SPE 80949
U.S. Natural Gas Market: Recent Dynamics and Future Concerns
S.K. Schubarth, Norton Proppants, Inc.; A.C. Byrd, J.F. Wickham, Halliburton
Copyright 2003, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at the SPE Production and Operations Symposium
held in Oklahoma City, Oklahoma, U.S.A., 22–25 March 2003.
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Abstract
The US Natural Gas Market has moved through some very
dynamic events over the past few years1. The fact that ninety-
nine percent of all gas consumed in the US comes from the
North American Continent plays a large part in the lack of
stability in pricing of Natural Gas. The nature of the
production stream feeding the demand for gas has changed
drastically in the past decade. The potential demand for gas
during peak usage periods of each year has changed
dramatically and the maturity of the available gas
development projects have all led to a greatly different market
than ten years ago.
This paper will focus on the three main points of interest;
first, the production supply of gas in the US and how the
underlying decline rate of produced gas has changed. Second,
the root cause of the recent gas price increase and resulting
fall. What caused it and how likely is it to occur again.
Lastly, What will it take to meet the increasing demand for
natural gas into the future?
Introduction
The search for and development of natural gas producing
wells has become the focus of the U.S. Oil & Gas Industry
over the past decade. At present, about 85% of the drilling
rigs in the U.S. are classified as looking for natural gas rather
than oil. This is a complete turnaround from 1987 when only
about one-third of the rigs were searching for natural gas. In
recent years supplies have become tighter causing substantial
volatility in pricing and uncertainty in investments.
In 1998, the drilling rig count began falling from a peak of
1,032 total rigs (646 gas rigs) to a bottom of 494 total rigs
(365 gas rigs) in April 1999. Reductions like this in the U.S.
rig count put a strain on the ability of our industry to operate
profitably without making changes. These cycles of high
activity followed by declines have been the nature of our
industry for decades.
In early 1999, the authors undertook the task of trying to
determine the depth and time period the current “trough” in
activity would encounter. Through a detailed examination of
the supply side of the natural gas industry, determining
changes in the producing nature of U.S. natural gas wells, we
determined that there would be noticeable shortages in supply
in the very near future and these should drive prices higher,
spurring drilling activity and ending the down cycle. This, in
fact, did occur in May 1999 when the rig count began to rise
and reached historic levels in 2001.
After studying the behavior of U.S. gas production and
building a predictive model for forecasting, attention was
turned to monitoring changes in demand for natural gas.
Correlations were built between temperature trends and
storage level changes. Monitoring changes in these trends can
lead to insights into the changing demand for gas in the U.S.
This paper will detail the work performed in building an
understanding of U.S. gas production behavior and changes in
U.S. gas demand over the past several years. We will
demonstrate the ability to forecast U.S. gas production and the
ability to recognize changes in trends of demand for gas very
early in their life. We hope that this information can lead to a
better understanding of market trends and allow the industry to
recognize changes in trends and be able to anticipate changes
in business environments for smoother transitions.
Supply
The natural gas that supplies the United States of America
comes from many sources. Production from wells in the U.S.,
account for about eighty-five percent of the gas supply, while
imports make up the remainder. Fig. 1 is a chart depicting the
contribution of each source of gas to the net supply. There are
both imports and exports of natural gas. About ninety-eight
percent of the gas used in the U.S. each year comes from a
well on the North American Continent. Liquefied Natural Gas
(LNG) is imported via tankers from several countries not in
North America. However, the U.S. also exports LNG to
Japan, often in quantities greater than the LNG imports.
Over the past ten years the percentage of gas that is
imported has more than doubled, from seven percent to near
sixteen percent. The vast majority of this gas comes from our
2 SPE 80949

neighbors to the north, Canada. Fig. 2 shows how the reduced to 430 BCF and from 1998 to 2000 it has been
percentage of gas imported has changed. negligible. This excess capacity acts like additional storage
for the winters and aids in buffering a extremely cold winter,
when they arise. Since 1998 our industry has gone to a real-
time gas supply. In this operating condition, without excess
LNG Imports
Net NA Imports capacity, supply will respond more rapidly to reductions in rig
US Gas Production count. However, the real-time supply scenario will allow for
more accurate prediction of the response of supply and
demand to changes in the market, such as rig count changes or
price fluctuations.

