NATURAL GAS GROUP
U.S. Supplies Can Last 118 Years
by Joe Duarte, MD
Joe-Duarte.com & IntelligentForecasts.com
July 31, 2008

Shale Deposits To The Rescue

The U.S. has enough natural gas imbedded in its shale deposits to last 118 years and now has the technology to extract it efficiently says a study sponsored by the American Clean Skies Foundation, a group backed by the natural gas industry.

The report was previewed on CNBC's Squawk Box program this morning and is likely to get significant press coverage. According to istockanalyst.com: "The report says the U.S. has up to 50% more natural gas reserves than earlier projections because of higher-than-expected yields from 22 shale formations in 20 states."

According to the U.S. Energy Information Agency (EIA), and something that we've been talking about for a couple of years on the Financial Sense News Hour, and in this space, Texas's Barnett Shale, a huge shale rock formation centered under the city of Forth Worth, is already beginning to make a huge contribution to U.S. natural gas supplies.

By employing horizontal drilling techniques, the yield from the difficult to extract shale rock is on the rise, noting on its web site that "the production from just one Barnett Shale field in Texas contributes more than 6% of production from the lower 48 States, which is more than from the large producing State of Louisiana."

But there's a bit more detail here, as the estimates have changed. According to istockanalyst.com: "The Potential Gas Committee, an independent research group, estimated in 2006 the U.S. has 1,530 Tcf of gas, an 82-year supply. The increase stems from greater production in the Marcellus Shale in the Appalachians and the Haynesville Shale in Louisiana and Texas, says Kenneth Medlock, an economics professor at Rice University who worked on the Navigant study."

The American Clear Skies Society's web site has an interesting article, which features a device called Phill (www.myphill.com) that allows users to fill up their cars with natural gas in their own garage. According to the Phill website, the device is widely available in Europe and is available in limited areas of the U.S. including parts of California and Texas. The Phill web site features the Honda Civic GX, a natural gas powered car by Honda as its sample car and GM's Sierra and Silverado models as other natural gas powered vehicles, among others (http://www.myphill.com/vehicles.htm).

The web site also features retailers in Europe where you can buy Phill, and lists several dealers in the U.S. (http://www.myphill.com/purchase.htm).

Conclusion

Fuelmaker, a small Canadian company that's been around since 1989 could be an interesting player in the next few months to years, as its natural gas and hydrogen refueling technology could be brought to the forefront of the energy debate.

The big push by T. Boone Pickens on natural gas, and the presence of gas drilling wells at the Dallas Forth Worth International airport, and downtown Fort Worth are just more proof of the interesting dynamic that is developing around the fuel.

The real question, though, is whether this dynamic will last if oil falls to or below $100 per barrel, as is possible given the recent price action in crude.

For now, natural gas is way out on the frontburner.

© 2008 Joe Duarte, M.D.
Dr. Duarte's Bio and Archive

Joe Duarte M.D. is founder and Editor in Chief of Joe-Duarte.com. Dr. Joe Duarte's Daily Market I.Q. is a premium service that provides daily intelligence, trading strategies, and technical analysis at www.joe-duarte.com. Duarte offers free analysis and news coverage at www.intelligentforecasts.com . Dr. Duarte is a board certified anesthesiologist, a registered investment advisor, and President of River Willow Capital Management. He is author of "Successful Energy Sector Investing" and "Successful Biotech Investing" (Prima/Random House). Duarte's analysis appears regularly in major outlets including CBS MarketWatch and Investor's Business Daily.