Gulf of Mexico Drilling Is Picking Up : Energy: A surge in natural gas prices since Hurricane Andrew has renewed interest. But the industry may never approach its former size.

After a long slump in the nation’s offshore drilling, a surge in natural gas prices has renewed interest in the gas-rich Gulf of Mexico and pumped new life into the industry, experts say.

But it could be years before idled rigs go back to work, and for some struggling companies, that will be too late.

Even if offshore drilling recovers, analysts predict that it will not approach its former size. And it will have little more than a trickle-down benefit on the Gulf region’s economy, which has cut its dependence on the oil business.

Since Hurricane Andrew swept through the Gulf in August, natural gas prices have soared nearly 35% to $2.40 per million British thermal units.

Analysts expect most of the price gains to be sustained, but add that demand for rigs will take time because of surplus equipment left over from the boom years of the 1980s.

“The area is so totally oversupplied with rigs right now,” said Tom Marsh of Offshore Data Services in Houston. “We can’t expect the market to balance any time soon.”

The surplus equipment has also depressed rental rates for rigs.

But industry experts said that even if higher natural gas prices do lead to better rates, drilling activity will be curbed by limited financing and widespread restrictions on drilling.

Only 85 of the 151 offshore rigs in the Gulf are now operating, down from a peak of 230 in 1984. But since many laid-up rigs need repairs, smaller companies face trouble financing expansion, said Robert Spears, chairman of consultants Spear & Associates in Tulsa, Okla.

“I expect the initial growth in demand will be very profitable, but soon there will be a strain on capacity,” said Spears.

“The industry is in a major period of change, and there will be a lot of consolidation,” said Marsh. “You won’t need 25 companies to work various rigs, when only 100 are in use.”

Drilling bans off the Atlantic and Pacific coasts and much of Florida’s Gulf shore will prevent the euphoric expansion that overtook the industry in the late 1970s, when oil prices hit nearly $40 a barrel, analysts say.

Many areas still open are in deep water, where drilling is very costly.

“Enough pockets remain open to keep drilling busy for some time. But in terms of really expanding, there are restraints,” said Paul Kuklinski, president of Boston Energy Research.

While U.S. natural gas is ensured a domestic market because of difficulties in importing gas, analysts predict that U.S. oil exploration will continue to move abroad to areas with less strict environmental regulations.

“Our outlook is for some improvement, but it is not going to be another boom,” said Cyrus Tahmassebi, chief economist at Ashland Oil.

“In 1981, oil was $35 a barrel, and people were predicting it would rise to $100. Now any expansion will be much more cautious,” he said.