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The Gas Revolution

Amazingly, an era of energy abundance is upon us, unless politicians and environmentalists get their way.

Apr 18, 2011, Vol. 16, No. 30 • By STEVEN F. HAYWARD
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From the recent news reports you’d think shale gas and fracking had just been discovered, but neither is brand new. It has been known for decades that deep shale rock formations contain lots of natural gas, and oil drillers have employed fracking for years to enhance oil recovery. But fracking for shale gas was not economical until a second technology achieved major breakthroughs in the last decade and a half: directional drilling. It is possible today to drill several wells from a single platform in many different directions, often for several miles laterally, and navigational advances enable drillers to know their exact position down to a few inches from thousands of feet away. Combined with advances in underground geological surveying, directional drilling and fracking over the last decade have allowed us to tap into previously uneconomic shale gas deposits. At the present time shale gas accounts for about 20 percent of total U.S. gas production (up from 1 percent in 2000), but it is projected to account for nearly half of U.S. gas production by the year 2035.

One remarkable aspect of the shale gas revolution is that it was not the product of an energy policy edict from Washington, or the result of a bruising political battle to open up public lands and offshore waters for new exploration. Although the Halliburtons of the world are now big in the field, its pioneers were mostly smaller risk-taking entrepreneurs and technological innovators. George P. Mitchell, an independent producer based in Houston, is widely credited as being the prime mover in shale gas, pushing the idea against skeptics. The technology was mainly deployed on existing oil and gas leaseholds or on private land beyond the reach of bureaucrats (for the time being, anyway). That is why shale gas seemed to sneak up unannounced to the media and Beltway elites, even though people inside the gas industry realized several years ago what was rapidly taking place. Mitchell worked the Barnett shale formation near Dallas, but the biggest shale gas “play” is the Marcellus​—​a massive deep shale formation stretching from West Virginia through upstate New York.

Now that shale gas is front-page news, everyone wants a piece of the action. Environmentalists, who have supported natural gas as a “bridge fuel” to kill coal, are starting to turn against gas now that it looks more abundant. Regulators want to regulate it; state legislators want to tax it more. And politicians are eager to “help” the market decide how best to use this newfound bounty, which is music to the gas industry’s ears, as they fear a glut might collapse prices and do to their industry what the collapse in oil prices in 1986 did to the small producers in the oil patch. In other words, the one thing that might disrupt this amazing success story has arrived on the scene: politics.

The shale gas revolution presents two main issues. The first concerns fracking, which is currently unregulated or lightly regulated by state and local governments. Fracking is currently exempt from some sections of the Clean Water Act and the Safe Drinking Water Act, though it is subject to all of the wastewater and hazardous material rules and regulations. Fracking fluids, once they have done their work loosening the gas, contain some toxic chemicals (and can pick up low levels of radiation from deep underground). Environmentalists are raising a predictable hue and cry about threats to groundwater from well casing leaks or from water that returns to the surface. The environmental crusade against fracking has its own Inconvenient Truth-style documentary, Gasland, by Pennsylvania filmmaker Josh Fox, which was nominated for best documentary at the Academy Awards and aired on HBO. 

Gasland features dramatic footage of gas-infused well water that can be ignited at a kitchen tap, though it is not established that this is the result of nearby shale gas drilling. Hitting pockets of gas has been a well-known phenomena in shallow water wells in parts of Pennsylvania for decades. Most shale gas fracking is conducted as far as 5,000 feet underground, thousands of feet below the aquifer and beneath impermeable rock layers that separate it from drinking water. Still, spills and leaking well casings near the surface have caused some localized water pollution problems, providing just enough traction for environmentalist complaints. The EPA has launched a major study of fracking that is expected to report findings in 2014, and New York’s outgoing governor David Paterson imposed a moratorium on new gas drilling last year in response to claims that fracking threatened groundwater, even though New York’s state geologist concluded fracking presented a low risk to the state’s groundwater.

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