The number of rigs actively searching for natural gas in North America continues to decline, but the rate of the decline did decrease from the previous week, according to Baker Hughes' rig count for the week ending April 24.
Following up the prior week's drop of 30 rigs, 18 more rigs packed it in, according to Friday's report, which leaves 742 natural gas-seeking rigs still on the job in the United States. The current low level of activity has not been seen in more than six years.
Low natural gas prices and the depressed global economy continued to pressure U.S. natural gas producers to rein in operations. Earlier this month, Chesapeake Energy Corp. said it will shut in more natural gas production because of continued low wellhead prices (see Daily GPI, April 17). The company plans to curtail 400 MMcf/d (gross), which is twice as much as it began to defer in early March (see Daily GPI, March 3).
The count of rigs searching for natural gas in the country has dropped 54% since September 2008's peak of 1,606. The last time fewer rigs were searching for gas domestically was during the week ending Feb. 7, 2003, when 734 rigs were operating.
Natural gas futures prices are also at lows not seen in more than six years. Front-month natural gas futures put in a low for the down move of $3.275 on Friday -- a price level that hasn't been seen since September 2002. Friday's $3.297 close for May natural gas is 76% lower than last summer's $13.694 peak for front-month futures.
Natural gas prices, production and demand are expected to continue on a downward spiral through the rest of the year and possibly pick up in 2010 if the economy recovers, the Energy Information Administration said in its recently released Short-Term Energy and Summer Fuels Outlook (see Daily GPI, April 15).
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