The Case for a Coming Gas Shortage
by Matthew R. Simmons
Chairman and CEO
Simmons & Company International
As the world's largest energy consumer, America is fortunate to be virtually
self-sufficient in each key energy source, with the exception of oil. And
of the key sources, natural gas is assuming greater importance, both because
it is available domestically and because it is the cleanest energy source
used on any significant scale. Yet our natural gas supply could come up
short as soon as this winter.
begins with the 1999 National Petroleum Council (NPC) report, "Natural
Gas – Meeting the Challenges of the Nation's Growing Natural Gas Demand,"
which predicted U.S. gas demand would grow from 22 TCF per year to almost
30 TCF by 2010 based on the large number of new gas-fired power generation
plants needed to meet growth in electricity demand.
were three task forces that compiled this study. I served as the chairman
of the Demand Task Force and a member of the integrating team of this study.
When released, the report's demand assumptions generated considerable skepticism,
principally because most readers did not realize the number of gas-fired
power plants actually on order. In the 30 months following the NPC report's
release, power generator orders far exceeded the total number of gas-fired
power plants the NPC predicted by the end of 2010.
many power plant orders have been canceled, some 130,000 MW of new generating
capacity will be complete by year's end, with another 50,000 to 70,000 MW
of new power plants likely to come online in 2003. In fact, the number of
new gas-fired plants will be double what the NPC report envisioned by 2015.
Worse, the NPC study assumed that most new gas-fired plants would be dual-fuel
plants, but instead, almost all are pure gas or cogenerated plants.
report said meeting a demand level of 30 TCF would be difficult but possible,
as long as proper access to our gas reserves occurred in a timely manner
and rig efficiency gains continued. The NPC report's model also suggested
that this gas growth could happen while gas prices remained under $3 through
2015, though it acknowledged there would be price spikes from time to time.
The Last Drilling Boom
Within weeks after the report's publication, gas prices burst through the
$3/mcf ceiling, rising steadily before peaking at $10. This price explosion
led to an unprecedented gas well drilling boom. In 2000 and 2001, over 36,000
new gas wells were completed, twice the annual rates of the previous decade,
exceeding the NPC report's model for new gas wells in this same period by
the U.S. set a new record for gas wells completed, topping the 1981 record
by over 2,000 wells (Figure 1). At the height of the 2001 boom, about 85
percent of the rigs at work were drilling for gas. Almost all these gas
wells were development wells, which typically come on stream far faster
than exploration wells since the delivery infrastructure is usually in place
before the well is drilled.
spring 2001, gas prices began to soften as gas storage began to rapidly
refill. Yet 2001 production figures show that in spite of the record-shattering
drilling boom, daily gas production stayed flat for the eighth year in a
row. Actually, gas storage was rising as a result of falling demand.
weakness in demand arose from several causes. The $10 prices destroyed some
key industrial gas markets. Some users shut down and others went to alternatives.
Worse, the weather has remained mild, both summer and winter, ever since
February 2000. Our stunned economy after 9/11 added impetus to the reduction
in demand. So, after the mild 2001/2002 winter, storage levels had gone
from "comfortable" to extremely high. By the first anniversary
of $10 gas, prices had fallen to $1.85.
boom peaked at the end of July 2001, with over 1,070 gas rigs drilling for
gas – a record. For the next few months, gas drilling declined but still
stayed at very robust levels. Gas drilling really plummeted from November
through its low point in early April 2002. By the bottom, gas drilling had
dropped by 45 percent (Figure 2). Gas supplies, though, stayed relatively
Supplies versus Drilling
Through the first quarter of 2002, reported gas well completions had fallen,
but so far, the extent of the decline in supply is less than half the drop
in drilling. All of this creates a two-part natural gas riddle: (a) Why
did gas supplies fail to respond to the drilling boom? And (b) What impact
will the drilling collapse have on gas supply? The answers could indicate
whether the U.S. can ever deliver a 30 TCF market, or anything even close
to it, absent calling on a massive amount of imported LNG and significant
volumes of arctic gas.
unprecedented 2000/2001 drilling boom could not increase production, it
becomes hard to imagine the industry growing supplies by over 30 percent
by 2010. Even worse, if supply suffers a serious reduction as a result of
the drilling collapse, it then becomes problematic that production could
climb back even to 52-53 bcf per day. This would certainly create a serious
energy crisis. Unlike oil, where foreign imports can readily substitute
for a fall in domestic production, imported natural gas can only come from
Canada and four relatively small LNG terminals, two of which are still not
be facing an era where high prices stimulate more domestic drilling, but
ever-rising decline rates in many North American producing basins keep supplies
flat. In fact, few gas analysts now think gas supplies can grow until drilling
recovers to boom conditions. On the other hand, these same supply forecasters
also assume that any decline in gas production, as a result of the drilling
drop, will be small.
