The report contained four conclusions about natural gas and oil and their impact on America's energy future. The conclusions were: 1) "the potential supply of North American natural gas is far bigger than was thought even a few years ago;" 2) "perhaps surprising to many - America's oil resources are also proving to be much larger than previously thought;" 3) "we need these natural gas and oil resources even as efficiency reduces energy demand and alternatives become more economically available on a large scale;" and 4) "realizing the benefits of natural gas and oil depends on environmentally responsible development." It is this latter conclusion that becomes the big "IF" in how America's and North America's energy market evolves.

The NPC study's conclusions are based on an analysis of a number of market outlooks and forecasts prepared by others. The NPC did not actually do its own analysis of the market. Based on the assimilation of all these prior studies, the report takes an extremely optimistic stand about the future for the North American natural gas market. The report begins with a review of the growth in estimates of the technically recoverable natural gas resources in the United States over the past 12 years. As shown by a chart of the estimates of the gas resource potential since 1999, it is clear that the estimates have increased since the gas shale revolution began.

Eoin Treacy's view Technological innovation is allowing the USA to tap previously inaccessible energy resources. Such has been the increase in natural gas supply that prices have been locked in a relatively depressed range. Excess supply at the Cushing facility has also contributed to a wide spread between West Texas Intermediate and Brent crude. US energy independence is a realistic goal over a 10 to 15-year time horizon provided regulatory hurdles are not put in place to hinder the evolution of a thriving onshore energy industry.

Unconventional natural gas supply has made most headlines. However unconventional oil exploration is rapidly attracting interest and a trend of drilling rigs being redeployed has been evident for some time. With prices below $4 it is questionable whether unconventional wells are economic and high prices make oil a much more attractive proposition.

Significant natural gas demand growth has not yet reappeared as a result of the weak US economic environment. For any industry choosing a fuel source nothing is more alluring than low costs in an environment where margins are being compressed. The longer prices stay low the more attractive they will become for industry. Over supply remains the dominant theme at present.

Prices rallied to test the short-term progression of lower rally highs yesterday but a rally of greater than 20¢ is the minimum requirement to suggest a relief rally is underway.