Chesapeake Energy plans to commit at least $1bn over 10 years toward a new venture to support the use of US natural gas in the face of a glut that has driven down prices.

“We need to kick-start a demand revolution,” said Aubrey McClendon, Chesapeake’s chief executive.

The second-biggest US natural gas producer said it will start by committing $150m to newly formed Chesapeake NG Ventures (CNGV) to support infrastructure for fuelling heavy-duty trucks with liquefied natural gas along interstate highways as well as another $155m to support gas-to-liquids technology.

The US is awash in natural gas because of breakthrough technology making more economical the extraction of gas from shale rock. The breakthrough has led industry analysts since 2008 to raise estimates of supply life at current usage rates to 100 years. This was up from estimates of about 30 years’ worth previously.

The country is so oversupplied, however, that natural gas producers are moving toward exports.

Instead, according to Chesapeake, the US should find a way to use the fuel to “help break OPEC’s 38-year stranglehold on the US economy”.

“Our CNGV fund, which will be at least $1bn in size, will represent a large and reliable source of capital to entrepreneurial companies with strong business models, validated technologies and experienced management teams focused on creating value by enhancing demand for American natural gas,” he said.

Chesapeake said it will redirect about 1 to 2 per cent of its forecasted annual drilling budget away from efforts to increase natural gas supply toward projects that will stimulate gas demand.

“Things are not moving fast enough, and we wanted to throw the proverbial gasoline on the fire,” he said.

Chesapeake will accelerate the conversion of all 4,500 of its own light-duty vehicles and 400 of its heavy-duty fleet to run on compressed natural gas, in a move which will reduce fuel costs by an estimated $15-20m a year.

It is also converting at least 100 of its drilling rigs and all of its planned hydraulic fracturing equipment to run on liquefied natural gas. That will cut the company’s diesel fuel consumption by about 350,000 gallons a day and save the company an estimated $230m annually.

Chesapeake’s share price rose 0.44 per cent to $29.88 in after hours Wall Street trading.

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