The Marginal Well Theory
Those who assume that a 45 percent drop in drilling will only result in
a modest change in daily gas supply believe a theory that also explains
why supply never rose during the historic drilling boom. It's called the
"marginal well" theory. It presumes that the drilling boom created
by ultra-high gas prices induced the industry into drilling a pyramid of
steadily more marginal wells.
the marginal well supply models assume that the first 10,000 wells drilled
at "normal drilling rates" produce wells that average about 1
mmcf per day in their first year of production. As the rate of drilling
increased during the boom, the next 5,000 wells' initial production was
only a third of "normal" wells. The final wells brought on at
boom's peak, the last 6,000 well completions of 2001, this theory suggests,
had daily production levels of about 15 percent of the first 10,000 wells.
numbers are correct, and the base pre-2000/2001 production decline stayed
around 26-28 percent, this perfectly explains why more than doubling 1999
well completions still failed to raise gas supply.
of us at Simmons & Company were troubled by this theory. It seemed unlikely
that the well productivity could suddenly drop as much as 65 to 85 percent
from the "norm" in such a short period. If the wells completed
in 2001 were fairly similar to the wells completed in prior years, why was
production flat? Absent "marginal wells" occurring, the only other
answer is that the base decline rate has accelerated sharply from the past
also turn out that the opposite of the marginal well theory happened. Not
only were more "normal" wells drilled, but high gas prices could
have created an environment where far more money was spent to maximize the
volumes initially produced from each new well completed. This behavior could
have led to a new generation of wells actually having higher peak rates
of production, but this higher production would also result in far higher
Testing the Theory
If marginal wells are not the answer to the riddle, a meaningful drop in
gas supplies is in store. To investigate the marginal well issue, we at
Simmons & Company made use of the remarkable new online database created
by the Texas Railroad Commission called the ACTI. It contains monthly production
history of every oil and gas well in Texas, from January 1993 onward (Figure
53 Texas counties to represent a wide profile of production by type of well,
ranging from counties with the largest number of wells to counties with
the lowest well productivity to counties with the highest production per
well (Figure 4). These 53 counties had total January 2002 gas production
of 8.3 bcf per day. This amounts to 66 percent of Texas' daily gas-well
gas production (as distinct from "casing head" gas, a by-product
of oil production).
Texas represents the single largest gas-producing state in the U.S., these
counties also accounted for 16 percent of the entire country's total daily
gas supply. Our survey looked at January 2002 production for all the wells
still producing that had been completed over the past four years, separating
them into "vintages" by year of completion. We analyzed the current
production from 10,648 wells completed in these four years, of which 7,024
were still producing in January 2002.
analyzed all the "giant gas wells" (GGW) in production that month,
defined as any well still producing in excess of 3 mmcf per day. In addition
to approximately 1,800 wells completed between 1998 and 2001, another 104
wells completed prior to the beginning of 1998 still produced in excess
of 3 mmcf per day in January 2002.
A variety of important conclusions and endless interesting observations
sprang from this extensive well-by-well analysis. The most important observation
was the lack of any strong evidence in support of the "marginal well
thesis" throughout the 53 counties surveyed.
per well from these 53 counties varied enormously. But even in the low well
productivity counties, the new wells completed in 2000 and 2001 seemed to
have well volumes close to those seen in prior years. In some cases, there
was evidence that current peak production is higher than in the past, bringing
with it higher declines, too.
the survey highlighted how the state of Texas' gas supply is now anchored
by a small number of highly prolific wells. These 53 counties had 393 giant
gas wells, which amounted to only 1 percent of the total gas wells in the
survey, yet accounted for 28 percent of total gas produced.
