EnCana cuts natural gas output

Continent’s largest producer reduces output and trims costs as low prices make production uneconomic

The continent’s largest natural gas producer is turning off the taps on a hefty chunk of its daily natural gas production, saying low prices make it too expensive for EnCana Corp. ECA-T to bring some of its gas to the surface.

With gas prices hovering around $4 (U.S.) for 1,000 cubic feet, EnCana has dropped its production by “a couple hundred million cubic feet per day in Canada, and a couple hundred million cubic feet in the U.S.,” chief executive officer Randy Eresman said yesterday, adding that the company is also cutting spending by 10 per cent.

EnCana had planned to produce 3.8 billion cubic feet a day this year.

Gas prices have remained weak in the face of leaping crude prices, largely because of a glut of cheap new gas supply coming from unconventional gas sources that are being tapped using new technology.

“At these prices … on a full-cycle basis, they’re below what’s economic for any producer,” Mr. Eresman said. “We are shutting in some of our gas and have shut in some across our portfolio.”

Globe and Mail