Friday, July 20, 2012

Natural Gas Rig Count Down 4 to 518

I was just looking at the rig count in Texas' part of the Haynesville shale:

Cumulative Haynesville Rig Count

and was reminded of a joke I heard during the 1986 oil price collapse, as prices dropped below $9.85 from $23.30 six months earlier and $35 in 1981:

Me: I'm getting nervous,I'm hearing bankruptcy rumors about everybody in the patch, how slow is it?

Oil CEO: Well, we're down to two hookers, and one of them's a virgin.

Me: Oh.

From Reuters:
Energy producers this week trimmed the number of rigs drilling for natural gas in the United States to the lowest level in 13 years as low gas prices squeezed profits and forced some to curb dry gas drilling operations.

The gas-directed rig count posted its eighth drop in the last nine weeks, slipping by four this week to 518, the lowest since August 1999 when there were 510 rigs operating, data from oil services firm Baker Hughes showed on Friday.

The gas rig count is down 45 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 on Friday 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 second straight week, dropping two to 1,164. But the horizontal count is still not far below the all-time high of 1,193 hit in nine weeks ago.

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 high levels....MORE