* Gas-directed rig count falls to lowest since July 1999
* Horizontal rig count drops for third straight week
* Oil drilling rigs gain slightly, still below 25-year high
NEW YORK, July 27 The number of rigs drilling
for natural gas in the United States dropped this week to the
lowest level in 13 years as producers continued to slow dry gas
drilling operations and focus instead on more profitable oil and
gas liquids wells.
The gas-directed rig count posted its ninth drop in the last
10 weeks, sliding by 13 this week to 505, the lowest since late
July 1999 when there were 498 rigs operating, data from oil
services firm Baker Hughes showed on Friday.
The gas rig count is down 46 percent since peaking last year
at 936 in October. The nine-month-long drop has fed expectations
that producers were getting serious about stemming the flood of
record gas supplies.
Baker Hughes earlier this month said it expects the U.S.
natural gas rig count to stand at 488 by the end of this year,
down 321 from 2011 levels.
The company also reported that horizontal rigs, the type
often used to extract oil or gas from shale, fell for the third
straight week, dropping 13 to 1,151. But the horizontal count is
down just 3.5 percent from the record high of 1,193 set in May.
Dry gas drilling has become uneconomical at current prices,
but drillers have moved rigs to more lucrative shale oil and
shale gas liquid plays which still produce plenty of associated
dry gas that ends up in the market after processing.
Rising output from shale has made it difficult to slow
overall dry gas production, which is still flowing near record
Oil-directed horizontal rigs now represent about 70 percent
of the total horizontal count, up from just 53 percent at the
start of the year and 43 percent one year ago.
OIL DRILLING EDGES UP SLIGHTLY
U.S. energy companies added two oil-focused rigs this week
bringing the total count to 1,416.
The oil rig count hit a 25-year high of 1,427 two weeks ago
before 13 rigs were brought offline last week.
Baker Hughes president Martin Craighead said last week that
the drilling boom in North Dakota's Bakken shale, which has so
far led new U.S. domestic oil production, may be curtailed if
oil prices drop below $80 a barrel.
The rig count in North Dakota fell this week by 5 to 193.
Major Bakken producers like Continental Resources
attribute the drop to their move to replace older rigs with
Houston-based Baker Hughes expects the oil rig count to
stand at 1,430 by year end, up about 300 from a year earlier.
GAS PRODUCTION STILL NEAR RECORD HIGHS
While gross U.S. gas production has slowed slightly from
January's record peak, output is still flowing at near all-time
highs despite the sharp decline in dry gas drilling.
The Energy Information Administration expects U.S. marketed
as production in 2012 to rise by 4.2 percent to a record 68.98
billion cubic feet per day, easily beating last year's record of
66.22 bcf daily.
Front-month natural gas futures on the New York Mercantile
Exchange, which were down 7.1 cents at $3.034 per mmBtu
just before the Baker Hughes data came out at 1 p.m. EDT, edged
up to about $3.05 after the report.