Calgary-based Progress Energy Resources Corp. said late Tuesday it is shutting in 10% of its natural gas production, which is all in Canada, until prices cooperate. The company produced an estimated 224.6 MMcf/d in 3Q2011.

“We believe the current low natural gas price is unsustainable,” said CEO Michael Culbert. “Shifting capital to preserve asset value and maintain our balance sheet strength is prudent in this environment.”

The Montney Shale-focused producer also is reducing its gas development spending to C$365 million this year, a reduction of C$100 million from the original 2012 capital budget.

Progress Energy is one of the top leaseholders in the Montney fairway in northeastern British Columbia, where it is jointly developing around 900,000 net acres with Malaysia’s national oil company Petronas (Petroliam Nasional Berhad) (see Daily GPI, June 3, 2011).

UBS Securities said the decision by Progress Energy to shut in gas was the first for a Canadian producer, but more shut ins may be coming. “Major players” that include Canada’s No. 1 gas producer, Encana Corp., are expected “to follow suit” when it releases its year-end results next week, said the analyst.

Chesapeake Energy Corp., the No. 2 gas producer in the United States, last month curtailed 0.5 Bcf/d, or 8%, of its operated gross gas output, which was 6.3 Bcf/d, or about 9% of the nation’s estimated gas production (see Daily GPI, Jan. 24). Chesapeake also cut domestic dry gas spending by 70% in 2012 and cut in half its operated gas drilling activity. ConocoPhillips last month also shut in 100 MMcf/d in North America (see Daily GPI, Jan. 26).

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