June 15, 2009 / 7:50 PM / 10 years ago

UPDATE 1-EnCana shutting in gas wells, CEO says

* Shuts in natural gas wells in Canada, United States

* Cuts in response to low natural gas prices

* Shares drop 3.1 percent (Adds detail)

By Scott Haggett

CALGARY, Alberta, June 15 (Reuters) - EnCana Corp (ECA.TO) Chief Executive Randy Eresman said on Monday the company has shut in wells producing a couple of hundred million cubic feet of natural gas in each of Canada and the United States because of low prices for the fuel.

Speaking to reporters at an investment conference, Eresman said Encana, North America’s largest natural gas producer, has chosen not to bring some new wells on stream and has shut in other wells where it costs more to produce the gas than it can be sold for.

“In some cases, we’re getting below the lifting costs. You more or less have to shut them down,” he said.

Natural gas prices have faltered as the recession saps industrial demand and storage for winter use has reached a record for this time of the year.

The benchmark price for the fuel on the New York Mercantile Exchange has dropped more than two-thirds over the past year while Canadian spot prices has dropped almost 75 percent.

Eresman said he could not give specific figures on the amount of natural gas the company has decided not to produce because of low prices. He said only that the cuts were “a couple of hundred million cubic feet” in both Canada and the United States.

The suspended wells will be returned to production “when they’re economic. When they make money again,” Eresman said.

Suspending production is a step few other natural gas companies have so far taken, though U.S. gas producer Chesapeake Energy Corp (CHK.N) cut 400 million cubic feet a day of production earlier this year.

EnCana, Canada’s No. 1 oil and gas company, produced an average of 3.87 billion cubic feet of gas a day during the first quarter of 2009.

EnCana shares fell C$1.95 to C$60.04 late on Monday on the Toronto Stock Exchange. ($1=$1.13 Canadian) (Editing by Janet Guttsman)

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