North American Rig Count To Rise In 2012-Baker Hughes

New York (Reuters) -- The number of rigs drilling for oil and gas in North America will jump this year even as companies shift their focus from natural gas to oil, U.S. oil services firm Baker Hughes said on Tuesday.

Baker Hughes expects the number of oil- and gas-drilling rigs to jump by five per cent to 2,409 in 2012, the company's new CEO Martin Craighead said, addressing analysts after the company's fourth-quarter earnings report.

Despite the total growth in rig count, Baker Hughes expects the number of rigs drilling for natural gas alone to fall by 218 while the count for rigs drilling only for oil will rise by 220 in 2012.

The forecast confirmed underlying shifts in U.S. energy production after natural gas prices sank to 10-year lows last week.

Companies like Chesapeake Energy, the nation's second largest gas producer, are turning away from cheaper gas production to the more lucrative oil reserves trapped in shale rocks from Ohio to North Dakota.

Chesapeake announced on Monday an immediate cut of eight per cent, or 0.5 bcf per day, in U.S. gas production, a decision other producers are likely to follow.

However, the oil rig count, which exceeded 24-year highs in 2011, will continue to rise as U.S. companies unlock reserves trapped in shale rock across the United States and Canada using horizontal drilling and hydraulic fracturing technologies.

U.S. energy policy, however, might put a curb on any drastic shift.

U.S. president Barack Obama is expected to encourage booming U.S. natural gas production as part of his State of the Union address Tuesday as a "new era for American energy," according to sources familiar with the matter.