In the past few years, natural gas drilling production technology innovation has seen a dramatic increase in efficiencies. Combine these new drilling techniques with the development of unconventional shale gas resources and the stage is set for dramatic production increases and reliable long term supplies throughout North America.
One of the major reasons nat gas is not currently used on a greater scale by transportation and industrial end users is that in the past nat gas supply stocks were not available in reliable quantities to enable the use of long term forward contracts throughout North America. And even in certain areas where supplies were adequate, price volatility made gas a difficult risk proposition.
We are entering a new world now of abundant gas supplies. Encana's, Dave Thorn, states, "The economical recovery of shale gas has been a game changer. Reserve life estimates have increased dramatically, and North American gas supplies could rise by 25 bcf per day."
These estimates are being driven by rig efficiencies. Not too long ago, supply estimates were largely based on the number of drilling rigs in production. However, unconventional gas wells are driving production increases even though active rig counts have fallen 50%.
Not too long ago shrinking nat gas supply stocks created worries that North American gas supplies were in a permanent decline. Liquid Natural Gas was seen as a possible, yet expensive solution to this decline. Those worries are quickly disappearing. The one caveat to the future of natural gas is proposed environmental regulation. These concerns are likely to be overcome by recent environmental research showing the new shale drilling technologies are not harming local water supplies. This research along with the economic and environmental benefits of switching to gas as a bridge fuel will make the future very bright for natty gas.
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