Attendees at the Colorado Oil & Gas Association's annual meeting in Denver in early August were treated to expert viewpoints on the fundamentals of natural gas supply and demand. The Rocky Mountain Natural Gas Strategy Conference and Investment Symposium, which drew more than 1,200 attendees during its three-day run, offered forecasts and opinions from members of academia, government and industry on the place of natural gas in America's future energy supply. Scott Tinker, director of the Bureau of Economic Geology, University of Texas at Austin, predicted that energy demand growth in the United States would be met by natural gas and renewable energy sources; at the same time, the country will continue to burn coal and oil at levels that are roughly on par with current consumption. But the natural gas flowing into the nation's boilers and heaters will come from a different mix of wells than it does today. By 2015, more than half of the nation's gas supply will likely flow from unconventional sources such as tight gas, shale gas, coalbed methane, deep-basin gas and deepwater gas reservoirs. These sources will require considerable work and hefty investments to bring the gas into production, however. John Wood, productive capacity expert, U.S. Energy Information Administration, says domestic gas production and reserves have been increasing during seven of the last eight years. "That just doesn't portend a collapse of natural gas production." U.S. reserves have been growing, thanks mainly to growth in the Rocky Mountain area, he says. In the last few years, the Rockies' share of domestic proved reserves has been inclining dramatically. Now, 11 of the nation's top 20 gas fields, as ranked by proved reserves, are in the Rocky Mountains. "These are tight, tight and coalbed, or just coalbed fields." Abundant reserves do not necessarily mean low prices, however. Wood contends that what drives price volatility is a high utilization of effective capacity. The EIA has been measuring this factor for years. In the 1980s, the effective capacity utilization in the nation's natural gas system was around 80%. The huge swings in capacity experienced during those years reflected the seasonal nature of the market. Since 1995-96, effective capacity utilization has risen to more than 90%. "That doesn't guarantee high prices, but it creates conditions where if anything disturbs the market, such as a hurricane or extremely cold weather, you can expect to see some real price volatility," Wood says. Indeed, a 1% change in demand will change the wellhead price by $1 per thousand cubic feet. Furthermore, following a change in wellhead price, the number of well completions responds strongly. There were 22,000 completions and recompletions in 2001, and most of those were decent wells; some were exceptional. "The current drilling contributes an inordinate amount to the productive capacity each year, and if you don't drill you can very rapidly run out of productive capacity." M. Ray Thomasson, president, Thomasson Partner Associates Inc., and past president of the American Association of Petroleum Geologists, stressed that the Rockies region can meet the continuing challenge of increasing domestic supply because it is home to a very large volume of rich, mature source rock, and thick potential sections of reservoir rock. And, the Rocky Mountain region remains an immature gas province. Just 5% of the region is covered by 3-D seismic data, as compared with more than 70% of the acreage in the Gulf Coast. "Admittedly, our projects and plays are different, but still, 3-D seismic is critical to many of the types of stratigraphic plays we're making. "I would contend that we are underexplored and underexploited, and I would suggest that there are many gas resources below some of our very shallow gas resources currently being developed," Thomasson says. Unconventional reservoirs will also produce tremendous volumes of gas using new technology; that premise does assume that exploration and production technology will continue to evolve at the rapid rate seen in recent years, however. The upshot? The nation, and especially the Rocky Mountain region, is brimming with natural gas resources, and it boasts an abundant supply of proved reserves. What it lacks at this time is a comfortable cushion of deliverable gas.