Abu Dhabi (Platts)--26May2009

The falling natural gas rig count in the US seen in the last six months
has not been matched by a drop in productivity, Porter Bennett, CEO of US
consultancy Bentek Energy, said Tuesday.

While the rig count has fallen by 50% in the last six months, with 1,000
rigs coming out of operation, productivity fell by "just a few hundred million
cubic feet per day," Bennett said, speaking at the Gastech conference in Abu
Dhabi.

There were a number of factors explaining why productivity had not
fallen, Bennett said, but "it boils down to innovation and improvements in
efficiency."

Rig productivity had improved 50% in the last few years, with the average
number of wells drilled by a single rig rising from 1 in the first quarter of
2005 to 1.5 in the first quarter of 2009.

And for many producers, much of that increase occurred just in the last
year, Bennett said. One independent producer had drilled 20 wells in 2008
using 18 rigs, but in 2009 drilled the same number of wells using just 12
rigs.

Many commentators had focused on the drop in rig count as a sign that US
production might tail off in the coming months, thereby creating space for LNG
imports and setting the stage for a price rise, Bennett said on the sidelines
of the conference. But the rig count drop was a "distraction," he said, adding
that US production would likely remain robust.

US production of natural gas grew by 4 billion cubic feet/day in 2008, to
61.4 Bcf/d. And much of that was due to unconventional sources of gas. Most of
those sources were "very new," with many of the major shale gas fields
currently producing not even mentioned in annual reports in 2007.

The strong production meant the US was facing a supply build of 3.1 Bcf/d
this year, he said. Although supplies would fall by 1.4 Bcf/d, demand would
drop by an even greater amount, 4.5 Bcf/d.

That meant wholesale gas prices were likely to stay low for some time, he
added.
--Jonty Rushforth, Jonty_rushforth@platts.com