During this period of natural gas surplus and declining prices, gas production, transportation, and distribution companies need low-cost reserves to maintain market share and assure economic survival. This paper discusses the attractiveness of three new sources of natural gas -- tight formations, methane from coal seams, and Devonian shales -- as options for low-cost gas reserves. In particular, the paper examines the role of improved extraction technology for increasing the recovery efficiency for improving the economics of unconventional gas, and for making these new sources competitive with conventional supplies.

The paper addresses three key questions of concern to managers of gas supply:

  • How does unconventional gas compare economically with conventional gas from the Lower-48 onshore and offshore?

  • How do the various unconventional gas sources compete among themselves?

  • How might one formulate a "least cost" investment and production strategy for future natural gas supplies?

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