Chesapeake Energy Corp., the second- largest U.S. natural-gas producer, will cut output, idle drilling rigs and reduce spending in gas fields by 70 percent after prices for the fuel hit a 10-year low.

Gross production at wells it operates will drop by as much as 1 billion cubic feet a day and the Oklahoma City-based company will defer gas-well completions wherever possible, according to a statement today. Chesapeake, which accounts for about 9 percent of U.S. gas output, will cut spending on gas wells to $900 million this year from $3.1 billion in 2011.

Gas futures contracts on the New York Mercantile Exchange have fallen by half in the past year and have declined the most among the Standard & Poor’s GSCI Spot Index of raw materials. Gas hit $2.231 per million British thermal units in electronic trading today in New York, the lowest price since Feb. 15, 2002.

“One company can’t right the entire gas market,” Scott Hanold, a Minneapolis-based analyst for RBC Capital Markets who rates Chesapeake at “sector-perform” and owns no shares. “It’s going to be collective effort by the industry that gets it done.”

Gas sold from U.S. production in 2011 rose by about 4.5 billion cubic feet a day, or 7.4 percent, the

largest annual gain in history, according to the Energy Information Administration. U.S. production and reserves have been driven by the increased use of hydraulic fracturing, the practice of injecting water, sand and chemicals underground to release gas from shale-rock formations.

Idling Rigs

Chesapeake said it will “immediately curtail” output of 500 million cubic feet a day, 8 percent of production, and will idle half its drilling rigs by the second quarter in fields that produce only gas, including the Barnett Shale of Texas, the Marcellus Shale and the Haynesville Shale.

Chesapeake made the announcement before regular trading began in U.S. markets. The shares rose

5.4 percent to $22.10 at 8:50 a.m. in New York.

Spending on undeveloped leases will fall to $1.4 billion in 2012 from $3.4 billion in 2011 and will be limited to areas where the company already is active, Chesapeake said.

Chesapeake’s output curtailment follows EQT Corp.’s Jan. 20 announcement that it will suspend drilling in its Huron Field in Kentucky. Southwestern Energy Co. Chief Executive Officer Steven Mueller said in a Jan. 5 interview his company may slow production in Arkansas’s Fayetteville Shale if prices stay low.

Exxon Mobil Corp. is the largest U.S. gas producer.