393 giant gas wells in the 53-county sample, 167 were completed in 2001,
43 percent of the total. These 167 wells accounted for 14.5 percent of the
total 53-county production, or half of all production contributed by almost
2,300 2001 gas wells still producing in January 2002. The growth in total
gas produced by these 167 wells is illustrated in Figure 5. Total production
appears to have peaked in December and was already in decline in the first
two months of 2002. The average life of these wells from the date of first
production is seven months. The average life from the date of peak production
is five months.
coming from gas wells completed over the last four years, plus 104 other
giant gas wells from prior periods of time, amounts to 65 percent of all
gas produced in these 53 counties. The other 49,000 gas wells now account
for only 35 percent of this 53-county gas supply. This has created a remarkable
like this works well as long as new wells are constantly added. If only
giant gas wells are added, supply can also possibly stay flat with even
fewer wells added. But such a pyramid creates a high supply risk if any
significant drilling decline occurs. To keep supply flat, an exponential
growth in new gas wells is imperative.
the 53-county survey was finished, we also examined the annual gas production
throughout Texas on a county-by-county basis. This led to another surprising
finding – that Texas maintained eight years of flat gas production despite
steep declines occurring in many key-producing counties, and even during
a gas drilling boom.
gas supplies were maintained by a handful of counties, often bolstered by
the small number of giant gas wells that were rapidly growing their production
fast enough to offset substantial production declines occurring in many
other parts of the state.
has 192 counties that produce natural gas. Between January 2001 and January
2002, 144 of these counties suffered a fall in production from 10.3 bcf/day
to 8.8 bcf/day, a drop of almost 15 percent despite a record-setting drilling
48 counties increased production from 4.3 bcf per day to almost 5.3 bcf
per day over the same 12 months, which resulted in the impression that Texas
gas production was staying flat. Of the 48 counties with higher production,
five key counties made up almost half of the daily increase.
county-by-county analysis proves that gas supplies can fall fast, even during
a drilling boom. The 91 counties whose combined gas production totaled 34
percent of the state's total supply suffered a 26 percent decline over the
course of 12 months, even during Texas' greatest drilling boom.
hard to imagine how much further supply would have fallen had the drilling
boom not occurred. It also suggests that since this boom ended a year ago,
there is no way Texas gas supply can grow. The big question is how fast
supply might decline once the full impact of the drilling collapse is felt.
A handful of observers now worry that gas supplies might fall by 5 to as
much as 7 percent by the end of 2002. But most analysts dismiss these dire
forecasts as being overly bearish.
mid-April this year, the best support for a modest supply decline was the
fact that supply had only dropped a little, despite the rig count peaking
a year ago.
came a series of quite large gas production drops for many of the best-in-class
public E&P companies. A close examination of Texas rigs drilling, compared
to the gas wells reported to the RRC as completed, highlights how dangerous
it is to disregard a falling rig count by citing the lack of evidence showing
up so far.
rig count peaked at 509 rigs in July 2001. By April 2002, the Texas rig
count had fallen to 293 rigs at work, a decline of over 40 percent.
of gas wells completed monthly throughout Texas previously averaged 250
to 300 new wells per month. In mid-2000, these well completions began to
rise steadily. They reached a peak at an all-time high of 469 in March 2002.
This peaking date reflects both the time delays in drilling many of these
significant wells and also the lag in reporting the well completions.
the rig count has now fallen so much from its peak, six to nine months from
now Texas' well completions should drop back into the low 300 wells per
month. If this happens, it would seem almost impossible that gas supplies
could only fall a percent or two.
the drilling decline, reported well completions were at peak levels six
to nine months after drilling peaked. While gas prices have now doubled
from their recent lows, gas-related drilling could soon rebound, but through
the end of September 2002, no sign of a big drilling recovery is underway.
even a quick drilling rebound will probably not reverse a supply drop because
such a large proportion of the state's supplies are dependent on the steady
growth of giant gas wells, and drilling for these wells has also declined.
in Texas will fall. Calculating the timing and magnitude of the decline
is difficult. The risk that a supply drop could be significant is too serious
to ignore. How big a drop is likely? The fact that 75 percent of Texas counties
suffered declines of 15 percent during a major drilling boom illustrated
that a statewide drop of this magnitude or more could be realistic. Handicapping
the odds of such an event is impossible.
Is Texas a National Model?