2.5
US Gas Production
Excess Wellhead Capacity

2.0

Monthly Gas Production, TCF

Source: EIA 1.5
Fig. 1 U.S. Gas Supply Sources for 2001

Production from oil and gas wells in the U.S. is plotted in 1.0

Fig. 3. This graph shows the rise and fall of production in the
U.S. over the past two decades. The data presented in this 0.5

graph is “wet” gas or the production reported to state

regulatory agencies. Consumed gas is usually measured in 0.0
“dry” gas, primarily methane. A conversion factor of 0.9 was Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06

used in this paper to convert “wet” gas to “dry” gas for the Fig. 3 U.S. Wet Gas Production - Historical Source: IHS Energy

purpose of comparisons.
Gas produced in the U.S. comes from both gas wells and
oil wells, which produce associated gas. Seventy-four percent
100%
of the gas produced in the U.S. comes from gas wells, while
90%
twenty-six percent comes from oil wells. While gas wells
80%
typically produce more gas than oil wells the production
70%
decline over time for gas wells is typically much greater than
Percentage From

60% the associated gas from oil wells. The decline behavior in
50% U.S. gas production is what we will examine next in Fig. 4.
Imports
40% US Production This plot shows many things, but we will start with the
30% production decline of existing wells first.
20%
2.5
10%

0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2
Year
Monthly Gas Production, TCF

Fig. 2 Historical U.S. Gas Supply Sources Source: EIA

1.5

A characteristic of the production presented in Fig. 3 is Pre 1994

that each year the production in January and December is 1
1994
1995
much higher than the production presented in the middle of 1996
each year, until we reach the past few years. The reason 1997
0.5
behind this was the curtailment of production from wells, both 1998
Actual
voluntary and state regulated. Production is used to fuel
consumption year round and fill storage facilities during the 0
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04
summer. Since well production capacity was far greater than Fig. 4 U.S. Gas Production Decline Source: IHS Energy
the consumption need and storage refill need during the
summers, wells were either shut-in or pinched-back during
that period. Also plotted in Fig. 3 is the estimated excess gas At any point in the U.S. production history we can
capacity for that year. It is calculated, assuming that the examine what the production decline would be like if no
January and December production rates are at capacity, using additional wells were added. This is presented in Fig. 4 as we
the average of these two over the entire year less the actual see what the existing wells would decline at if no wells were
production for that year. From 1983 to 1992 the average drilled and completed after December 1993. A different curve
excess capacity was about 1.3 TCF. From 1993 to 1997 was is presented for each subsequent year up to 1998. The data is
SPE 80949 3

only presented through 1998 as this represents the point at mmcf to 2,053 mmcf. The four-year cumulatives are plotted
which this work was originally performed. It should be noted against the average rig count for that year and there is a very
that the decline rate for wells in existence in January of 1994 good correlation between the two. The higher the rig count,
had a first year decline rate of 14.7% per year. For wells in the lower the average well produces. This is understandable
existence in January of 1998 the decline rate had increased to as the lower the price of gas, the more productive a well must
25.2% per year. The increasing intrinsic decline rate of U.S. be to be economical. At higher prices, wells that produce less
gas production is very significant as an increasing amount of gas may become economic. Unfortunately, this also means
new gas must be found each year just to maintain a constant that to significantly increase gas production we will be
level of production. fighting a diminishing return per rig.
350 2,250,000

300 2,000,000

Average 4 Year Gas Recovery per Rig-Month, mcf

R2 = 0.8336
Actual Production
Monthly Gas Production, BCF

250
Predicted Production 1,750,000

200
1,500,000

150 Year Avg Rigs 4yr Gas

1988 595 917,402
1,250,000
1989 446 1,518,312
1990 517 1,300,197
100 1991 377 1,892,916
1,000,000 1992 302 1,814,271
1993 374 2,052,961
50 1994 421 1,648,342
1995 389 1,636,761
Source: IHS Energy 750,000 1996 455 1,592,791
1997 540 1,322,693
0
1998 585 1,205,984
Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99
500,000
200 250 300 350 400 450 500 550 600 650
Fig. 5 Production Match of Gas Wells Completed in 1994 Average Rigs

