EOG Resources Inc. CEO Mark Papa said Friday it will be “real close” as to whether U.S. natural gas producers will be forced to curtail their output this year. If gas pipeline pressures increase, there could be “automatic curtailments pretty much across the board.”

Papa’s remarks came during a conference call with financial analysts to discuss EOG’s quarterly performance. His views are similar to some made a few days ago by Chesapeake Energy Corp. CEO Aubrey McClendon, who said he sees “pain across the whole industry” because of high gas storage levels (see Daily GPI, Aug. 5).

“On the storage side, it’s obviously going to be real close as to whether we have shut-ins or not,” Papa said. “In my own opinion, we will get to about 3.9 [Tcf] in storage, and the question is, do we have 3.9 Tcf of storage out there?…The West is almost full of storage today. My guess today is, most of the pressure will be in the West, the deterioration or basis blow-outs in September or October…In terms of shut-ins, that would be my view.”

In the western United States, EOG has significant gas operations in the Green River Basin of Wyoming and in the Uinta Basin of Utah.

“Our feeling is, if gas prices reach a certain price, and I won’t say what that is, we’ve got to…curtail production. What also may happen is that we may just see pipeline pressures nationwide go up as storage fills up most everywhere…If pipeline pressures go up, and there’s more back pressure on some wells across the nation, that could cause automatic curtailments pretty much across the board.

“If that were to happen then production would drop for everybody,” he said. “That may be what actually occurs. What we’re seeing right now is, [EOG’s] 5.5% production growth [target] is at some risk, depending on the storage situation. Particularly in September and October, we’ll have to see how that plays out.”

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