UPDATE 1-US natgas rig count falls by 3 to 892-Baker Hughes

Fri Sep 9, 2011 5:26pm GMT



* Gas-drilling rig count slips for third straight week
   * Horizontal rigs fall after record high two week's ago
 (Adds price reaction, details, background)
    NEW YORK, Sept 9 (Reuters) - The number of rigs drilling
for natural gas in the United States fell by three this week to
892, the third straight weekly decline, data from oil services
firm Baker Hughes showed on Friday.
    Horizontal rigs -- the type most often used to extract oil
or gas from shale -- fell two to 1,134 after hitting a record
high of 1,140 two week's ago. Horizontal drilling rigs comprise
part of the overall gas rig count.
    (Rig graphic: r.reuters.com/dyb62s )
    Front-month U.S. natural gas futures NGc1 were unmoved by
the data, remaining about 5 cents, or 1.3 percent, down at
$3.93 per million British thermal units after the report.
    The gas rig count is 88 rigs below the same week last
year.
    Some firms have shifted spending away from gas to more
profitable liquids or oil-related ventures due to relatively
low gas prices. The changes have yet to be reflected in
industry data, which still show production at record levels.
    The U.S. Energy Information Administration expects marketed
natural gas production this year to climb to a record high
65.80 billion cubic feet per day, easily eclipsing the previous
high of 62.05 bcf daily in 1973.
    There has been record heat and power demand this summer,
but traders said high gas production has easily offset the
surge in cooling needs and some storm-related supply cuts.
    The gas rig count of 892 remains well above the 800 level
some analysts say is needed to cut production significantly and
tighten overall supplies.
    Most analysts expect no major slowdown in domestic gas
output until early next year.
 (Reporting by Edward McAllister; Editing by Alden Bentley)

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