Natural gas supply glut creates whiplash for producers

By Shelby Webb | 02/26/2024 06:40 AM EST

The U.S. is “swimming in gas,” as one expert put it, prompting producers to consider sealing wells they rushed to drill just two years ago.

A small vehicle drives past a network of piping at Cameron LNG export facility in Hackberry, Louisiana.

A small vehicle drives past a network of piping carrying natural gas in Hackberry, Louisiana. Martha Irvine/AP

A national glut of natural gas has driven prices to three-decade lows, confronting producers with a choice: proactively cut off the supply or risk losing even more money in the hopes the market changes.

Chesapeake Energy, one of the nation’s largest natural gas producers, made their decision last week, announcing plans to slash production by 15 percent and capital expenditures by 20 percent this year. Experts expect other companies to follow suit.

“Chesapeake was the first one to drop the hammer. There are going to be a string of these announcements as weeks pass by,” said Al Salazar, director of intelligence with analytics firm Enverus. “We’re swimming in gas right now.”


That glut is reflected in the country’s natural gas storage levels. As of Feb. 16, the amount of natural gas in storage was 12 percent higher than it was a year ago — and 22.3 percent higher than the five-year average from 2019 to 2023, according to the U.S. Energy Information Administration.