Environment & Energy

[font face=Times, Serif][font size=5]Chesapeake to cut natural gas production[/font]

9:30 AM, Jan. 23, 2012

[font size=3]NEW YORK (AP) - Faced with decade-low natural gas prices that have made some drilling operations unprofitable, Chesapeake Energy Corp. says it will drastically cut drilling and production of the fuel in the U.S.

Chesapeake, the nation's second largest natural gas producer, said Monday that it plans to cut its current daily production by 8 percent. Over a year, that means the company would produce the same or slightly less natural gas in 2012 than it did in 2011. Chesapeake produces about 9 percent of the nation's natural gas.

That's a change from the dramatic increase in domestic output seen in recent years. Chesapeake and other drillers have learned to tap enormous reserves of natural gas trapped in shale formations under several states using a controversial 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.

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Chesapeake said it would cut its current activity in so-called dry-gas regions by half, to 24 rigs, by the second quarter. That's 67 percent fewer rigs than an average of 75 rigs the company had in use last year.

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