As natural gas prices soared last spring, Ontario government officials contacted the province"s gas distributors, looking for assurances about price and supply.

Ontario relies on natural gas for 16 per cent of its power, and expects to increase that share significantly to replace coal-fired generation and complement the growth of renewable sources like wind and hydro. But as prices climbed to near-record levels, officials began to fret their natural gas bet would leave the province vulnerable to dramatic price hikes and potential shortages.

In response to these concerns, the province"s two biggest gas distributors offered two words: shale gas.

It wasn"t so long ago analysts were anticipating declining North American gas supplies. But those gloomy forecasts are being revised to reflect booming development of unconventional gas reserves, notably those trapped in hard-to-tap shale rock.

Driven by sharply rising shale gas volumes, U.S. production of natural gas is on track to rise by more than 6 per cent this year. In a jointly funded report, the gas distributors say North American production is now expected to increase 16 per cent by 2015, and 30 per cent by 2030. The prospect of booming production has triggered a dramatic selloff in natural gas futures, bringing prices 40 per cent below their July peak.

The steep decline may be tested this weekend by the prospect of a hurricane hitting the Gulf of Mexico, but prices are expected to settle in a lower range.

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