I think ngas inventory is going to be an issue thru 2009. We are getting close to shoulder season where winter heating use falls off. Once that happens, demand will fall even more and industrial demand is unlikely to improve until later in 2009.
The new generation of shale gas wells have a very high production rate that falls off fairly rapidly over 6 to 12 months and then plateaus for a longer, slower decline rate. As new well drilling drops, there are fewer new wells to boost production. I would guess that inventory will show material declines towards the end of 2009 and we will see measurable declines in production by Q4.
The other issue with ngas is that even though we will see drops in production in 2009 and beyond, the cat is out of the bag. Drillers know that there are huge shale gas resources that can be accessed at decent ngas prices. That is going to put a cap on ngas prices over time. The higher the prices rise, the more shale gas fields will get drilled, increasing production and capping prices.
I am still cautious about ngas. I didn't even mention LNG, which could migrate to the US just because we have the world's largest storage system. Several multi billion dollar plants are starting to produce and will put product onto the world markets. Bobwins
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