Shale gas is a major revolution with broad implications for the nation’s energy picture, according to FERC Commissioner Marc Spitzer and several other speakers Monday at a Law Seminars International’s “Energy in California” conference in San Francisco.

“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.”

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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