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NPC: 'Enormous' Natgas Base Could Transform U.S. Economy

Shale gas is reviving the domestic chemical industry, has already sparked growth in exports, and going forward it will boost the U.S. economy through new jobs in supplier industries and other manufacturers benefiting from cheap, plentiful energy, according to the National Petroleum Council (NPC).

Challenged two years ago by the U.S. Secretary of Energy with the task to assess the nation's oil and natural gas reserves and come up with a strategy to make the most of them, the council Thursday released its findings in a report titled "Prudent Development: Realizing the Potential of North America's Abundant Natural Gas and Oil Resources."

While natural gas and the nation's emerging, developing and now maturing shale plays cut a strong profile in the NPC report, it also emphasizes the need to increase efficiency in energy use and work toward a global, market-based trading system to rein in greenhouse gas emissions.

"...[T]he potential supply of North American natural gas is far bigger than was thought even a few years ago," the report said. "As late as 2007, it was thought that the United States would have to become increasingly dependent on imported liquefied natural gas [LNG], owing to what appeared to be a constrained domestic supply. That is no longer the case.

"It is now understood that the natural gas resource base is enormous and that its development -- if carried out in acceptable ways -- is potentially transformative for the American economy, energy security and the environment, including reduction of air emissions.

"The United States is now the No. 1 natural gas producer in the world, and together with Canada accounts for over 25% of global natural gas production. While shale and other unconventional gas resources are the new game-changers, significant conventional resources are being produced in onshore and offshore areas. Lower and less volatile prices for natural gas in the past two years reflect these new realities..."

The study by the advisory group to Secretary of Energy Stephen Chu reached four broad conclusions and came up with five general recommendations. The report was lauded by industry groups such as America's Natural Gas Alliance (ANGA), the Interstate Natural Gas Association of America (INGAA), the American Gas Association (AGA) and the American Chemistry Council (ACC).

"Today's report from the National Petroleum Council provides yet another verification that new domestic supplies of natural gas, particularly shale gas, have the potential to kick-start economic growth, revitalize our nation's manufacturing sector and create hundreds of thousands of new jobs," said ACC CEO Cal Dooley.

"Shale gas is proving to be a game-changer for America's chemistry industry, giving domestic chemical manufacturers a significant competitive edge for the first time in years. The benefits of new shale gas development reach far beyond gas producers and the chemical industry. For example, an American Chemistry Council report found that a reasonable increase in shale gas production would result in 400,000 new jobs for the business of chemistry and many supplier industries, and shale supplies have already driven significant growth in exports."

But, the nation's more bountiful energy future includes oil, too, the report said. "The North American oil resource base offers substantial supply for decades ahead and could help the United States reduce, but not eliminate, its requirements and costs for oil imported from outside of North America," the report said.

While efficiency improvements have helped to temper energy demand and new energy alternatives have emerged and are maturing, "Americans will need natural gas and oil for much of their energy requirements for the foreseeable future," according to the NPC study. "Moreover, the natural gas and oil industry is vital to the U.S. economy, generating millions of high-paying jobs and providing tax revenues to federal, state and local governments."

The economic development role of abundant supplies of energy depends upon their production in an "environmentally acceptable" way, the NPC said. Security of supply and delivery also are critical, as are effective regulatory practices. "The critical path to sustained and expanded resource development in North America includes effective regulation and a commitment of industry and regulators to continuous improvement in practices to eliminate or minimize environmental risk," the report said.

NPC said it examined a broad range of energy supply, demand, environmental and technology outlooks through 2050. Study participants addressed issues relating to public health, safety and environmental risks associated with natural gas and oil production and delivery practices, as well as opportunities for natural gas to reduce emissions from energy use.

"This report shows that natural gas is a driver of the U.S. economy, and that its development, transmission and consumption create American jobs," said INGAA CEO Don Santa. "These and other benefits, including environmental improvements, increased energy security and stable, competitive prices, only will grow with additional domestic gas use.

Core strategies recommended by the NPC report are:

A variety of trade associations were quick to weigh in on the report.

"...[W]e are especially pleased that such a distinguished and diverse study team concluded that natural gas and energy efficiency can work in tandem to help solve our most challenging needs, from economic growth to energy security and environmental protection," said AGA CEO Dave McCurdy. "We agree that responsible development of the resource is the lynchpin to realizing this promise and we urge our policy makers to endorse the recommendations of this study that clearly lay out workable solutions to timely and important issues."

ANGA CEO Regina Hopper said the "new era of abundant and affordable natural gas supplies has helped revive U.S. industries that were beginning to shift their operations overseas. With continued expanded use, natural gas can have tremendous positive effects on the economic vitality of our nation. Of equal significance is the attention paid in the report to safe and responsible operating practices and good-faith engagement with people in communities where we operate. The report's proposal that industry establish regional councils of excellence underscores the importance of in-depth understanding of the unique geology and surface conditions of different parts of the country."

In addition to the recommended five top strategies to realize the potential of North American natural gas, the study also called for promoting combined heat and power applications; encouraging private-public partnerships to maximize the GHG benefits of natural gas by reducing methane emissions; enacting regulatory policies that align financial incentives for utilities and their customers to use energy more efficiently; and making continued investments in research and development to maintain America's technology leadership position in energy innovation, AGA noted.

"Very often, when we discuss the potential role and contribution of natural gas we limit ourselves to a discussion of baseload electricity generation. I am very pleased that this study looks beyond that one market and recognizes the potential for the direct and distributed use of natural gas in residential and commercial gas markets," said Tom Massaro, vice president of marketing and business intelligence for New Jersey Natural Gas, who chaired the residential/commercial subgroup of the natural gas demand task force of the study.

"Energy efficiency is a cornerstone of our national energy policy. The efficient use of natural gas in homes and buildings is an essential tool for meeting the objective set out by Secretary Chu: to meet the needs of American energy consumers consistent with environmental, economic and energy security goals."

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