Fig. 7 Yearly Gas Well Average Quality

By examining the new gas production from each year we
were able to build an average decline curve given the number Taking the production history that we knew in January
of rigs drilling during that time frame. Sixty days was used as 1999 and the average gas well per rig-month that was being
the time lag from the rig count to production reported. The made, we forecast the U.S. gas production curve given the
monthly average rig count data was used to bring on new declining rig count at that time and the later increase in rig
wells with an average decline curve for each year. The count to present. Fig. 8 shows the results of this forecast with
individual decline curve was iterated on until a match of the additional actual production information. We were able to
new well production was achieved. Fig. 5 is an example of match the drop in U.S. gas production that resulted from the
the match between the forecast production and actual for the reduction in rig count and then the subsequent increase in
wells completed in 1994. Fig. 6 is the individual decline curve production into early 2001. Unfortunately, accurate
used to build that match. Of course we are not estimating the production values for the entire U.S. severely lags the current
production from an individual well, but the production date and we cannot determine if production has truly increased
associated with one rig-month. to the levels shown on this curve. We suspect that they have
80
not as we did not continue to reduce the incremental benefit to
production that each additional rig-month brings and the
70
average gas rig count for 2001 was significantly higher (over
1,000 gas rigs) than anything recorded before (about 600 gas
Monthly Gas Production, mmcf

60

50
rigs). We believe this will make our estimations of the rigs
required for the future a conservative one in order to maintain
40 and grow production. Using our model, Fig. 8 also shows the
30
estimated rigs required to grow U.S. gas production at a rate of
2% per year is 950 active drilling gas wells. To maintain
20
production at current levels 810 gas rigs would need to be
10 drilling. Of course these rig count levels would have to grow
each year, as the wells being added would be increasing the
0
0 12 24 36 48 60 72 intrinsic decline of existing wells.
Producing Months

Fig. 6 Average Rig-Month Gas Well Decline Curve for 1994 How much gas must we add each year to grow U.S. gas
production at a rate of 2% per year? Fig. 9 is a plot showing
A match was obtained for each year from 1988 to 1998. how the intrinsic decline rate has grown from 1993 to 1998
The decline curve associated with each of these years was and then forecasts how it might change in the future for three
evaluated for cumulative production after four years. The scenarios. Also plotted is the amount of gas that must be
results are presented in Fig. 7 and show a range from 917 produced by new wells given each of the decline rate growth
4 SPE 80949

scenarios. At present we must produce 3 TCF of gas from the total basis. Fig. 11 presents the same consumption data, but on
wells completed in 2002 under the most conservative decline a monthly basis. This plot shows the very seasonal nature of
rate growth case. Looking at the actual new gas produced, the consumption of natural gas in the U.S. Residential,
also plotted on in Fig 9, we see that we have yet to accomplish Commercial and Industrial users all require their maximum
3 TCF of new gas in any recent year. The required gas volumes during the winter months. Electrical Generation
continues to increase each year, making the task of growing users are 180 degrees out of phase with the other categories
U.S. gas production very difficult. and require peak usage in the summer months.
25,000
US Gas Production
3.0 Forecast of Production in 1999 1800
Forecast of Production w/ Current Rig Count
Forecast of Production w/ 810 Gas Rig Count 20,000
Forecast of Production w/ 950 Gas Rig Count
2.5 1500 Residential
Actual Gas Rig Count
Commercial
Monthly Gas Production, TCF

Flat Rig Count Forecast

Gas Rig Forecast to 810 15,000 Industrial
2.0 Gas Rig Forecast to 950 1200
Electric Utility

Gas Rig Count

BCF
Total
1.5 900 10,000

1.0 600
5,000

0.5 300

0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
0.0 0
Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Fig. 10 U.S. Gas Consumption - Annual Source: EIA

