The number of natural gas rigs at work in the United States has dropped to 81, Kallanish Energy reports.

That total dropped by 4.7% from 85 from April 24 to May 1 in data released last week by Baker Hughes, the well services company.

That total has also declined by 102 from 183 rigs a year ago.

Most of those gas rigs remain concentrated in the Marcellus and Utica shales in Pennsylvania, West Virginia and Ohio and in the Haynesville Basin in Louisiana and Texas, according to the U.S. Energy Information Administration (EIA).

Those two gas-rich basins accounted for 50% of the decrease in natural gas-directed rigs over the last year, it said.

The Marcellus-Utica and Haynesville basins together account for 78% of remaining natural gas-directed rigs in the United States, the EIA said.

The Marcellus-Utica has 39 rigs at work, while the Haynesville Shale has 32 rigs.

It reported that natural gas rig count peaked at 202 rigs on Jan. 8, 2019, according to Baker Hughes data. That was the highest level since 2015.

In January 2019, the Henry Hub spot price averaged $3.05 per million British thermal units. By the beginning of 2020, the Henry Hub spot price averaged $2.00 per MMBtu, which is historically low for that time of year, it said.

One short-term factor contributing to low prices is lower demand due unseasonably warm weather. A longer-term factor affecting the price drop is the rapid growth in dry natural gas production, it said.

The EIA noted that production grew in 2019, even through the rig count declined. It reached 96.3 billion cubic feet per day of dry natural gas production.

Since then, dry natural gas production has declined as relatively low prices have reduced the financial incentive for producers to drill new natural gas wells.

Natural gas production is projected to drop to 85.9 Bcf/d in March 2021, after which is it is projected to start increasing, the EIA said.

This post appeared first on Kallanish Energy News.