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Opportunities and Challenges of Shale Gas

March 29, 2012

slideLarge shale gas discoveries in the last few years have had a significant impact on the US carbon emissions outlook, and large reserves of shale gas and its increased production is also expected to reduce energy dependence on other countries.  

However, there will be no end to controversies surrounding shale gas extraction until environmental concerns are properly addressed, said Susan Tierney, Managing Principal at Analysis Group, during a recent talk at Fletcher. 

Tierney recently served on two committees - the Secretary of Energy Advisory Board (SEAB) and the National Petroleum Council (NPC) committee on the size of the gas resource base in the US and Canada. The committee’s main task was to find out what could be done in near term to improve the environmental and safety performance of shale gas extraction.

The findings of both committees show that the benefits of the shale gas industry depend upon its development. If shale gas production continues to rise, gas prices are expected to remain low for many years to come, and natural gas will take over more of the electricity market. Also, it is anticipated that shale gas will reduce coal use for electric power, which will be a climate benefit.

Tierney said that when gas prices were very high, production of chemicals in the US was moving offshore, but now the situation seems to be changing with the announcement of new domestic industrial facilities. Aluminum production uses a huge amount of electricity, and some companies are looking at the US because of cheap prices. The same is true for other companies looking to build industrial facilities in the US.

But shale gas extraction is not without harmful effects. In hydraulic fracturing, large quantities of pressurized water and chemicals are injected to break underground rocks and release the gas trapped in them. While most remains underground, the water that returns to the surface is toxic. Tierney said that chemical spills, methane releases, heavy truck traffic and groundwater problems have been issues of concern for some communities where hydraulic fracturing has taken place.

"We did agree that there are serious environmental issues to deal with. They are manageable if people do it right, but there is not complete confidence that people are doing it right. We identified a number of issues that we hadn't seen together in one place before, especially air pollution questions, which were more on our radar screen than we thought they would be based on what we were hearing from the public. They were completely focused on us focusing on water issues, but we think air issues are much more important. The disruptiveness was a problem, the cumulative effect of all of this development activity was a problem."

Estimates of gas reserves in the US have more than doubled in recent years, and projections show extraction continuing to rise. A fall in prices could challenge coal energy, which is inexpensive but a source of pollution and greenhouse gases. Tierney stated that a number of coal plants won't be able to make it through the next phase of regulations partly because of gas prices. Coal plants are also suffering in this marketplace because they cannot afford to implement pollution controls. 

The National Petroleum Council study looked at all the supply and demand forecasts, price relationships, and the ability to access areas with resources underground. "The conventional look at natural gas greenhouse gas emissions tells you that if it does displace coal, you would see some improvement in greenhouse gas emissions. But the National Petroleum Council looked at that question, and we scoured the literature. We won't get past a fifty percent reduction. Going beyond that would require carbon sequestration and other technologies,” Tierney told the audience. 

She pointed out that with shale gas reserves, many countries find themselves in a much stronger geostrategic position with regard to their energy security. "One of the main reasons people talk about shale gas is from the national security point of view. So many countries that have unfriendly neighbors, from an energy point of view, have shale gas. Israel has shale gas, Poland has shale gas. That gives them a different position in the global energy markets than in the past. The United States has shale gas, and we have the technology that we may transfer. So there is a different set of alliances that arise because of this," added Tierney. 

Shale gas is a great advantage to the US, but it also threatens other energy resources, especially renewables. The expansion of shale gas would limit the investment in and expansion of other sources of electricity because gas power plants would be cheaper than wind or solar plants. This issue needs serious consideration in the midst of a natural gas revolution.

-Article by Sachin Gaur, MALD candidate F13