Gas producers in North America including Chesapeake Energy Corp. are killing their commodity’s biggest rally in 10 months by opening more wells, putting the U.S. on track to have record gas supplies this year.
After a 44 percent price rise beginning Sept. 10, the fuel began a slide Oct. 30, falling 9.2 percent by Nov. 12 as stockpiles swelled to an all-time high this month, valued at about $15 billion using the current spot price. Gas production in 2013 is expected to match this year’s record level, the U.S. Energy Information Administration forecast this month.
The rebound stalled as Chesapeake, the second-biggest U.S. producer, and rivals added output in areas such as the Marcellus Shale in Pennsylvania. ConocoPhillips and Encana Corp. brought back curtailed output. Some producers that struggled when the fuel hit a 10-year low in April are opening new wells, dashing hopes by others that a depressed rig count would boost prices.
“Unfortunately all the players in this game don’t read by the same Bible,” said Peter Howard, chief executive officer of the Canadian Energy Research Institute in Calgary. Producers need to keep gas wells shut and “force the price up,” he said.
The U.S. is on a path to surpass Russia by 2015 as the world’s top producer of fuel used for heating, power generation and chemicals, the International Energy Agency said this week.