Fig. 8 U.S. Wet Gas Production - Forecast

10 50%
The variability of monthly demand due to seasonal
conditions results in the need for a higher gas consumption
rate than the production rate from wells. This peak demand is
9 45%

Annual Gas Needed (1% Decline Rate Growth)

8
Annual Gas Needed (2% Decline Rate Growth)
40%
met by withdrawing gas from storage facilities. The volatility
Intrinsic Annual Decline Rate

Annual Gas Needed (3% Decline Rate Growth)

7 Actual Gas Added
Intrinsic Decline Rate (1% Annual Growth)
35%
of each category or user is presented in Fig. 12. We defined
6 Intrinsic Decline Rate (2% Annual Growth)
Intrinsic Decline Rate (3% Annual Growth)
30% volatility as the difference between the maximum and
minimum monthly usage divided by the average monthly
TCF

5 25%

4 20% usage during each year. Both Residential and Electrical

3 15%
Generation users are becoming more volatile. Commercial
users are not changing in volatility. Industrial users are
2 10%
actually declining in volatility.
1 5%

Total Residential Commercial Electrical Industrial

0 0%
3000 1500
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Fig. 9 Annual Added Gas Required for a 2% Growth in Supply 2500 1250

2000 1000
Demand
Total BCF/Month

BCF/Month
Use of natural gas in the U.S. has increased steadily over 1500 750
the past two decades. Natural gas is a very desirable energy
source as it is the cleanest of the fossil fuels. Despite concerns 1000 500
over the abundance of natural gas in the late 1970’s, demand
for it has grown through extensive development of supply and 500 250

environmental concerns for clean energy.

0 0

The Energy Information Agency (EIA) provides detailed Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03

Fig. 11 U.S. Gas Consumption - Monthly Source: EIA

data on the use of natural gas and other energy sources in the
U.S. The EIA divides the users of natural gas into 4 major To meet peak demands for natural gas, consumption above
categories; Industrial, Commercial, Residential and Electrical the rate at which gas is being produced and imported, storage
Generation. Fig. 10 presents the annual consumption of gas facilities provide the needed extra deliverability. Natural gas
for each of these categories along with the total U.S. is withdrawn from storage during winter months and storage
consumption. Each of these categories is trending upward volumes are replenished during the summer months. Fig. 13
with Industrial increasing at the greatest rate. shows the level of storage in the U.S. over the past 9 years.
The amount of gas in storage is reported weekly by the EIA
While the consumption curves presented in Fig. 10 appear and in the past by the American Gas Association (AGA).
to be consistent, this is only due to plotting them on a yearly Storage values are also reported regionally and these are
SPE 80949 5

indicated in this figure. The buffer that gas storage provides

1500
allows peak demand to be met and a continuous gas supply to
exist.
1000

250%

Difference, BCF
500

200%
Volitility, % (max - min) / avg

150%

-500

100%

Residential
Commercial -1000
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03
50% Industrial
Electrical Sources: AGA & EIA
Fig. 14 52-Week Storage Comparison

0%
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
3500 5 Year Average

Fig. 12 Volitility of Monthly Gas Consumption Source: EIA 1999

1999 Difference
3000
2000
2000 Difference
2500 2001

Working Gas in Storage, BCF

2001 Difference
2002
2000 2002 Difference
West Consuming Region
3500
East Consuming Region
1500
Producing Region
3000
1000

2500 500

0
2000
BCF

-500

1500
-1000
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
1000 Week of the Year Sources: AGA & EIA

