Bloomberg: Natural Gas Glut Continues Despite
Drilling Reduction

February 11th, 2010 • Filed Under
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A report from Bloomberg says U.S. natural-gas production is unexpectedly rising even as energy companies halt drilling at the fastest pace in more than two decades because newly found fields are gushing more fuel than previous discoveries.

The price of gas, the worst-performing U.S. energy futures contract of 2009, is on the verge of further declines when colder-than-normal weather and blizzards that have propped up demand from Chicago to Baltimore come to an end, said Porter Bennett, chief executive officer of Bentek Energy LLC, which tracks North American gas output and shipments.

Figures compiled by regulators in Texas and Wyoming, the biggest U.S. gas sources, are overstating the drain on supply from rigs idled by producers such as Chevron Corp. in response to low prices last year, said Corey Rhoden of HPDI LLC, an Austin, Texas, firm that monitors state-by-state gas output. Executives at Chesapeake Energy Corp. and hedge-fund manager Moncrief Willingham Energy Advisers LP last week cited state- level data in predicting an impending supply crunch.

“A massive collapse in the gas supply is a pipe dream,” said Subash Chandra, a managing director who follows the energy industry at Jefferies & Co. in New York. “Everything we can measure is telling us that gas production is not falling.”

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