Domestic oil and natural gas drilling in the second quarter fell by nearly 50% from the same period a year ago, with gas activity taking the biggest hit in 10 years, the American Petroleum Institute (API) reported last week. The three-month decline was more than double the percentage drop (22%) witnessed in the first quarter (see NGI, April 20).

For the second quarter in a row, U.S. drilling fell to levels not seen since 2003-2004, according to API, which represents major producers. It estimated that 8,038 oil wells, natural gas wells and dry holes were completed in the second quarter of the year, down 46% from the comparable period in 2008. This compares to a completion level of 11,071 wells and dry holes in the first quarter.

While natural gas continued to be the primary target for domestic drilling, it suffered its most severe quarterly decline this decade, API said. An estimated 4,225 gas wells were completed in the second quarter, down 43% from the second quarter in 2008 and significantly below the number of gas wells that were completed in the first quarter (5,735).

Oil well completions continued to subside as well, with total estimated oil well completions in the second quarter falling 53% below year-ago levels, the institute noted. This is more than double the first quarter percentage drop in oil well completions to 4,060 wells.

The estimated number of second quarter exploratory oil and gas wells drilled plunged 63% from 2008 to 336 wells, while the number of development oil and gas wells slipped 46% to 6,761 wells in the second quarter, API said.

It further reported that total estimated footage drilled in the second quarter was 48.1 million feet, down 53% from the same period a year ago. An estimated 64.5 million feet was drilled in the first quarter.

The domestic natural gas rig count as of last Friday had slipped to its lowest level in more than seven years, according to a report by Baker Hughes Inc. (BHI).

According to BHI, the number of rigs drilling for gas in the United States stood at 665, which is down 57% from a high last September when more than 1,600 gas rigs were in operation. The rig count is lower now than it's been since May 3, 2002, when there were 640 gas rigs in operation, BHI said.

The U.S. gas rig count has been in free-fall since last fall when gas prices slid almost 70% from their summer highs and access to credit markets tightened.

A forecast of a colder-than-normal winter, combined with mildly bullish gas storage figures reported by the Energy Information Agency, factored into gas futures prices moving higher Thursday to $3.668/Mcf.'s Joe Bastardi said last Wednesday this coming winter may be the coldest in five years in an area stretching from Boston to Washington, DC (see related story).

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