Nation’s No. 2 producer shunning natural gas, shrinking rig count

Chesapeake Energy Corp., which calls itself America’s Champion of Natural Gas, has announced that it’s basically giving up on gas drilling this year, adding to an industrywide retreat from what has been deemed the fuel of the future. The Houston Chronicle reports that the nation’s second-largest natural gas producer—after Exxon Mobil Corp.—says, as part of a major contraction in its operations, it has cut its plan for new gas exploration by 83%. Chesapeake previously had planned to operate 47 gas rigs in 2012, but now hopes to cut that rig count to eight by the end of the year, executives revealed during a conference call with analysts on Tuesday to discuss the company’s second-quarter earnings. That shift by the most prominent proponent of natural gas came as fossil fuel producers across the spectrum are shying away from gas drilling, even though they have invested billions of dollars in its promise as a major energy resource for the future. The problem is price. “Clearly you’re going to have to have higher prices than $3 [per million Btu] in 2013 to incentivize producers to come back,” Chesapeake CEO Aubrey McClendon says. “For us, it’s got to be a pretty healthy price to pry our rigs away from our liquids-focused areas.” Natural gas closed Tuesday at $2.964 per million British thermal units on the New York Mercantile Exchange, up 5.6 cents. Read the full story here.