A lot of new production of natural gas comes from the oil shale projects in the US. They have very high flow rates and very quick decline rates (up to 70% a year). The cost to drill new wells which are horizontal is currently about twice the cost of natural gas so no new wells are being drilled. There is currently an over supply of gas as a lot of bussiness in the US have shut down and so demand has fallen. I expect that by next fall the production decline rates will catch up with the demand destruction and prices could double very quickly. The new US energy policy will include a cap and trade. This will also benifit natural gas as it is a cleaner fuel.

I would not invest in any of the US companies myself as they will be taxed heavily under the new cap & trade. I think the larger Canadian companies and some of the income trusts are the place to be. You want to make sure that they have solid balance sheets in this environment.

I currently own ECA, CNQ, XEG and some income trusts.