Natural gas glut means drilling boom must slow

Sunday, April 08, 2012

So much natural gas is being produced that soon there may be nowhere left to put the country's swelling surplus. After years of explosive growth, natural gas producers are retrenching.

Analysts say that before long companies could have to start slowing the gas flow from existing wells or even take the rare and expensive step of capping off some wells completely.

"Something is going to have to give," says Maria Sanchez, manager of energy analysis at Bentek Energy, a research firm.

Between November and March, daily natural gas demand fell 5 percent, on average, from a year earlier, according to Bentek Energy. Yet production grew 8 percent over the same period.

If current production and consumption trends were to continue, Bentek estimates that storage facilities would be full on October 10.

Storage capacity, which has grown by 15 percent over the past decade, cannot be built fast enough to address the rapidly expanding glut. And analysts note there is little financial incentive to build more anyway.
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