Fig. 15 Historical U.S. Gas Storage Volumes

500

0
Replotting the relative level of storage for these years
Jul-94

Jul-95

Jul-96

Jul-97

Jul-98

Jul-99
Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Dec-99

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

through time, inverting the scale and also plotting the price of
Fig. 13 U.S. Gas Storage Volumes Sources: AGA & EIA
gas at the Henry Hub, we get Fig. 16. There appears to be a
strong correlation between the direction gas price moves and
Comparing storage levels from year to year allows us to the direction that relative level of storage is moving. We have
see how current levels compare to those in the past. One now established some sense of a correlation between gas price
manner in which to view storage is compared to the previous or at least the direction gas price is moving and storage
year, or a 52-week change in storage volume. Fig. 14 presents volume. Can we then, using what we know about supply
this evaluation and indicates that over the past few years the (production) trends, predict whether gas pricing will most
trend in this indicator has moved more significantly both up likely move up or down?
and down. During the past two years, the 52 week storage
level comparison has increased by 1.8 TCF and then decreased In examining the gas consumption data supplied by the
by 1.5 TCF and appears to be headed lower. EIA we found that there were significant changes seasonally.
Temperatures from 5 U.S. Cities were recorded daily to
Another comparison of storage levels is one we have determine if there was a correlation between gas usage and
named, the relative level of storage. This value is the temperature. These 5 cities are: New York, Los Angeles,
difference between the current storage level and the level for Chicago, Houston & Dallas. The high and low temperatures
the same week of the year using a 5-year average. The 5-year are recorded each day and a population-weighted average is
average was taken from 1994 through 1998. Fig. 15 is a plot calculated from the data. Fig. 17 shows this data plotted
showing the actual storage history for the years 1999 through versus time. This data was then averaged over weekly periods
2002 along with the 5-year average values. Also plotted on and compared to the injection or withdrawal values from
this graph is the relative level of storage for each of these storage for that week. Fig. 18 shows this comparison and the
years. correlation between these data. A very good correlation
appears for the time period presented here, July 1999 through
August 2000. It should be noted that correlating the injection
and withdrawal values from storage to temperature is only be
6 SPE 80949

a valid comparison over a time period when wells are not January 2001 to around $5 again, some of the difference was
being restricted and are being produced at capacity. recovered and as the price fell further, more of the difference
was recovered. This behavior suggests that the changes in the
-1000 $10
difference between predicted and actual storage change is
Relative Storage Level
-800
Henry Hub Gas Price
$9 demand driven. As prices rose, demand was driven from the
-600 $8 market. As prices fell back to acceptable levels for business,
demand returned.
Relative Storage Level, BCF

-400 $7

Henry Hub Gas Price, $

-200 $6 150

5-Cities
0 $5 100 New York
Los Angeles
200 $4 Chicago
50
Houston

Injection (+) / Withdrawal (-)

400 $3 Dallas
0
600 $2 Pre 9/00
Poly. (Pre 9/00)
800 $1 -50
Sources: AGA, EIA & Salomon Smith Barney
1000 $- -100
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03
4 3 2
y = 1.0066E-05x - 6.3829E-03x + 6.6118E-01x - 1.1625E+01x - 4.0850E+02
Fig. 16 Relative Storage Level & Gas Price - Historical -150 2
R = 9.7776E-01

-200

-250
85 5-City Wtd Avg Temp 30 35 40 45 50 55 60 65 70 75 80 85 90

7-Day Moving Avg 5-City Average Temperature

80
New York Fig. 18 Correlation Between Temperature and Storage Change
75 Los Angeles
Chicago
Houston
Weighted Average Temperature,oF

70 Dallas
Knowing the relative nature of demand can assist us in
65
determining future price direction. As we saw in Fig. 16, if
60
we can tell the direction the relative level of storage is
55
moving, we can estimate the direction that gas prices will
50 move. So by combining the knowledge of relative demand
45 and the direction gas supply is headed we can forecast future
40 trends in price. At present, with high intrinsic decline rates
35
present in U.S. gas production, the only thing that can
30
overcome reduced supply is reduced demand due to high
prices. High prices only occur when the relative level of
00

