November 5, 2011


Could Shale Gas Reignite the U.S. Economy?: Unlocking vast reserves of shale gas could solve the energy crisis, the jobs crisis, and the deficit. Now, about fracking's safety ... (Paul M. Barrett, 11/03/11, Business Week)

Geologists have known for generations that immense, deeply buried shale formations contain copious reserves of methane, or natural gas, which can be burned efficiently to make electricity and run factories. Until recently, however, industry lacked the tools to get at shale gas profitably. In the early 2000s, the combination of two existing techniques led to a breakthrough. One method is horizontal drilling. The other is hydraulic fracturing, or "fracking," a scary-sounding and controversial process involving the high-pressure pumping of millions of gallons of chemical-laced water deep underground to create cracks in shale rock and release trapped gas.

When in 2007 environmentalists began raising reasonable concerns about fracking, industry executives responded with a dismissive, "Just trust us"--ensuring that skeptics would trust them less. Just in case concern didn't turn into panic on its own, the industry for years took the additional step of refusing to disclose the chemicals it uses in fracking. Lost amid the suspicion and recrimination was a potentially more constructive discussion over improving industry standards for drillers' concrete-lined steel casing, which, when installed correctly, has successfully insulated wells from drinking water.

Now, though, there's some surprising good news: Despite all the vituperation on both sides, some people from business and environmental circles are quietly at work in Texas, New York, and Washington on guidelines that should ensure a safe, profitable gas revival. The Environmental Defense Fund, for example, is drafting model state regulations with Southwestern Energy, a producer based in Houston. The collaboration is rooted in the recognition that the choice between polluting fossil fuels and pristine alternatives is not simple. For the foreseeable future, the U.S. has to burn a whole lot of something to produce power. The nation now gets 45 percent of its electricity from coal, 25 percent from natural gas, 20 percent from nuclear, 7 percent from hydro, and 2 percent from wind. Solar barely registers. With current technology, wind and solar probably can't reach into double digits, let alone bear the bulk of the load.

If you want to continue to turn on the lights with the flip of a switch, the real short-term choice is whether to stick with the current mix or replace a substantial amount of coal capacity with less dirty natural gas. John Podesta, former chief of staff to ex-President Bill Clinton, argues for the latter option. Now head of the Center for American Progress in Washington, Podesta writes on the liberal think tank's website that natural gas can serve "as a bridge fuel to a 21st century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels." Exploring where that bridge will lead should be one of the country's most important economic priorities.

Like petroleum, natural gas is a hydrocarbon, a product of decomposed organic material that simmered underground for hundreds of millions of years. Simple in structure--one carbon atom and four hydrogen atoms--gas has a convoluted history in the U.S. In the 1970s, federal price restrictions contributed to underproduction and shortages, leading to wintertime shutdowns of Midwestern schools and factories. Utility executives and consumers came to view natural gas as unreliable.

A titanic political fight during the Carter Administration ended in a bizarre compromise: price deregulation combined with restrictions on burning gas to generate electricity. (The coal industry, it should be noted, sponsors a long-established and adroit K Street lobby.) By the 1990s, the limits on using natural gas for power had been eased, and new turbine technology made gas an attractive alternative to coal. Furious construction of gas-fired power plants ensued, only to be followed by dismay: Gas supplies were not expanding apace. At the turn of the 21st century, some natural gas basins were nearly tapped out, and once again many utilities, homeowners, and energy-intensive manufacturers dismissed domestic gas as a sucker's bet.

It might have stayed that way if not for the stubbornness of a Texan named George P. Mitchell. The son of an immigrant Greek goat herder, Mitchell worked his way through Texas A&M University in the late 1930s waiting tables and repairing clothes for students. After World War II, he went into the oil and gas business in Houston, working from a tiny office above a drugstore. All through the '80s, Mitchell pondered geological studies showing that gas could be found not only in conventional reservoirs but also in deeper, denser "unconventional" shale formations.

Shale is where gas is actually created. Energy men call it "the kitchen," where hydrocarbons "cook," and where large amounts of gas remains trapped. Mitchell wondered: Why not drill all the way down to the kitchen? His exploration company probed the Barnett Shale, a slab sprawling 7,000 feet beneath Dallas and Fort Worth. Competitors scoffed. "We we running low on gas, and I had to find another reservoir somewhere," Mitchell, now 92, told Bloomberg News. "So I said let's drill a well and see what this thing is about."

Posted by at November 5, 2011 10:49 AM

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