It is hard to accurately gross up the results of this 53-county gas survey
to approximate the state of Texas. It is beyond sound analysis to even try
to extend this sample to all of the U.S., despite the fact that these 53
counties represent 16 percent of total U.S. gas supply.
the 53 counties were specifically selected to serve as a reasonable proxy
for not only the entire array of Texas wells but also the wide variance
seen in the gas well productivity of states around the U.S.
County in west Texas, for instance, is a good proxy for a state like Kansas,
with many wells but tiny per-well production. Brooks County in south Texas
is a good representation for the best gas wells completed in the Gulf of
Mexico. Logically, it is hard to see why this survey of 16 percent of the
U.S. gas supply would not be a rough proxy for what is likely to happen
to gas supply for the entire country.
gas rigs drilling declined by 45 percent. Texas rigs are down 44 percent.
Both rig counts peaked at the same time. During the boom, the only states
with higher growth rates were Oklahoma and Wyoming. The only states that
fell from peak rig counts further than Texas were Oklahoma and New Mexico.
The collapse in drilling was relatively uniform throughout the U.S.
the fact that we surveyed production from almost 8,000 producing gas wells,
there is no way to precisely guess the magnitude of the coming decline in
gas supply, even from these 53 counties. It is even harder to use this data
to precisely quantify what is likely to happen to total U.S. gas supply.
a decline in gas supply as little as 1 percent to 3 percent now seems almost
impossible, once the full impact of a drilling collapse is finally felt.
I think the U.S. will be fortunate if the decline is only 10 percent. It
could be far higher.
of how much gas supply will ultimately fall, based on sampling individual
gas wells in this 53-county survey, the full impact of the possible gas
supply decline is unlikely to be felt until the fourth quarter of 2002 or
1st quarter of 2003.
a robust drilling boom could be underway, assuming the industry has a sufficient
inventory of drilling prospects. But the lag effect and a far higher decline
rate now challenges the industry more than ever (and there is no sign of
this renewed boom occurring any time soon).
Each time prices soar and subsequently crash, it further erodes the confidence
of oil and gas operators to begin drilling more wells when prices begin
big drop does occur, the dynamics of supply could make it hard, if not impossible,
for the industry to build supply back to the levels we enjoyed for the past
eight years, let alone ever grow supplies to meet a 30 TCF market by 2010
or even 2015.
drops more than a marginal degree, there is also a risk that gas prices
will face another violent and unhealthy upward explosion.
indications should be but a trickle compared to the production loss that
should show up when a decline in completing the giant wells finally appears.
The stunning drop in 75 percent of the Texas counties that produce the USA's
biggest supply of gas, even during a drilling boom, attests to how fast
gas supplies can drop.
risk embedded in a supply drop is that a new drilling boom might merely
stabilize gas supply at the new lower supply level. Finding a way to return
gas supplies to the 52 bcf per day base that the U.S. enjoyed for the past
eight years might take years. If the industry's drilling boom did, in fact,
use up many drill sites that were planned for 2002 and 2003, the industry
will have a hard time quickly responding to a high gas price scenario, regardless
of how attractive the economics might become.
How Much Could Supply Drop?
The unanswered questions from this intensive analysis are how far U.S. daily
gas supply could drop, given the 45 percent drop in drilling new gas wells,
how fast the drop will occur and when it will bottom out. The top 30 U.S.
oil and gas producers' production results for the first quarter of 2002
showed a drop in gas supply from the fourth quarter 2001 that was a surprise
even to most of the reporting companies.
all the acquisitions and divestitures are removed, total gas production
of these 30 companies fell by almost 3 percent in just one quarter. But
half of these companies, producing 75 percent of the total gas, experienced
average declines of 3 to 10 percent. The best half, accounting for 25 percent
of total production, actually grew their gas supplies.
these 30 companies represent over half of total U.S. production, they are
probably not representative of all gas operators. The bottom 50 percent
of U.S. gas supply comes primarily from smaller companies with no access
to external capital. These companies were likely forced to curtail drilling
earlier than the 30 large public companies did. It would be strange if these
smaller companies did not suffer a more severe drop than the best-in-class
larger public companies.
