Chesapeake to Cut Natural Gas Production in Response to Falling Prices

New York Times
January 23, 2011

Chesapeake to Cut Number of Gas Rigs
Clifford Krauss

Chesapeake Energy announced on January 23 that it is reducing production of natural gas in response to falling natural gas prices. As stated in this NY Times article, natural gas prices have been steadily falling over the last two years because of a glut stemming from the rapidly increasing production in shale fields like the Haynesville in Louisiana, the Barnett in Texas and the Marcellus in Pennsylvania and West Virginia. And warmer-than-normal weather this winter has also cut normal seasonal demand significantly, putting further downward pressure on natural gas prices. According to the NY Times, Chesapeake’s announcement showed that the oil industry “does not know what to do with all the gas it is able to produce in shale fields, which were considered almost useless until a decade ago when new production techniques, including horizontal drilling and hydraulic fracturing, were first employed in a major way.”