U.S. ethics group urges probe of natgas output cuts NEW YORK/WASHINGTON (Reuters) - A Washington-based ethics watchdog has asked the U.S. Department of Justice to investigate whether energy firms conspired to fix natural gas prices by cutting production this year, an allegation the producers deny. Citizens for Responsibility and Ethics in Washington (CREW) said simultaneous production cuts by companies including Chesapeake Energy (CHK.N) and ConocoPhillips (COP.N) in the face of decade-low prices may amount to collusion and violate competition law. "These companies are conspiring to restrict the nation's supply of natural gas in order to raise its price," CREW executive director and former federal prosecutor, Melanie Sloan, said in a letter to the DOJ on Tuesday. CREW, a non-profit organization, is funded by foundations such as George Soros's Open Society, and the Carnegie Foundation, as well as private donors, Sloan said. Record increases in U.S. natural gas production over the past year have swelled inventories and pushed prices to 10-year lows in January and again in April. Natural gas prices are now about 30 percent higher than the April lows in part due to the belief that production has fallen off. The prolific development of shale deposits across the country has transformed the supply outlook but has crimped company profits and made natural gas drilling largely uneconomical. Many producers cut output and slowed new drilling in the first few months of the year, which helped bump prices higher, though they deny any wrongdoing. Chesapeake reduced production by 1 billion cubic feet per day (bcfd) in a two-phase cut in January and February, while Conoco said it had cut 0.1 bcfd in January. Conoco's continued production cuts are expected to be about half that, a spokeswoman said on Tuesday. Canada's Encana Corp (ECA.TO) also cut production by 0.25 bcfd in February. U.S. daily production is about 70 bcf. "These allegations are without foundation," the ConocoPhillips spokeswoman said. ConocoPhillips complies with all laws, including antitrust laws, and we do not discuss our investment decisions with competitors. Chesapeake declined to comment and the DOJ was not immediately available to respond. "In order to be per se illegal, there has to be evidence of an actual cartel," said Mark Cooper, research director at the Consumer Federation of America. You have to show the collusive conduct. CREW has no proof that collusion has actually taken place, although an investigation is warranted, Sloan told Reuters. Clearly we can't prove it, which is why we asked for a Justice Department investigation. It would be all about the communications between the firms," she said. Founded in 2003, CREW regularly makes accusations against lawmakers and government officials for alleged ethical or legal transgressions. Reporting By Edward McAllister in New York and Emily Stephenson in Washington; Editing by Tim Dobbyn and Bob Burgdorfer