Gas Supply Conclusions
Downside for the gas price will need to come from weakening demand, not burgeoning supply.
Even at the current high level of drilling activity, growth in supply is likely to be less than 1 bcf/d
Returning to historic activity levels will cause overall North American production to resume its decline
- Canada is no longer able to meet US shortfall
- Strong oil prices will encourage competition for rigs
Structural obstacles are limiting the supply response
Strong evidence of reduced rig efficiency as activity ramps up
In 2001, new wells in U.S. must produce over 8 bcf/d, annual average, to hold production flat