If you have been following resource prices you may have noticed that the price of natural gas is down in the doldrums. As the price of gold, silver and crude oil seem to climb higher every day; natural gas has actually fallen about 12 percent over the past year. One major reason for this depressed environment is the proliferation of shale gas in the US.Over the past 10 years breakthroughs in shale gas recovery technologies have led to some of the largest “recoverable” discoveries the US has ever witnessed. Regions such as Haynesville, Fayetteville, Barnett and Marcellus have been noted often in the press and have seen a huge inflow of investments. The key technology that has enabled this boom is a process called hydraulic fracturing or “fracking” - a process by which shale formations are fractured by using high-pressure water. Fracking coupled with horizontal drilling has really cranked up production of gas and subsequently a large volume of supply. Storage levels of gas in the US are sitting near record highs.This is why we find natural gas interesting. This is a commodity that has not inflated and is trading near the marginal cost of many producers. Contrarian investors, we believe, now have the opportunity to pick up numerous world-class natural gas exploration companies at attractive prices. Recently Chevron's head of oil and gas exploration and production was quoted in the Financial Times as saying “the industry needed prices in the $6s and $7s in the long term to cover the cost of investment”. This seems reasonable when you consider that natural gas in international markets trades at about $8 versus the North American benchmark near $4.50. Eventually these prices will converge as natural gas becomes a more global product and not a regional one. This will slowly come about with the increase in the world's use and distribution of Liquid Natural Gas (LNG). LNG is essentially the process by which the gas form of natural gas is converted to liquid form that can be shipped anywhere in the world.The nuclear set-back due to the problems in Japan should also help drive future demand. Natural gas utilities are a lot cheaper to build than nuclear and therefore the payback on investment is a lot quicker. They also are currently perceived as being much safer. The environmental aspects of gas-fired plants also make them attractive as they use clean burning fuel with lower carbon emissions than coal. On a fundamental basis, the gas to oil price ratio is near an all-time high so we should see the US progressively transition to its large and stable domestic supply of gas from oil. This may take several years to play out as converting the current infrastructure based on oil fuel to some portion of natural gas fuel does take time.So in our contrarian opinion it seems like a good time to buy natural gas. It may not climb rapidly to $13 again but prices in the $6 to $7 range seem likely over the medium term. We like to “go long optionality” - that is buying assets that can deliver big results when certain seemingly unlikely things occur. Buying stocks with low downside but huge upside if what seems unlikely or even unexpected happens often offers good risk-reward. Investors should look at natural gas producers who are still making money at these low prices. Companies that are considered low-cost producers with large growing reserve bases would appear attractive here. Several of these companies can make money even at today's current low prices.Full disclosure: The author and clients of Anchor Investment Management Ltd own positions in Ultra Petroleum. This column should not be construed as investment advice. An investor's best course of action must be based on individual circumstances. Any investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of any companies mentioned.