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Burgeoning Shale Industry Still Honing Public Image

Output from the nation's shale plays has ballooned domestic natural gas production over the past few years, but the industry, and the country, have yet to fully embrace all that the paradigm shift entails, said Rick Smead, a director in Navigant Consulting Inc.'s energy practice.

"One of the things that's really amusing about Americans is that we're still wringing our hands about whether this is a good thing," Smead said Tuesday at the 3rd Annual Energy Outlook in Washington, DC. "We just can't make up our minds...Jimmy Carter said our oil import balance was the moral equivalent of war. Well, we won; now what do we do?"

The Annual Energy Outlook was sponsored by Navigant and Dentons, an international law firm.

Much of the early work to get the shale gale blowing was done by independent producers, who "are really, really good at getting stuff done," but they didn't have as much success convincing the general public that shale drilling in general, and hydraulic fracturing (fracking) in particular, could be carried out safely, Smead said.

The controversial anti-fracking film, Gasland, was released into a polarized atmosphere more than three years ago and was able to influence public opinion despite energy industry rebuttal. The follow up, Gasland II, appears to have been less influential (see Shale Daily, July 10).

Since the release of the first Gasland, through the efforts of American's Natural Gas Alliance, with which Smead often works, and other industry groups, "slowly but surely, the public is understanding that safe and responsible development of shale can be done," he said. But while propaganda needs to be exposed as such, the industry's goal should not be to silence legitimate environmental concerns, he added.

"One of the big drawbacks in terms of development in recent years has been the marginalization of environmental non-governmental organizations [NGO] -- Sierra Club, Greenpeace, organizations like that -- that are really valuable to have on the other side of the table, developing regulations for responsible development. But they've gotten to the point where they just don't think you should extract anything out of the ground, period, so they're not at the table."

The Environmental Defense Fund, which has been actively involved in the search for middle ground on fracking regulations, is an example of an exception to that rule, according to Smead.

Production from domestic shale plays has allowed natural gas prices to tumble, opened the way for liquefied natural gas exports and made credible discussions of American energy independence. "But long term, if we don't do it right, we won't get to do it," Smead said. "Meanwhile, in the present climate...natural gas could turn out to be the primary tool that can cause everything to happen in the near term..."

According to one financial analyst at the conference, the shale industry can't just talk the talk of safe, responsible fracking; it will need to prove it in practice. "To more and more shareholders, it's not enough to just put on a good PR campaign," she said. "These guys have to be able to say and prove that it's not going to get in the water table."

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