by Mortimer B. Zuckerman
Can America escape the energy trap?
Must our lives and security be forever held hostage to the vagaries of political power in the Middle East oil states?
Yes, we can escape, thanks to American technology and enterprise, but only if we can sort out our priorities.
The good news is that America is at the center of a global energy map revolution. Our development of innovative shale gas technology offers the prospect of a huge bonanza of natural gas (and some oil as well). It's the most positive event in the U.S. energy outlook in a half century. Let's celebrate the achievement before looking at what needs to be done to bring it to full fruition.
Our geologists have long been aware that gas (and oil) lies hidden in the country's shale beds and under the ocean, but we had no chance to extract it until American entrepreneurial energy inspired companies to gamble on new technologies.
In a phrase, technology has trumped geology. Advances in computer processing power yielded seismic mapping and three-dimensional imaging, enabling geologists to "see" through the thick layers of salt obscuring the reservoirs thousands of feet or more below the surface. We've combined that information capacity with new drilling technology. Once we've penetrated thousands of feet of impervious rock with new super strong alloy drill bits, we can turn a corner and continue drilling horizontally for several thousand more feet to reach the buried treasure of millions of cubic feet of gas. It's trapped in the shale, but it can be released by the process known as hydraulic fracturing, or "fracking." Millions of gallons of water, sand, and chemicals are blasted in at high pressure. Fissures open up, and the gas seeps out (and oil, too). Fields of energy regarded as dead can be restored to productive life.
The process of finding and producing hydrocarbons from this shale has taken off with such velocity that it has already significantly altered government and corporate energy expectations. The production costs of shale gas are about one half to one third the costs associated with new conventional gas wells in North America. The result is a glut of new supply. The price of natural gas has plummeted. Energy companies have become exporters. The United States has passed Russia as the world's leading gas producer.
Shale gas production is now more than five times what it was in 2006 and has climbed from 2 percent of domestic natural gas production in 2001 to almost 30 percent. A whole series of possible reserves or "plays" are now accessible across the United States, raising the estimates of recoverable shale gas in North America from about 39 trillion cubic feet in 2003 to perhaps 50 times that amount. Recoverable shale gas reserves in the United States are an estimated 600 trillion to 700 trillion cubic feet.
This good news about energy is rare. It represents a broad historical shift. It could bring us back to the time when the United States and its neighbors in the hemisphere were self-sufficient and even a major source of energy for the world at large.
So what's the snag -- and how serious is it?
Communities where fracking has taken place, notably in Ohio and Pennsylvania, protest the noise and scarring of the landscape during the initial explorations. Restoration and compensation can ameliorate those concerns. The most significant fear is that the wastewater with chemicals from the fracking process, called "flowback," can contaminate the aquifers and hence drinking water. State regulators in Alaska, Colorado, Indiana, Louisiana, Michigan, Oklahoma, Pennsylvania, South Dakota, Texas, and Wyoming have stated that there have been no verified or documented cases of groundwater contamination as a result of hydraulic fracking.
The process uses about 99 percent water and sand, the rest being a solution of a few chemicals. Most drilling experts have asserted that it is highly improbable that fracking liquids will contaminate drinking water. Fortunately, no cases exist in which the fracking process itself has caused drilling liquids to contaminate drinking water. The issue then is whether the flowback hazard can remain at acceptable levels.
The risk comes from wells that are not designed properly.
Failures in cementing the steel casing at the uppermost portion of a well can send gas bubbling from fracks into nearby water wells. This has occurred on occasion, so fracking liquids can end up in aquifers.
The industry recognizes that it must impose tight control and monitoring of flowback since its economic future depends on good environmental stewardship. John Deutch, a
The idea would be to improve techniques and methods based on measurements and field experience, documenting the best engineering practices to track and improve environmental results over time. The data would be disclosed and analyzed to improve field operations, minimize environmental impact, and incentivize the industry to adopt best practices. One possible option is to have the energy companies set aside a reasonable amount of money in advance to cope with possible environmental damage.
That the record is good so far doesn't mean it will remain so (we remember Deepwater Horizon). Still, public policy must take into account the positive attributes of this newfound gas. All forms of energy have their environmental drawbacks. Even the favorite energy sources of the sustainability movement have drawbacks: Windmill-inspired energy kills birds and spoils landscapes; solar paves deserts; biofuel devastates the rainforest; and hydro interrupts fish migration. But the potential hazards of fracking have to be put into the context of the critical benefits of switching to gas.
- Hydraulic fracking is a big plus in the struggle to reduce emissions of greenhouse gases, since the use of natural gas emits less than either coal or oil. Turbines convert gas to electricity with much higher efficiency than other fossil fuels. "Natural gas combined cycle" plants produce less carbon dioxide compared with coal plants, and over the longer term, natural gas is a substitute for gasoline or diesel in many vehicles, since oil is three times as costly as natural gas for the given amount of energy.
- Gas is already making energy more affordable, putting downward pressure on oil prices.
- Falling oil prices will mean substantial savings while eroding the market and political power of today's major oil and gas exporting countries such as Saudi Arabia, Iran, and Russia. Gas can make us much more resilient to shocks of supply disruptions and even conflicts, not to mention re-channeling revenues from unfriendly or undemocratic regimes. We should never forget how the oil sheiks used their power in the 1970s.
- We are likely within a decade to be able to cut our petroleum imports from 10 million barrels per day down to about 3 million -- needs that could be met from Canada and Mexico, dramatically reducing our current account deficits.
- Cheaper energy from gas provides a powerful economic incentive to develop new technologies to substitute natural gas for gasoline. Cities would convert bus fleets to natural gas. Oil could be replaced in the production of polymers, plastics, and other petrochemicals.
- Nuclear, with its own hazards, would be less of an imperative.
- Furthermore, as technology further improves the efficiency of using natural gas, there will be significant reductions in the environmental burdens of production.
Because of its competitive advantages over oil, wind, nuclear, and solar power, gas may well emerge as the world's dominant fuel for most of the century. We can see the shape of things to come in that soaring natural gas production has already cut our share of oil consumption met by imports from more than 60 percent in 2005 to 47 percent last year.
In short, we have a chance to remake our energy future.
Quite simply, this new supply will make a major contribution toward keeping our lights on and our temperatures down, while addressing three long-standing concerns of the energy business: energy scarcity, energy security, and environmental risks. It is therefore all the more important to deal seriously and convincingly with the so far marginal risks of fracking before it gets bogged down in the kind of wrangling that has plagued the Keystone XL pipeline for feeding Gulf of Mexico refiners with petroleum from Canada's oil sands.
The United States is positioned to be the country with the most to gain from this dramatic new energy source. The tables are turning in our favor.
"With Fracking America Can Escape the Energy Trap"