The biggest long-term threat to oil and natural-gas production in the Gulf of Mexico isn't hurricanes. It is the dwindling supply of drilling equipment.

Jack-up and deep-water rigs, the massive platforms and ships that drill for oil and gas in the ocean, are leaving the Gulf of Mexico for more lucrative jobs elsewhere. This is expected to accelerate production declines in the Gulf, putting upward pressure on domestic energy prices. The rig exodus is squeezing what was an already tight market for drilling equipment. In 2001, about 148 rigs were in the Gulf. Now, about 90 remain, and more are expected to leave soon.

The rig migration will have the most pronounced effect on natural-gas production and prices because most of the rigs leaving the Gulf are jack-ups used to find gas in shallower waters. Gulf gas reservoirs are often quickly exhausted, so energy companies must keep punching new wells to maintain production. It "certainly puts an upward bias to natural-gas prices in the long-term," says Jeff Tillery, an analyst with Pickering Energy Partners.

The Energy Information Administration, a government agency that tracks data on the industry, predicts natural gas will cost $10 a million British thermal units by the end of 2007, up from Friday's close of $6.104 in New York Mercantile Exchange futures trading. (Nymex was closed on Monday and Tuesday this week.) Gas cost $2.43 a million BTUs as recently as the end of 2001.

Gas is largely a local market, so upward pressure on prices can't easily be offset by increasing imports from overseas. By contrast, oil is a global commodity, and the impact of the Gulf's shrinking rig fleet on oil pricing will be smaller, but not negligible. Hurricane-related disruptions of the crude-oil flow from the Gulf sent world-wide prices jumping roughly $10 a barrel in each of the past two years, underscoring the importance placed on the region's production. Analysts expect declining Gulf production to be one of several factors keeping oil prices between $50 and $70 a barrel during the next three years or so. Oil closed at $73.93 a barrel Friday in Nymex trading.

Why has the rig count dropped so sharply? The duo of hurricanes Katrina and Rita in 2005 destroyed five rigs. But the bigger factor is that drilling companies are signing long-term deals to send rigs overseas.

Houston's GlobalSantaFe Corp., for example, agreed late last month to send four jack-ups -- rigs that stand on stilts and are used in shallow waters -- to the Persian Gulf, where Aramco, the Saudi national oil company, will pay more than $160,000 a day to drill for oil and gas for four years. Ensco International Inc. will send a jack-up to Tunisia next year, where it will fetch day rates of more than $200,000 for as much as two years of work. Contracts for the larger deep-water rigs are fetching day rates exceeding $500,000.

Fewer available rigs mean fewer new wells to stem the annual declining production in the Gulf of Mexico, a region that produces about one-quarter of U.S. oil and gas. Federal offshore oil production, predominantly in the Gulf, decreased 19 percent between 2003 and 2005, to 458 million barrels a year, according to the EIA. Offshore natural-gas production fell to four trillion cubic feet a year in 2004 from 5.1 trillion cubic feet a year in 2001, according to the latest data.

The rig departures also represent something of a sea change in the global energy market. For years, the Gulf of Mexico -- the birthplace of offshore drilling and a very active region for underwater exploration -- dictated global contract terms for drilling equipment. But with the emergence of several offshore zones, the Gulf is being eclipsed by hotter prospects off the coasts of Africa, the Middle East and China. By contrast, many of the Gulf of Mexico's richest targets have already been drilled, leaving only expensive deep-water and ultradeep reservoirs untapped.

"There are much bigger fish to fry elsewhere in the world," says Matt Conlan, an analyst with Weeden & Co., an equities-trading firm in Greenwich, Conn. Foreign oil companies have larger drilling programs, he says, and "more conviction that they can keep a rig busy for four or five years."

The demand has sparked a dramatic increase in offshore rig-building. Companies world-wide are currently building 91 major offshore rigs, up from fewer than 10 in 2003, according to ODS-Petrodata, an offshore-oil-and-gas market-analysis firm. But this wave of new rigs isn't expected to start plying the seas until 2009. And it isn't uncommon for this type of construction to run into delays. "One of the questions being asked is, 'Will the rigs come out on time?'" says Tom Kellock, ODS-Petrodata's head of consulting and research in Houston. He noted that several rigs missed their completion dates during the last rig-building boom in the late 1980s and early 1990s. To build a jack-up rig costs $160 million to $190 million, and deep-water rigs can cost as much as $600 million, according to ODS-Petrodata.

To compete with international markets, Gulf of Mexico producers will have to pay higher rates to lease rigs. In February, BP PLC agreed to pay Transocean Inc. $520,000 a day to keep a massive drill ship in the Gulf; the three-year contract starts at the end of 2007. BP leased the same ship in 2004 for $184,500 a day. The ship is nearly as long as three football fields and can drill in waters that are 10,000 feet deep.

A spokesman for Apache Corp., a Gulf energy producer, says, "At some point, the day rate could make it harder to do things."

"Just about any way you cut the cards, the Gulf of Mexico looks like it will be struggling in (rig) population, and that is likely to force day rates even higher," says John Olson, co-manager of Houston Energy Partners, an affiliate of Sanders Morris Harris Group Inc. "It's become such a seller's market, they're going to have to pay the piper in terms of higher day rates and much larger contracts to keep equipment here."