Abundant clean energy in your backyard

'Plane' truth about fuel prices

More Videos

Special Reportfull coverage

Oil's record high, one year later Oil settles below $67 on economic concerns Oil plunges 2% to under $70 House passes sweeping energy, climate bill $3.3B deal creates leading energy partnership Gas prices hold steady as July 4 nears

Quick Vote

The 2008 Fortune 500 comes out Monday. What big company would you most want to work for?

• Google
• Starbucks
• Whole Foods Market
• Nike

or View results

NEW YORK (CNNMoney.com) -- Americans are used to hearing that their energy supplies are dwindling.

But new discoveries of huge new natural gas fields in the United States and Canada could change that, cutting foreign imports and boosting production of a relatively clean energy source as global warming concerns take center stage.

Natural gas is used to generate about 20% of the nation's electricity and heat half its homes. Many people also use it for cooking, and it's seeing a small but growing use in vehicles.

Prices and production were fairly low during the 1980s and 90s, but growing demand for energy globally, and an increased interest in cleaner fuels, has sent natural gas prices sharply higher.

Over the last few months, big gas discoveries have been announced in the Northeast, Louisiana, and British Columbia. Together, they could boost natural gas reserves in the United States and Canada by up to 10%.

These new fields are what experts call "unconventional" natural gas. What makes them unconventional is the geology.

Most natural gas previously came from fields buried in sandstone - a porous stone that is, like its name implies, similar to sand. These new fields are in shale, which has a consistency more like brick. It's much harder to get the gas to flow out of shale than it is sandstone.

But thanks to new technology - horizontal drilling and 3D-seismic imaging - and higher natural gas prices, unconventional natural gas is now very profitable.

"Incredible is a reasonable word to use to describe the amount of drilling going on," said John Wood, head of the reserves division at the Energy Information Administration.

Wood was referring specifically to drilling in Texas' Barnett Shale, one of the first shale fields, where he said activity in reaction to high gas prices is so frenzied now that rigs are drilling right up to the perimeter line at the Dallas-Fort Worth International Airport.

It's the success of the Barnett - and the companies that operate there like XTO Energy Inc., (XTO, Fortune 500) Devon Energy Corp. (DVN, Fortune 500) and Chesapeake Energy Corporation (CHK, Fortune 500) - that has inspired the exploration leading to new discoveries across North America.

In the Northeast, the Marcellus Shale stretches from southern New York, through western Pennsylvania, and into eastern Ohio and West Virginia.

In Louisiana, the Haynesville Shale occupies the northeastern corner of the state, and British Columbia's Muskwa shale field lies in the remote northern reaches of the province.

It's difficult to say how much gas these three fields hold, and estimates vary widely. One estimate from Fredonia State College for the Marcellus Shale field put the number at 500 trillion cubic feet - more than twice the county's current proven reserves.

Actual production will be far more modest, but nonetheless significant.

Output from the three new finds could boost production by six billion cubic feet a day over the next three to five years, according to Christopher Ruppel, an energy analyst at Execution LLC, a broker and research firm for institutional investors like hedge and mutual funds. That's about 9% more than the current U.S. output.

In a world of tight supply and demand, six billion cubic feet is a lot - enough to heat 60,000 homes for a year.

"It's the new wave," said Scott Speaker, a natural gas strategist at JPMorgan Chase. "Domestic production will be growing at a clip that will surprise a lot of people."

In the short run, it could surprise the people who planned on building big terminals to import liquefied natural gas (LNG), mostly from places like Russia and Qatar.

"A lot of the companies that planned on importing LNG into the U.S. are looking at other options now," said Speaker.

These companies shouldn't lose out if they can't find a market for LNG in the United States, as high demand in Asia and Europe will most likely ensure that they'll be able to sell their gas.

Desire for cleaner energy is a main driver behind this demand, which has led to the higher prices responsible for making shale gas viable in the first place.

In the United States, commercial natural gas prices have trended higher over the last 6 years, going from around $6 per thousand cubic feet in 2002 to about $11 today. Overseas, it's even more expensive. In Spain, gas is over $13 a thousand cubic feet, and in Asia they pay $16 to $17.

Like all commodities, gas has risen due to tight demand, a falling dollar, and overall investor interest.

But the environmental advantages of natural gas - it's far cleaner than coal and somewhat cleaner than oil - shouldn't be overlooked, said Speaker.

"The single most bullish factor for natural gas is impending climate change regulation," he said. "It's driving the psychological demand scenarios."

Which should ensure gas from the Haynesville, Muskwa, Marcellus and other shales across North America is profitable for the foreseeable future.