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Shale Gas and how will it effect Natural Gas prices in the future
Here is an article pointing out a bullish outlook for NG.
Regarding shale gas..
It is worth quoting Berman at length to get the flavor of his analysis:
For several years, we have been asked to believe that less is more, that more oil and gas can be produced from shale than was produced from better reservoirs over the past century. We have been told more recently that the U.S. has enough natural gas to last for 100 years. We have been presented with an improbable business model that has no barriers to entry except access to capital, that provides a source of cheap and abundant gas, and that somehow also allows for great profit. Despite three decades of experience with tight sandstone and coal-bed methane production that yielded low-margin returns and less supply than originally advertised, we are expected to believe that poorer-quality shale reservoirs will somehow provide superior returns and make the U.S. energy independent. Shale gas advocates point to the large volumes of produced gas and the participation of major oil companies in the plays as indications of success. But advocates rarely address details about profitability and they never mention failed wells.
Shale gas plays are an important and permanent part of our energy future. We need the gas because there are fewer remaining plays in the U.S. that have the potential to meet demand. A careful review of the facts, however, casts doubt on the extent to which shale plays can meet supply expectations except at much higher prices.(my emphasis)
The entire piece should be required reading for anyone involved in energy policy or who is thinking about investing in anything related to natural gas. The upshot for investors is that natural gas prices are likely to recover much sooner than most analysts are predicting. Gas rig counts in North America tumbled from 906 during the first week of November to 624 last week. This is the lowest number of gas rigs deployed since 2002. As the count continues to fall, new production capacity will slip in the face of a 32 percent annual production decline rate. That's not a typo. The U.S. must now replace one-third of its natural gas production capacity each year just to stay even. Shale gas wells contribute to much of the problem with a first-year decline averaging 65 percent and a two-year decline rate around 0 percent