The shale-induced brimming natural gas supply is one of three "major themes" -- the other two being world oil prices and climate change policy -- that will drive U.S. energy policy in the years ahead, said the head of a Washington, DC-based nonprofit energy and environmental research group last Tuesday. Energy Secretary Steven Chu called shale gas a "big deal" because "gas will be [the] transition fuel as [we] go to renewables."
The development of shale gas plays in the Appalachia region, Texas, Oklahoma and Louisiana was a "tremendous boon" to the U.S. gas supply and was "by and large unexpected," said Philip Sharp, president of Resources for the Future and former congressman, during an energy conference jointly sponsored by the Energy Information Administration (EIA) and Johns Hopkins University School of Advanced International Studies in Washington.
"Until prices rose, until young, small companies got out and took the major risks, we frankly just didn't know" the extent of the natural gas resources in the United States, he said.
As a result, "the consequences...here are potentially significant in multiple ways throughout our energy markets. Obviously they're [shale supplies] reshaping people's thinking and investments in the [Gulf of Mexico] and LNG market," and have the "potential to delay" the Alaska natural gas pipeline "one more time," Sharp said.
The "real question" is, will the U.S. become a natural gas exporter because of the prolific shale supply, he said. It may even impact the rate of growth in the Gulf of Mexico, according to Sharp.
And in the absence of government policy, he believes shale gas could delay growth of renewable and nuclear energy. It "seems like it probably would," he said. But Sharp said he was "far less certain" of the impact shale would have on inefficient coal plants.
He believes "shale should make our transition to [a] low-carbon future a cheaper route to go."
Chu credited the Department of Energy's investments in the late 1970s and early 1980s for developing new technology, such as hydraulic fracturing (hydrofracing), that led to the massive increases in recoverable coalbed methane and shale gas reserves. He estimates that U.S. gas reserves have shot up by 30% due to the influx of shale gas.
Chu said he doesn't consider it odd that some federal officials are now trying to restrict a practice that the government had a hand in creating (see NGI, Feb. 22). "I think what people are trying to do is make sure that when you do do the hydraulic fracturing that it's done in an environmentally responsible way. This is a new method that increased gas reserves in the United States considerably. It is very important that we do develop those resources in an environmental responsible ways so that it doesn't contaminate our water," he told NGI.
And in response to reports that the EIA has been overstating its 914 production data (see NGI, April 5), Chu said, "I think there's some questions about the data. [But] I don't think there's an overstatement of the data. This is something where EIA is continually trying to upgrade its method of data collection."
As for new markets for natural gas, he said, "We are looking at transportation. We're piloting transportation mostly with vehicles that have a central fueling station so [we] don't have to worry about infrastructure...We're looking at it [gas for transportation] but it really depends again on the economics of the situation."
The DOE believes electricity rather than natural gas is more the wave of the future for vehicles because "natural gas right now is commonly used for industrial purposes and for heating and for power generation. And that's a very good use for it," Chu said.
Other niche markets for natural gas would be for use in large-scale utility storage and as a back-up fuel when renewable power (solar or wind) is disrupted due to the weather. Natural gas "is actually one of the fastest response" energy forms, he noted.
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