US oil rigs drilling for natural gas drops to lowest level in 13 years

US oil rigs drilling for natural gas has dropped to the lowest level in 13 years, Reuters has reported.

Producers in the country have significantly slowed their efforts to extract natural gas in the US, and have instead turned their focus to more profitable oil and gas liquids wells. Energy companies operating in the US have added two oil-focused rigs this week, bringing the total to 1,416. The total had stood at a 25-year high of 1,427 two weeks ago, before 13 rigs were brought offline last week.

Conversely, the gas-directed rig count posted its ninth drop in the last ten weeks, sliding by 13 this week alone to 505. This is the lowest level since 1999, when 498 rigs were operating in the US, according to data from oil services firm Baker Hughes.

Gas rigs peaked in October last year, but have since dropped 46 per cent. The significant drop, which has been staged over the last nine months, has led experts to believe that producers are getting serious about stemming the flood of record gas supplies.

Horizontal rigs are also suffering a downward trend, falling for the third straight week as 13 rigs were taken out of service. However, the drop hasn’t been as severe as in other parts of the industry, falling only 3.5 per cent from the record high of 1,193 set in May.

Dry gas drilling has been hit hard by current prices, and most suppliers are finding it hard to make the numbers add up. It is unsurprising, therefore, that drillers have moved rigs to more lucrative shale oil and shale gas liquid, which still produce plenty of associated dry gas that ends up in the market after processing.

Even though gross US gas production has slowed since January, output is still flowing at near all-time highs despite the sharp decline in dry gas drilling.

Posted by Lauren Steadman