will arbitrage the u. s. natural gas price down, possibly significantly, through increased imports. in addition to increased supplies from abroad, north america still has numerous unexploited sources of gas production. significant quantities of recoverable gas reserves are located in alaska and the northern territories of canada. negotiations over the construction of pipelines connecting these northern supplies to existing delivery infrastructure are currently under way. * * * to be sure, the dramatic changes in technology in recent years have made existing oil and natural gas reserves stretch further while keeping energy costs lower than they otherwise would have been. seismic imaging and advanced drilling techniques are facilitating the discovery of promising new reservoirs and are enabling the continued development of mature fields. but because of inexorably rising demand, these improved technologies have been unable to prevent the underlying long - term prices of oil and natural gas in the united states from rising. conversion of the vast athabasca oil sands reserves in alberta to productive capacity has been slow. but at current market prices they have become competitive. moreover, new technologies are facilitating u. s. production of so - called unconventional gas reserves, such as tight sands gas, shale gas, and coalbed methane. production from unconventional sources has more than doubled since 1990 and currently accounts for roughly one - third of u. s. dry gas production. according to projections from the energy information administration, the majority of the growth in the domestic supply of natural gas over the next twenty years will come from unconventional sources. in many respects, the unconventional is increasingly becoming the conventional. in the more distant future, perhaps a generation or more, lies the potential to develop productive capacity from natural gas hydrates. located in marine sediments and the arctic, these ice - like structures store immense quantities of methane. although the size of these potential resources is not well measured, mean estimates from the u. s. geological survey indicate that the united states alone may possess 200 quadrillion cubic feet of natural gas in the form of hydrates. to put this figure in perspective, the world's proved reserves of natural gas are on the order of 6 quadrillion cubic feet. * * * in the decades ahead, natural gas and oil will compete in the united states with coal, nuclear power, and renewable sources of energy. as the manner in which energy is produced and consumed evolves, it is not unreasonable to expect that, in the long run, the prices per unit of energy from various sources would tend to converge

markets. at the liquefaction end of the process, new investments are in the works across the globe. in qatar alone, five large - scale projects have begun construction or are at advanced stages of development. in january, egypt exported its first lng cargo. enormous tankers to transport lng are being constructed, even without being dedicated to specific long - term delivery contracts. the increasing availability of lng around the world should lead to much greater flexibility and efficiency in the allocation of energy resources. according to tabulations of bp, worldwide imports of natural gas in 2003 were only 24 percent of world consumption, compared with 59 percent for oil. clearly, the gas trade has significant margin to exercise its price - damping opportunities. in the united states, import terminals in georgia and in maryland have reopened after having been mothballed for more than two decades. the added capacity led to a noticeable increase in lng imports last year, but lng imports still accounted for less than 3 percent of u. s. consumption. 2 u. s. natural gas consumption in 2004 amounted to 22. 3 trillion cubic feet. additional import facilities, both onshore and offshore, are being developed. according to the federal energy regulatory commission, the number of approved and proposed new or expanded lng import terminals in the united states stood at thirty - two as of last month with a capacity to import 15 trillion cubic feet annually, far in excess of any pending needs. clearly, not all of these projects will come to fruition. some will be abandoned for economic and business considerations, and others will fail because of local opposition, motivated by environmental, safety, and other concerns. the larger question, of course, is what will increased world trade in lng and expanded u. s. import capacity do to currently uncompetitive natural gas prices in the united states? during the past couple of years, when u. s. prices of natural gas hovered around $ 6 million btu, import prices of lng in europe have ranged between $ 2 and $ 4 per million btu, and those in japan and korea have generally been between $ 3 and $ 5 per million btu. estimates of production and delivery costs of lng to north america appear to hover around $ 3 per million btu. in the short run, exporters to the united states are likely to receive our domestic price, currently above $ 7 per million btu. but unless world gas markets tighten aggressively, competitive pressures