A leading E&P executive, wearied by an already-too-long year of chasing declining gas paper, expressed a wish over after-dinner drinks at the A&D Strategies and Opportunities conference in Dallas in early September: “I wish these gas producers would get together like in The Godfather, when the five families meet and declare peace.”

Putting on the highly accented, throaty voice and manner of Marlon Brando’s Vito Corleone, he said, “I hope that we can come together today, make some peace, lay down our rigs. Aubrey, Larry, Floyd, Harold, let us lay down some rigs. Or we will all sleep with the fishes. I swear on the souls of my grandchildren that I will not be the one to break the peace we make today.”

Exuberant thinking: If only such collusion to prop up gas markets were allowed, at least temporarily. Meanwhile, a go-to-the-mattresses urgency is intensifying as the gas-supply barometer approaches a Category 5 storm level and producers rush to hold their ground. Some of their leasehold cost as much as $25,000 an acre in the Haynesville, for example.

Barclays Capital analyst James Crandell is calling surging growth in U.S. gas production an “arms race.” While the Lower 48 gas-directed rig count has fallen from some 1,600 in the summer of 2008 to roughly 1,000 today, total U.S. onshore gas production has not declined, he says. Instead, it has grown slightly to approximately 57.5 billion cubic feet per day.

“The gas-directed rig count appears stuck. Even as gas prices have plunged in the past two months, the rig count has not wavered, averaging near 975,” Crandell says.

Contributing to greater gas supply, despite a lower rig count, is the number of rigs drilling onshore shale-gas targets: 50%, up from 30% of the mid-2008 count. And, shale-gas wells’ initial-production rates are growing. For example, Crandell says, early Fayetteville wells had an average IP rate of approximately 1 million cubic feet per day; today, some 3 million per day. In the core of the Barnett play, early wells made average IPs of some 700,000 cubic feet per day; today, some 1.6 million each.

If not for peaking service-side capacity, there would be yet more gas on the market, he adds. “Recently, there has been some confusion over (Energy Information Administration) data that shows production growing more slowly and even declining at a rig count of more than 950.”

Crandell disagrees with the suggestion: “There are constraints in the service market for hydraulic fracturing, delaying completions and artificially depressing supply and measured rig productivity.”

Tom Petrie, vice chairman, Bank of America Merrill Lynch, noted in opening remarks at the A&D conference, which is presented annually by Oil and Gas Investor and A&D Watch, that an international gas cartel—a proposition that has been floated about for decades—has yet to materialize “and as far as I can see—the next five years—none will materialize.”

A cartel of U.S. producers controlling domestic supply would be more effective—if legal—only temporarily; cheap liquefied natural gas from Qatar and elsewhere would quickly land at U.S. regasification terminals.

Chesapeake chairman and chief executive Aubrey McClendon extended one concession—an offer of peace to shareholders that was duly noted throughout the U.S. gas-producer community in early August. He announced that Chesapeake won’t drill gas wells—except to hold acreage by production or in instances in which a joint-venture partner has provided a drilling carry—while gas prices are below $6.

“Unless gas prices increase over $6, Chesapeake is committed to continuing to reduce its gas-drilling capex and increase its liquids-drilling capex,” he said in a quarterly investor conference call.

One energy private-equity manager says more reining in of the gas industry is needed than this. “Yeah, six bucks. And, unless this, unless that. Talk about a cap on gas prices. Right.”

How many rigs should be stacked to right the gas market? Crandell says a rig count of 850 or less would prevent further growth in total output. That’s the estimate. “Any more delay in cutting the rig count from here means (more gas in storage, so) drilling activity would have to drop even further…to balance the market,” he concludes.

Badda-bing. Badda-boom.

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