By OGJ editors
HOUSTON, Mar. 6 -- US drilling activity continued to plummet, approaching a 5-year low with 1,170 rotary rigs working this week, down 73 units from the previous week, said Baker Hughes Inc.

That's the lowest rig count since the week ended May 28, 2004, when there were 1,168 units working. Last year at this same period, there were 1,802 rigs drilling.

Land operations suffered most of the latest loss, of course, down 72 rigs to 1,114 making hole. Offshore drilling was down by 1 rig to 50 in the Gulf of Mexico and a total of 51 drilling in US coastal waters. Inland-waters activity remained unchanged with 5 rigs working.

"North American activity has continued to decline rapidly over the past several months," said analysts at Barclays Capital Inc. "We believe the rig count will continue to fall sharply into the second quarter of 2009."

They said, "The jack up market globally is weakening substantially, with offshore Mexico being the one bright spot. Some recent jack up contract data points in the Middle East have been at day rates, which are down nearly 50% vs. peak day rates."

Among the US rigs still active, 916 were drilling for natural gas, 54 fewer than the previous week. Rigs drilling for oil were down by 19 to 241. There were 13 rigs unclassified. Horizontal drilling declined by 9 rigs to 445. Directional drilling was down 1 rig to 237.

Texas accounted for most of this week's loss, down 58 to 480 rigs working. Oklahoma dropped 5 to 115. Louisiana was down 4 rigs with 140 working. North Dakota and Arkansas lost 3 rigs each to 55 and 47, respectively. Wyoming's count declined by 2 to 47. California and Alaska were unchanged with respective counts of 24 and 11. Colorado gained 1 rig to 63, and New Mexico raised its count by 3 rigs to 42.

In other areas of interest, Pennsylvania had 27 rigs working, up by 2. West Virginia and Utah each lost 3 rigs to 22 and 23 respectively.

Canada's rig count dropped by 95 rigs to 299 drilling, down from 623 working during the same period in 2008.