Natural Gas Caverns Are Full
Producers of natural gas have been forced to cut back their production as prices are falling and gas stockpiles are bursting. There is so much natural gas in production today that producers are running out of room to store it. The depleted oil fields, aquifers and salt caverns used to store the gas are quickly filling. A warmer than normal winter also has added to the lack of demand for natural gas.
The surplus of gas has helped homeowners and businesses that use it as the price has dropped to 10-year lows and continues on a downward spiral. However, companies that produce the gas are now victims of their own success. Stock prices are dropping as many anticipate profits to do the same and growth plans have been scaled back.
A number of the biggest gas producers in the nation such as Conoco Phillips, Encana Corp and Chesapeake Energy have announced they will cut back. Analysts said due to the heavy production and warmer than expected winter, surpluses are so high that the only option is to cut back.
Efforts to cut back production have not made little more than a dent. If the pace does not decline sharply or the demand does not increase substantially during the summer, analysts warn the storage facilities will reach their limit before the end of fall.
Natural gas prices have been cut in half over the last year and if the storage facilities are filled the price will only drop sharply even more. The price is currently at $2.08 and many feel it could drop as low as less than $1.