Wednesday, June 17, 2009

Natural gas producers cut back production in depressed market

HOUSTON – Faced by record-high inventories and depressed prices, natural gas producers have been idling rigs in an effort to reduce output and boost prices.
They have reduced by 56 percent the number of rigs drilling for natural gas, to 700 from the September 2008 peak of more than 1,600.
But natural gas prices have largely remained below $4 per million British thermal units since March, after falling 78 percent from a high of more than $13 last summer.
A recession-fueled fall in demand followed rapid supply growth last year due to a boom in gas produced from shale rock. Inventories continue to rise even as producers reduce production. Natural gas in storage reached 2.443 trillion cubic feet for the week ending June 5, the U.S. Energy Information Administration reported on June 11, up from 2.337 trillion a week earlier and 1.875 trillion in early June 2008.
EIA projected in its monthly short-term outlook that total natural gas consumption is projected to fall by 2.2 percent this year and then increase slightly in 2010.

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