Well worth the wait Gail. An excellent picture of today’s unconventional NG plays. I can back up some of your assertions from the front lines. The technology improvements have been THE key along with supporting NG prices. As an example, 5 years ago a vertical UNG well might be drilled on a 40 acre unit. A year or two later, one horizontal well 1000’ long might be drilled on 80 acres thus replacing 2 vertical wells. This well might be fractured in 3 or 4 spots thus allowing even better results then the 2 vertical wells it replaced. Today, a horizontal well drilled with a lateral length of 4000’ might be drilled on a 320 acre unit. This well may also have 10 or 12 intervals fractured. This latest effort would replace 8 vertical wells drilled just 5 or 6 years ago. The initial production rate might easily exceed that of the combined 8 wells also. Thus there would be a big disconnect between the number of wells drilled and expected results if these advances were not taken into account. It’s difficult to estimate future expectations of advancing technology but I’ll guess we’re getting close to the point of diminishing returns on that front. Some improvements for sure but nothing like we’ve seen in the last 5 or 6 years. On the other hand, new UNG plays are now being explored which have never been considered viable targets in the history of resource development in the USA. With that in mind, any effort to offer a maximum/minimum detailed expectation of future recoveries would be almost pointless at this time IMHO.

With respect to increasing gas storage, this has been one of the most sought after opportunities in the last 5+ years. But there have been significant road blocks. Only certain reservoirs are suitable for NG storage. And this number is limited. Complicating the effort even further is that many such sites are in the Gulf coast region. Adding storage here does little to alleviate demand out side the region due to the transportation bottle neck. Even where potential storage reservoirs are close to the end users it isn’t a sure thing. If the sites are distant to the pipeline system it adds a huge cost factor to make the connection. Additionally, building the new pipeline connections take a considerable amount of time. This adds considerably to the risk of predicting future demand/pricing. And even when conditions are favorable, NG storage is an expensive proposition to initiate. A certain volume of “bunker gas” is needed. This is the volume of gas that will never be produced as long as the facility is operating. A NG storage of significant size night require 10 bcf of such gas or more. At $10/mcf this would tie up $100 million of capital indefinitely.

A significant amount of tite NG sand production is still locked up in the western states due to lack of regional transportation lines. But advances on this front have been made over the last 5 + years.

But, as to the question of these plays being similar to the giant conventional gas plays of old, the simple answer is no…not even close. I’ve worked in some of those old fields where an individual well might produce 30 or 40 bcf over its life time. Cumulative production from some of the best UNG wells might approach this level but the vast majority will produced just several bcf of NG. The production profile of the typical UNG well is very different: a high initial rate with production dropping as much as 70% to 90% in just several years. This is why you’re seeing such an acceleration in new completions. (and given current NG prices these wells do generate a very acceptable, if short, rate of return). As wells drilled just 2 or 3 years ago start their steep decline rates the companies (especially the public one) must drill more wells to replace them. But as these newer wells begin their decline even more wells are needed to replace. Almost all the big UNG players are public companies. As outlined here earlier, these companies must show consistent y-o-y growth in reserve volume. This is how their stock is valued by most on Wall Street. This fact actually adds to the potential recoverable NG values. Even if NG prices were to drop to a level that a public company could only expect to just recover their capital cost they would have no choice but to continue drill as fast as their cash flow would allow. We may actually reach a point where NG prices won’t support continued development of UNG due to over supply conditions. But these periods will be relatively short lived as production rapidly declines.