Chesapeake Energy to put 80 new natural gas well into suspended animation until prices rebound

(Bloomberg) – Chesapeake Energy Corp. plans to put 80 new natural gas wells into suspended animation by the end of this year with an eye to turning them on when prices for power-plant and heating fuel rebound from the lowest prices in years.

The company already has drilled 15 such wells that are sitting in reserve, Chief Operating Officer Josh Viets said on the sidelines of Hart Energy’s DUG GAS+ Conference & Exhibition 2024 in Shreveport, Louisiana.

“The way I like to think about it is we’re using the reservoir as storage,” said Viets, who formerly oversaw ConocoPhillips’ Permian basin operations. “When the market says, ‘hey, I need more gas,’ we’ll be in a position to quickly restore that to help meet the needs of consumers.”

Gas prices have been hovering near a four-year low as an unusually mild winter dampened demand amid record production that swelled fuel stockpiles held in underground caverns. Chesapeake pledged last month to cut production by about 20% from 2023 levels.

The company is expecting prices to shift higher as demand for liquefied natural gas rises over the next few years, Viets said.