A Worst-Case Scenario
Handicapping the odds of a severe supply drop is difficult. But the probability
that it could happen is too high to ignore. Public policy energy planners
and major users of gas now need to begin planning for the various unforeseen
consequences that will occur if gas supply does drop.
a material drop occur, it seems unlikely that any drilling boom could grow
daily supply enough to get back to a 52-53 bcf per day U.S. base in any
reasonable period of time. The 2001 drilling boom, if carefully assessed,
was unsustainable. All useable rigs were working. Rigs were drilling for
gas, not oil. A large percentage of these rigs were applied to development
instead of exploration wells.
U.S. has a sharp fall in gas production it creates an urgent need for a
series of action programs, government-assisted or voluntary, to encourage
a steady growth in drilling an ever-increasing supply of giant gas wells
and to expand drilling in high impact areas like deep gas formations in
the shallow waters or the Gulf and deep formation Rocky Mountain wells.
to mitigate against any further unforeseen drilling collapses, some form
of price floor might be necessary. A price ceiling might also be needed
to keep gas prices from rising to destructive levels.
percent of Texas wells could essentially overcome a decline in production
throughout most of Texas' remaining supply, this also points to another
action. If the industry could crank up its drilling efforts to begin completing
hundreds of these highly prolific wells, this would go a long way toward
reversing a production drop.
gas wells are typically deep, take a long time to drill and are very expensive.
In a highly volatile price scenario, it is unlikely that enough new wells
with peak productivity to make a difference could materialize fast enough
to make a difference. Solving the gas supply problem through a relentless
growth in new giant gas wells also creates an imperative that such an effort
should never slow down.
curve for these wells is so steep that it takes exponential growth in these
wells merely to keep production flat. There is, of course, also a finite
number of prospects for such wells. A supply drop of even a modest degree
also highlights the importance of creating the necessary infrastructure
to bring Arctic gas to the lower 48 states as fast as possible, along with
a rapid expansion of LNG terminals and LNG facilities to receive imported
gas from overseas locations.
falls by 10 percent or more, the concept of a single Arctic gas pipeline
suddenly becomes barely adequate. Two Arctic lines become almost mandatory
if natural gas is to remain a key energy source. The cost of two sizeable
Arctic pipelines could exceed $40 billion and take a long time to build.
Offshore Technology Conference saw announcements of projects using both
compressed natural gas on vessels and a new generation of vessels that import
LNG and discharge the gas into conventional pipelines instead of expensive
and difficult-to-site offloading LNG terminals. Both become far more important
alternatives if gas supplies start to drop by any meaningful degree.
pending supply drop is severe, it is time for America to abandon its paranoia
about exploring and producing gas in our offshore basins outside the Western
and Central portions of the Gulf of Mexico. Natural gas spills do not happen.
No one has ever shown that developing offshore natural gas creates any environmental
an offshore platform or pipeline clearly impacts the environment. But there
is no evidence it hurts the environment. A major supply drop will create
a painful wakeup call for Americans to begin to distinguish between an event
that impacts the environment and one that hurts the environment.
America is the largest energy consumer on earth, it makes no sense to ban
trying to locate natural gas supplies in the eastern portion of the Gulf
of Mexico or offshore New England, let alone the potentially gas-starved
Pacific Coast states, simply because of environmental scare tactics.
gas is not our energy future, as so many people have assumed for so long,
then the only realistic way for the U.S. economy to continue to prosper
is to embrace more coal-fired power plants and initiate a return to more
nuclear plants. Coal gasification, the most basic way to process coal into
its cleanest state, becomes an idea that was 25 years before its time when
it became the poster child of the Carter Administration's energy solutions.
energy sources take on a far higher urgency, but the tough limits keeping
sources like wind and solar at only a tiny piece of the energy mix are real
barriers. For the foreseeable future, the U.S. will be highly dependent
on natural gas, coal and nuclear to heat and cool homes, power industry
and light up our offices and information highways.
as this may sound to environmentalists' ears, if natural gas cannot do the
job, there is no real alternative to providing energy to the U.S. economy
than tilting heavily to coal and nuclear. The industry and the government
will simply have to find ways to make coal clean, resolve the "spent
fuel" issue and replace the aging nuclear plants that now impede any
bright prospect for nuclear energy's future.
