When Daniel Yergin writes about historic development in energy production, one pays attention. In today’s Wall Street Journal, joined by his colleague Robert Ineson, Yergin examines the rise of natural gas production in the United States made possible by technological advances that open up vast shale deposits to exploitation. From “America’s Natural Gas Revolution“:
The biggest energy innovation of the decade is natural gas—more specifically what is called “unconventional” natural gas. Some call it a revolution.
Yet the natural gas revolution has unfolded with no great fanfare, no grand opening ceremony, no ribbon cutting. It just crept up. In 1990, unconventional gas—from shales, coal-bed methane and so-called “tight” formations—was about 10% of total U.S. production. Today it is around 40%, and growing fast, with shale gas by far the biggest part.
The potential of this “shale gale” only really became clear around 2007. In Washington, D.C., the discovery has come later—only in the last few months.
Making this development possible has been hydrofracturing, or fraccing, the technique of injecting pressurized liquids into the strata to fracture the shale and free the gas. (See Shopfloor.org’s previous posts on the topic.) The potential of this gas development is especially important economically to northeastern states — and industry — because the Marcellus Shale is close to markets in New York, Pennsylvania and other heavy energy consuming areas.
Earlier in the decade, natural gas prices soared as demand grew, spiking as Hurricane Katrina disrupted supplies. Price and price volatility were big factors in driving natural-gas consuming industries like fertilizer and chemical manufacturing overseas, but now…well, there’s reason for optimism.
Except, as the authors note:
[Industrial] users and the utilities with their long investment horizons—both of which have been whipsawed by recurrent cycles of shortage and surplus in natural gas over several decades—are inherently skeptical and will require further confirmation of a sustained shale gale before committing.
Skepticism also arises because of the growing environmentalist/NIMBY alliance dedicated to regulating hydrofraccing into submission, with the activist journalism outfit, ProPublica.org, serving as the movement’s house organ. States now regulate this aspect of drilling, and the regulators stand by the quality and safety of their oversight. (See the Interstate Oil and Gas Compact Commission for details.)
But federal regulation is always superior to state regulation, right? That at least is the theory of sponsors of bills — H.R. 2766 and S.1215 — to bring hydrofraccing under the Clean Water Act authority, even though as Yergin and Ineson note, shale strata lie much, much deeper than watersheds. Today, the predictable New York Times adds its support for the bills in an editorial, “The Halliburton Loophole.”
State regulation is not a “loophole,” and even invoking the bugaboo of Halliburton does not make it one.
History tells us the real goal, at least for the environmentalists, behind legislation to impose a Clean Water Act regime over hydrofracturing is project-halting litigation. So you can understand industry’s skepticism.
- Houston Chronicle, “Louisiana shale could change fate of U.S. energy supply“
- Houston Chronicle, “Shale gas is producing jobs, stimulating the economy“
- Natural gas producers group, EnergyInDepth