Chesapeake Scales Back Its Dry Gas Drilling Operations

Scott Detrow / StateIm­pact Pennsylvania

Chesa­peake CEO Aubrey McClen­don speaks to the Mar­cel­lus Shale Coalition’s “Shale Gas Insight” conference

Here’s a sign reduced nat­ural gas prices are hav­ing an impact on pro­duc­tion: Chesa­peake Energy is scal­ing back its drilling operations.

The Cen­tral Penn Busi­ness Jour­nal reports:

Chesa­peake Energy Corp. plans to reduce its dry gas rig count from 75 in 2011 to 24 by the sec­ond quar­ter, the com­pany said in a state­ment. Half will oper­ate in the Mar­cel­lus Shale, and six each in the Hay­nesville and Bar­nett shales in the Gulf Coast states, the Okla­homa City-based com­pany said.

Chesa­peake also will reduce invest­ment in dry gas pro­duc­tion from $3.1 bil­lion in 2011 to $900 mil­lion this year, and will reduce daily pro­duc­tion imme­di­ately by 8 per­cent, or half a bil­lion cubic feet, it said. Chesa­peake will lower pro­duc­tion an addi­tional 8 per­cent, if needed. The com­pany accounts for about 9 per­cent of total U.S. production.

Chesa­peake said it plans to shift resources to wet-gas plays. Unlike dry gas, which is solely a fuel, wet gas byprod­ucts pro­vide valu­able feed­stock to the chem­i­cal and plas­tics industries.

Accord­ing to our Shale Play app, Chesa­peake oper­ates more than 100 pro­duc­ing Mar­cel­lus Shale wells in Pennsylvania.