Citing FERC’s tradition of bipartisanship, Commissioner Marc Spitzer told an energy conference in San Francisco last Monday that the same cooperative approach is needed in Congress and elsewhere in Washington, DC, to address the nation’s energy issues, such as climate change, which he thinks cannot be ignored. Meanwhile for the gas industry shale gas — not politics — is the real game changer, he said.

Lame duck U.S. Sen. Lisa Murkowski (R-AK) will be “sorely missed” because she epitomized a bipartisan approach to energy matters, Spitzer said as part of his keynote remarks at the Law Seminars International “Energy in California” conference.

Another speaker at the conference, Douglas Smith, a Van Ness Feldman attorney from Washington, DC, noted that it is unclear on the Republican side who will replace Murkowski as the ranking minority member on the Senate energy committee. Smith speculated that the next highest ranking Republican, Sen. Richard Burr, does not appear to have energy issues among his top priorities.

But on shale gas there appears to be no doubts, Spitzer emphasized in part of his wide-ranging remarks. Shale gas is a major revolution with broad implications for the nation’s energy picture, he said.

“Shale gas is a true revolution that has impacts on the electricity industry as well as gas,” Spitzer said. “Everyone is looking at the impacts of natural gas-fired generation plant in relation to growing use of intermittent renewable resources, such as wind. And there have already been some coal-to-gas substitutions. [The Federal Energy Regulatory Commission] FERC restructured the natural gas industry and as a result we have a more market-based industry today.”

As a result, governments — federal and state — have provided “legal certainty” for investments in gas infrastructure, and finally the technology change to horizontal drilling has unleashed the new gas rush to shale, Spitzer said. “Fracing has radically reduced the cost, and what we used to call ‘E and P’ — exploration and production — has lowered the cost and reduced the environmental and acreage footprint of natural gas production so that it has become a manufacturing process. You don’t have dry holes anymore.”

But Spitzer was clearly concerned about possible gridlock on energy issues in Washington, DC, because of the political posturing and he cited Murkowski defeat in a Republican primary as another step toward more hardball politics. “Sen. Murkowski continued the bipartisan tradition in energy in the Senate that we have seen over the past 25 years,” Spitzer said. Republicans and Democrats on the Senate committee have worked very cooperatively in Congress and with the Federal Energy Regulatory Commission (FERC) as well, he said.

“Sen. Murkowski has a great understanding of energy issues, and having run in seven different elections myself [as a Republican officeholder in Arizona] I understand the difficulties of that, but she was a good member of Congress, she was good to FERC, she was good to ratepayers, and she will be sorely missed.”

“Energy is the lifeblood of this nation, and the state commissions are an essential part of making sure we get it right,” Spitzer said. And he could have added that shale gas is the “mother’s milk” of domestic energy production currently.

The technology has “revolutionized” the gas industry in Spitzer’s opinion and several academic and industry experts who spoke later in the day at the same conference basically echoed his outlook, except for citing the need for more best practices and industry regulation of the shale gas sector to protect against environmental and/or operational disasters.

Sempra Energy Economist Mark Ellis called shale gas a “once-in-a-generation” development, and Stanford University’s Mark Zoback, professor of earth science and geophysics, cited some world estimates currently placing global shale gas supplies at 300 years in longevity. In addition, the release of some recent North American industry estimates is being delayed for fear that they are so bullish they could cause an investment frenzy, said Zoback.

“A lot of the resource estimates, however, are soft because the resource has not been around very long, and we don’t even understand the decline curves [from shale gas wells],” Zoback said. “Petroleum engineers right now are debating the mathematics on how you extrapolate those curves, and even the SEC [Securities and Exchange Commission] is concerned because it is hard to make legitimate estimates on the value of the resource, harder than one would think.”

The global estimates are just as soft, in Zoback’s opinion, and he cited a recent Schlumberger study that identified 142 significant shale basins around the world that could add up to a 300-year supply. “An association of the 27 largest producers is sitting on a study they have done for both the United States and Canada because the numbers are so big that they don’t know how to release them; there are issues related to resources versus cost, and some legal implications related to price fixing that they are very afraid of, so they have the numbers [voluntarily released by producers by basin], and they will eventually be published, but they are struggling with how to get those numbers out in the public domain.

“The numbers are very big because even since the Potential Gas Committee’s numbers [2,000 Tcf, or 100 years] there have been major discoveries in a variety of basins.” He called 2008 the “year of shale gas madness,” which was followed by the recession and its dampening effect on demand.

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