NEW YORK — Faced with decade-low natural gas prices that have made some drilling operations unprofitable, Chesapeake Energy Corp., the nation’s second largest natural gas producer, said Monday it will cut drilling and production of the fuel in the U.S. by 8 percent.
Chesapeake produces about 9 percent of the nation’s natural gas. Its plan calls for a cut of 500 million cubic feet of gas per day in two drilling regions in Texas, Arkansas and Louisiana.
Chesapeake and other drillers have learned to tap reserves of natural gas trapped in shale formations under several states using a drilling method known as hydraulic fracturing combined with horizontal drilling. The drillers force millions of gallons of water and sand, laced with chemicals, into compact rock to create cracks that serve as escape routes for the gas.
Extreme weather for two winters and two summers kept natural gas prices high by boosting demand for home heating and power generation. But this season’s mild winter weather especially in the Northeast and Upper Midwest, has crimped demand and led to a glut.
Natural gas prices have fallen 23 percent since the beginning of the year. Storage levels of the fuel are 21 percent higher than their 5-year average for this time of year, according to the Energy Information Administration.
Read tomorrow's Arkansas Democrat-Gazette for full details.
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