U.S. Energy Information Administration said last week the number of rigs deployed to drill for natural gas declined over the last two years. U.S. natural gas-directed rigs decreased 32 percent between December 2022 and December 2024. EIA said March 4 the decline was concentrated in Haynesville and Appalachia, where gas rigs declined by a combined 34 percent during 2023 (43 rigs) and 24 percent in 2024 (21 rigs). The decline coincides with record-low natural gas prices for most of 2024 and the wider adoption of advanced drilling and completion technologies.
The extent to which producers respond to price changes depends on several factors, including future price uncertainty, contracts, volatility in the market, current costs of materials, equipment and labor, and availability of transportation and storage.
After the U.S. benchmark Henry Hub natural gas price reached a 14-year high of $6.95 per million British thermal units in 2022, it fell 62 percent in 2023 ($4.31 MMBtu) and an additional 16 percent in 2024 ($0.43 MMBtu). Producers have responded to low prices by drilling less and curtailing production. The inventory of DUC wells (drilled but uncompleted) has increased, but producers could complete these wells to quickly increase production.