Like oil, natural gas is an energy resource that lies hidden beneath the ground, trapped in porous rock formations. In fact, the two resources are often found together. Deposits of natural gas lie throughout the United States, but the most prolific production areas are in the Gulf of Mexico and the western and southwestern states. In the future, large quantities of natural gas are expected to become available from the North Slope of Alaska and from deepwater regions in the Gulf. But these are complex and costly undertakings that will take many years to accomplish.

The bulk of the nation’s gas production comes from what are termed “conventional” gas reservoirs, which typically are underground formations composed of sandstone. Increasingly, however, more gas is being discovered and produced from “unconventional” resources, most often coal beds and oil sands, where different production methods are required. The country’s proved reserves of natural gas rank sixth in the world behind Russia, Iran, Qatar, Saudi Arabia and United Arab Emirates. Russia’s reserves are approximately 12 times larger than those of the U.S.

Today there are approximately 425,000 producing gas wells in the United States, the majority of them extracting gas and gas condensate from conventional resources. Output from gas wells in the Gulf of Mexico, one of the nation’s key gas-producing regions, was seriously impacted by hurricanes in 2005. Offshore platforms, undersea pipelines and onshore processing facilities received severe damage, some of which is still undergoing repair. With the lessons learned from this unprecedented occurrence, the oil and gas industry is rebuilding the energy production infrastructure in the Gulf to better withstand monster storms.

The nation’s proved reserves of natural gas reached a high point in the late 1960s, with gas resources estimated at nearly 300 trillion cubic feet. During the 1990s, low prices for gas discouraged exploration and development and caused proved reserves to drop markedly. Higher prices since the start of the current decade have spurred a resurgence in drilling activity, and proved reserves are now up to about 200 trillion cubic feet. Last year, gas developers drilled some 31,500 wells – an industry record.

At the consumer level, prices for natural gas have risen about 75 percent per million cubic feet (Mcf) since 2000, reflecting the higher price of oil (a competitive fuel in some applications), tighter supply and the increased costs of finding and developing new reserves.