By now, if you are reading this site, you probably know a little about the economy, energy, and the environment. You might also know that the US is now one of the largest holders of natural gas in the world. Recent technological developments have allowed us to access energy from areas that we thought were previously off-limits – shale gas. The graph at right shows the projected increase in shale gas over the coming years – eventually contributing almost 50% of the US natural gas supply while gas from other sources decline. While we have an abundance of shale gas, the process of getting to it has caused quite a controversy. You have probably heard the term “Fracking” in the news. Fracking is slang for Hydraulic Fracturing, or the process of releasing natural gas from fissures in the shale deep below the Earth’s surface. Fracking entails pumping water, sand, and a cocktail of secret ingredients into a well in order to disturb the gas, capture it, and send it back to the surface. Reasons of concern about fracking are:
1) It is extremely water intensive – thousands of gallons of water are pumped down the well. Often, it takes hundreds of tankers to transport this water to the well resulting in increased traffic on country roads as well as the pollution aspects of this traffic.
2) Companies do not want to share the “secret ingredients” of their fracking fluid. Reports suggest that many times there are harmful or cancerous chemicals that are used and are brought back to the surface along with the shale gas.
3) There are many reports of water contamination (see the film Gasland) resulting in residents being able to set their tap water on fire. Other reports detail sickness in farm animals and people whose land the wells were drilled on.
4) A new study revealed an increase in earthquakes in area with heavy fracking. Yes, you heard that right – Fracking may cause earthquakes.
I mean a lot of gas. And the good thing about natural gas is it is much less polluting than coal and it is located right in our back yard. No more shipping dollars off to the Mideast and repressive regimes. We can produce enough of this stuff to satisfy domestic consumption as well as export it. Currently, nat gas makes up about 25% of our energy mix, but this should increase based on our supply. I touted the environmental benefits, but Bloomberg Businessweek does a great job of explaining it in chart form below.
So here is my conclusion – horizontal drilling and fracking have created a game-changer, if you will, in the natural gas sector. Currently, shale gas is responsible for almost 30% of our nat gas total and that number is expected to increase in the coming years. So abundant is this shale gas, that the price of nat gas has deceased dramatically and convinced some high-energy users such as steel mills, polymer, chemical, and plastic companies to relocate back to the US. This means jobs for Americans. We can also export this fuel to developing countries where we know there will be a demand, and solve our budget problem at the same time. However, the environmental risks are also plentiful and serious. So lets develop some rules that protect our resources while leading to economic benefit. Designate certain areas “No Fracking Zones”. Make the companies try out non-harmful fracking fluid substitutes. Etc. Etc. The bottom line is this natural gas boom can create bountiful economic benefits, but it can also have grave environmental consequences. There are some big decisions to be made – let’s not frack this up!