Lots of good points Gail. I can verify that trying to match the number of NG wells drilled or total footage drilled to some constant expectation won't produce useful results. The effectiveness of horizontal drilling has had its impact for quit a few years now. The big uptick in productivity has been on the fracing side. Several years ago 1 or 2 frac's per well were common. Now 10+ has become the rule in many plays. The best way to envision a frac is to imagine a small well being drilled away from the original horizontal well. Now imagine 10 fracs being pumped at 400' intervals along the horizontal well path. Each of these fracs act its own separate offshoot well.

This is a little difficult to document but this has been the result: It’s not that we don’t need to drill as much footage to develop all the reservoirs out there. You still need to get the well out there X thousands of feet. So the total number of wells needed to fully develop all the NG in one area of a play hasn’t decreased. We’ve just greatly increased the recovery per given area. Good news for the consumer: we’ll recover much more NG per unit area then was estimated just a few years ago. A little good news for the operators: less wells drilled but much more expensive due to multistage fracs.

The bad news in general: the effect is to increase the volatility of the situation. With less wells to drill the production ramps up much quicker. First, this puts pressure on the local gathering system: difficult to expand the pipeline system fast enough. Second, it pushes a surge of NG to the market. Even without the economic downturn the volume of new supply would have exceeded demand. It would have just taken a little longer.

Didn’t have time to read the NCI report but if they didn’t include a price model with their projection of a 50% increase in NG supplies over the next X years then it’s as useless as many of the other reports out there IMO. We do have 10’s of thousands of PROVEN unconventional NG wells that could be drilled. But those reserves are only proven at a much higher price level then currently exists. On any given day the volume of NG that could be developed in the future will vary greatly (at least a 5 to 10 times factor IMO) on the price model one uses. At $3.50/mcf we have X trillion cf of proven NG. At $14/mcf we 10X trillions cf of proven recoverable NG (just a WAG on my part but probably on that magnitude).

Logically, as you point out, gov’t intervention to stabilize the NG market makes sense. But I have virtually no expectation of that political will ever developing.