01

02

03
9

3
l-9

l-0

l-0

l-0

l-0
n-

n-

n-

n-
Ju

Ju

Ju

Ju

Ju
Ja

Ja

Ja

Ja

Fig. 17 Weighted Average Temperature - 5 Cities storage becomes dangerously low or has the potential to.
Under present circumstances we are destined to yo-yo up and
down on gas price as lack of supply drives prices up, followed
Using this correlation we can move forward in time and by lack of demand driving them back down.
evaluate changes in demand, if and when they occur. To do
this we used the correlation established in Fig. 18 and 105

calculate the difference between the predicted weekly storage W/I Variance

injection or withdrawal and the actual. Fig. 19 presents this 70

difference with time. Seen in this chart is a substantial drop in

the difference between the predicted and actual storage 35
W/I Variance, BCF

injections/withdrawals. This means that less gas was removed

when withdrawals were expected and more gas was injected 0

when injections were expected. In general this means either

an increase in supply or a decrease in demand. -35

After August 2000, a substantial drop in the difference -70

between the predicted and actual injections/withdrawals is

noted. During April 2001, the difference begins to climb -105

again until we reach the zero line in October 2001 and again
99

00
9

2
99

00

01

01

02

02

02
99

00

00

00

00
19

20
19

20

20

20

20

20

20
/1

/2

/2

/2

/2
1/

1/
1/

1/

1/

2/

1/

2/

3/
30

31

30

/1

/2

during the summer of 2002. Fig. 20 shows the same data

/3

/3
7/

7/

4/

7/

1/

4/

7/
10

10
9/

3/

9/
12

12

presented in Fig. 19, but includes the daily reported price for Fig. 19 Storage Variance

natural gas at the Henry Hub. As we can see from this plot, as
gas prices exceeded $5 in August 2000, there was a widening At present we are back to a normal demand base, or at
in the difference between predicted and actual storage change. least close to the same as the period between July, 1999
As the price of gas increased above $5 the difference through August, 2000. We are still in a period of real-time gas
deepened. When the price of gas rapidly fell from it’s peak in supply as there is no wellhead curtailment of production.
SPE 80949 7

Under these conditions, low winter temperatures will always Acknowledgements

lead to high gas price spikes. Depending on whether demand The authors would like to thank the management of
is reduced due to $5 gas prices this winter, the injection Halliburton and Norton Proppants for allowing us to publish
capacity during the summer of 2003 will most likely be this material. We would also like to thank Kyle Cooper of
reduced from recent years. We currently do not have enough Salomon Smith Barney for his assistance.
gas rigs operating to maintain production, so U.S. gas
production levels are declining. The intrinsic decline rate is References
most likely still increasing, so production will be more 1. Economides, M.J. etal.: “Natural Gas: Beyond All Expectations,”
difficult to replace in the future. All of this points to strong paper SPE 71512 presented at the 2001 SPE ATCE, New
prices for natural gas into the future. Orleans, September 30 – October 3.

105 $12

W/I Variance
Henry Hub Spot Price
70 4 week Moving Avg (W /I var) $10

16 week Moving Avg (W /I var)

35 $8

Henry Hub Spot Price

W/I Variance, BCF

0 $6

-35 $4

-70 $2

-105 $0
99

00
9

2
99

00

01

01

02

02

02
99

00

00

00

00
19

20
19

20

20

20

20

20

20
/1

/2

/2

/2

/2
1/

1/
1/

1/

1/

2/

1/

2/

3/
30

31

30

/1

/2
/3

/3
7/

7/

4/

7/

1/

4/

7/
10

10
9/

3/

9/
12

12

Fig. 20 Storage Variance with Henry Hub Gas Price

To maintain stability in pricing however, we must increase

the storage capacity available for supplying peak demand in
the winter. The deterioration of that supply, primarily
wellhead storage, has lead to the volatile price fluctuations of
the recent past. Additional physical storage is necessary to
buffer these price swings and maintain a more stabile business
environment. Of course filling that additional storage is
another problem for another paper.

Conclusions

1. Current U.S. natural gas supply is being met with

real-time gas production as U.S. wells are producing
at capacity year round.

2. The intrinsic decline rate for U.S. natural gas

production has increased over the past several years
and should continue to increase in the future.

3. Total U.S. gas storage, physical plus wellhead, has

decline substantially over the past decade leaving
available gas for peak winter demand short during
colder than average winters.

4. The ability to monitor and forecast the direction of

the supply/demand balance has been demonstrated in
this paper.