT
NEW YORK, May 22 (Reuters) - The number of rigs drilling for natural gas in the United States fell by 17 to 711 this week, the lowest level in nearly 6-1/2 years, according to a report issued Friday by oil services firm Baker Hughes in Houston.
U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September, and now stand at about 782 below the same week last year, the lowest level since Jan. 3, 2003, when there were 706 gas rigs operating.
Traders and analysts have said tight credit and a 75 percent slide in gas prices over the last 11 months forced many producers to scale back drilling operations.
Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to about the $3.25 per mmBtu level in late April from their peak above $13 last July.
With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by early summer, as gas rigs drop below 700 before bottoming, a level that should tighten the overall supply-demand balance. (Reporting by Joe Silha)
NEW YORK, May 22 (Reuters) - The number of rigs drilling for natural gas in the United States fell by 17 to 711 this week, the lowest level in nearly 6-1/2 years, according to a report issued Friday by oil services firm Baker Hughes in Houston.
U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September, and now stand at about 782 below the same week last year, the lowest level since Jan. 3, 2003, when there were 706 gas rigs operating.
Traders and analysts have said tight credit and a 75 percent slide in gas prices over the last 11 months forced many producers to scale back drilling operations.
Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to about the $3.25 per mmBtu level in late April from their peak above $13 last July.
With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by early summer, as gas rigs drop below 700 before bottoming, a level that should tighten the overall supply-demand balance. (Reporting by Joe Silha)
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Replies to This Discussion
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Permalink Reply by DaddyT on
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I think this article states what people on this site already know, and is no surprise to us.
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Permalink Reply by Carter on -
Meaningless without addressing the demand side, unless you are long price. Most folks on this blog are landowners, industry professionals, etc. Price escalation due to decreased supply does not equal higher bonuses for leases or more jobs.
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Permalink Reply by sesport on
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Do you think the part in the last line about "year-on-year output declines expected by early summer" is accurate? That's not too far off on the calendar.
thanks - sesport :0)
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Permalink Reply by Les Bamburg on
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Sesport, I think we have to get to 3rd & 4th Qtr before we see any real decline in production. Plus there is likely to be at least a 1-2 Bcfd increase in LNG imports beginning mid-year. Also not sure we have reached the bottom on gas demand.
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