The only possible land mine for continued robust growth in U.S. natural gas supplies in the next five years would be an outright ban or oppressive national regulation of the use of hydraulic fracturing (fracking) in America’s revitalized oil/gas fields, according to a panel of bullish experts assembled on the opening day of the LDC Gas Forum Mid-Continent in Chicago Monday.
In response to questions, panelists who represented the production, marketing, market analysis and research parts of the industry agreed that heavy handed fracking regulations could kill or greatly knock off course the golden goose that shale development has created for the U.S. industry and economy. And the panelist from America’s Natural Gas Alliance (ANGA), Paul Smith, said that the proposed U.S. Environmental Protection Agency (EPA) fracking regulations are not viewed as Draconian.
Smith, who is ANGA’s senior director of Infrastructure, and the other four panelists agreed that overregulation of fracking is the single biggest factor that could alter their outlook for a future mostly devoid of the supply/demand imbalances and price volatility that the United States experienced at times in the past 15-20 years.
“The biggest risk would be a ban on hydraulic fracturing or overregulation of it by the federal government,” said Jack Weixel, director of energy analysis for Colorado-based Bentek Energy, who sees the potential growth for gas in power generation alone being in the range of an added 1.7 Bcf/d to 5.9 Bcf/d during the next five years. A scenario involving fracking being banned, which none of the panelists view as likely, “would take the wheels off the production train,” Weixel said.
Smith agreed, saying his alliance of shale gas play producers is “working real hard” to make sure nothing bad happens to fracking, and the practice continues to be done “very safely,” but he added the caveat that no energy resources can be developed without some risk. “So far, the industry record has been outstanding in terms of protecting drinking water supplies, but going forward overregulation is the number one risk we face.
“The EPA is looking at fracking right now, and we are very involved in that process, and so far those draft regulations are not something the industry cannot deal with. So, I don’t see this as a major risk right now, but it is the primary risk.”
Frank Casey, XTO Energy Inc.’s Houston-based gas sales lead, said that the industry has an excellent track record in the use of fracking, but better informing the general public could help mitigate the risk of too much regulation. Without the low likelihood of a fracking ban, Casey said the XTO’s estimates call for half of the future growth of natural gas production worldwide coming from unconventional supplies, and half of that being from U.S. unconventional gas.
Both Casey and a keynote speaker at the LDC Forum stressed that the industry must be engaged in more public education on fracking. Nicor Gas President Elizabeth Reese said her primary job with regulators involves “educating” them on the gas industry, and fracking is one of the primary issues that needs more work.
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