Fri Mar 26, 2010 5:27pm GMT
NEW YORK, March 26 (Reuters) - The number of rigs drilling for natural gas in the United States climbed 2 this week to a fresh 13-month high of 941, according to a report on Friday by oil services firm Baker Hughes in Houston.
It was the 13th straight weekly gain and puts the gas rig count at its highest level since Feb. 27, 2009, when there were 970 gas rigs operating.
The U.S. natural gas drilling rig count has rebounded nearly 42 percent since bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
While the rig count is still well below its peak above 1,600 in September 2008, it now stands at 131 rigs, or 16 percent, above the same week last year.
Many gas producers scaled back drilling earlier last year with credit tight and natural gas cash prices sinking late last summer to about $2 per million British thermal units (mmBtu), a 7-1/2 year low and down some 85 percent from July 2008 highs above $13.
With current gas prices below the $4 area off nearly 35 percent since early January highs above $6, some analysts expect to see a slowdown in drilling, noting current prices were no longer a strong incentive to start new wells.
The break-even point for some key shale basins like Haynesville in Louisiana and Marcellus in Appalachia ranges between $3.50 and $4, according to some analysts.
But traders noted production has not slowed much, if at all, this year, with recent government data showing December gross natural gas output fell 0.7 percent from November because of well freeze offs but was still 0.9 percent above December 2008 levels.
Some traders said rig cuts eventually may be necessary to balance the market unless demand, particularly from the industrial sector, starts to recover with the economy. (Reporting by Joe Silha; Editing by John Picinich)
Source: http://uk.reuters.com/article/idUKN2619951220100326?sp=true
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