The Eye of the Hurricane
Two years ago, a convergence of events – cold winter, humid and hot summer
and a surging economy – created a "perfect storm" which sent gas
prices soaring to their $10 peak. Quickly, prices fell, finally bottoming
at between $1.85 and $2.10. Many observers credited this fast correction
to the market efficiencies of a deregulated market-driven energy business.
rapid change could merely have been "the perfect storm" passing
into a typical "eye of the hurricane."
reason gas prices plummeted was that gas storage went from almost empty
to safely full. The "savior" was 5 bcf per day of reduced demand.
Half of this came from abnormally mild winter and summer weather. Most of
the balance came from the destruction of key industrial markets through
extremely high prices.
bit came when NGL processing margins turned negative and some NGLs were
left in the gas stream, artificially boosting natural gas supply by 1.0
bcf per day during the first quarter of 2001.
of this perfect storm now seems to be passing. How bad the back-end of the
perfect storm might be will be dependent on the extent to which natural
gas supply falls in the third and fourth quarters of 2002, how quickly gas
drilling rebounds, how long the lag effect takes before a drilling upturn
halts the supply drop and what happens to natural gas demand over this same
period of time.
America's most precious energy supply, natural gas, is in for a major jolt.
The country is now as exposed to a serious energy shock as during the 1973
Oil Embargo. But this time, geo-politics and OPEC are absent. This new threat
is merely the by-product of a drilling slump.
of the extent of the pending supply drop, it now seems unlikely that conventional
gas supplies can grow beyond the steady levels enjoyed over the past eight
years through at least 2010. Whether supplies can even return to a 52 BCF
per day level is also now a serious energy issue.
consequences are almost too numerous to list. A drop in natural gas supply
of a severe magnitude is not a foregone conclusion, but it not a ridiculous
many years, a looming number of concerns on the reliability of safe, low-cost
energy in both oil and gas were dismissed as views of contrarians or inveterate
energy bulls, and for too long, unplanned and unpredictable events like
benign weather have kept serious energy concerns from being addressed.
"flashing yellow" and subsequent "flashing red lights"
were dismissed by many supposed energy experts as simply the normal cycles
of energy. America has never been particularly good at predicting crises
and warding them off. Our great strength has been how effectively we marshal
our collective assets to cope with a great crisis.
supplies suffer even a 10 percent decline by year-end, America will have
an abrupt energy wake-up call. We will know the answer to this gas riddle
by the fourth quarter of 2002. Hopefully, this article will prove to be
more alarming than the real facts. We will know all of these answers soon.
Matthew R. Simmons is chairman and CEO of Simmons & Company International,
a specialized energy investment banking firm. The firm has guided
its broad client base to complete over 450 investment banking projects
at a combined dollar value of approximately $56 billion.
Mr. Simmons was raised in Kaysville, Utah. He graduated cum
laude from the University of Utah and received an M.B.A. with distinction
from Harvard Business School. He served on the faculty of Harvard
Business School as a research associate for two years and was a doctoral
Mr. Simmons founded Simmons & Company International in 1974.
Over the past 28 years, the firm has played a leading role in assisting
its energy client companies in executing a wide range of financial
transactions, from mergers and acquisitions to private and public
Today the firm has approximately 135 employees and enjoys a leading
role as one of the largest energy investment banking groups in the
world. Its offices are in Houston, Texas and Aberdeen, Scotland.
Mr. Simmons is a trustee of the Museum of Fine Arts, Houston and
the Farnsworth Art Museum in Rockland, Maine. He serves on the
board of directors of Kerr-McGee Corporation (Oklahoma City), the
Atlantic Council of the United States (Washington, D.C.), the Initiative
for a Competitive Inner City (Boston), Houston Technology Center (Houston)
and the Center for Houston's Future (Houston). He is also on
the University of Texas M. D. Anderson Cancer Center Foundation Board
of Visitors (Houston) and is a charter member of the University of
Houston National Advisory Council (Houston). In addition, he
is past chairman of the National Ocean Industry Association.
He serves on the board of directors of the Associates of Harvard Business
School and is a past president of the Harvard Business School Alumni
Association and a former member of the Visiting Committee of Harvard
Business School. He is a member of the Council on Foreign Relations
and the Advisory Council of the National Trust for Historic Preservation.
Mr. Simmons' papers and presentations are regularly published in
a variety of journals and publications, including World Oil, Oil and
Gas Journal, Petroleum Engineers, Offshore and Oil & Gas Investors.
He is married and has five daughters. His hobbies include watercolors,
cooking, travel and reading.