Shale gas has been around for a long time, with first commercial production in New York in the late-1920s. Now it is back in fashion, fuelled by tax breaks.
In just a few years, shale has more than doubled the size of the discovered natural-gas resource in North America – enough to satisfy more than 100 years of consumption at current rates, according to IHS Cambridge Energy Research Associates (IHS CERA).
The study, Fuelling North America’s Energy Future: The Unconventional Natural Gas Revolution and the Carbon Agenda, says that the shale gale, the recent expansion of natural-gas resources, provides the potential to transform North America’s energy landscape.
“This is simply the most significant energy innovation so far this century,” says IHS CERA chairman Daniel Yergin.
“As recently as 2007, it was widely thought that natural gas was in tight supply and the US was going to become a growing importer of gas. But this outlook has been turned on its head by the shale gale.”
Fuelling North America’s Energy Future says that the emergence of shale gas has the potential to be a “game-changer”, dramatically augmenting natural-gas supply and opening new opportunities for competition among different energy sources.
Growth in power demand over the coming two decades will likely lead natural-gas demand for power generation to nearly double by 2030.
According to IHS CERA chief energy strategist David Hobbs, shale gas has shifted natural gas from a constrained resource to an abundant one, with wide-ranging implications for the energy future in North America.
“This new abundance of natural gas provides a crucial additional ‘shock absorber’ for supplies, providing greater flexibility to react to disruptions and market imbalances.”
However, water – both its use in hydraulic fracturing and the disposal and treatment of produced water – has emerged as the top environmental issue, particularly as the centre of gravity of development moves from the traditional oil&gas producing areas to the more densely populated US north-east.
While additional federal regulation is now being debated, the study points out that oil&gas drilling operations are tightly regulated or managed by states.
However, according to ConocoPhillips CEO Jim Mulva, the US government is ignoring the resource’s potential. He claims US policies and proposals are an impediment and are overly favourable to development of renewable sources of energy.
“Unfortunately, (the US government) also proposes higher taxes on the natural-gas industry and is tightening resource access,” says Mulva in a paper delivered at the recent IHS Ceraweek conference.
“Perhaps it has not yet learned that if you tax something, you get less of it.”
While shale-drilling techniques were pioneered in the US, the country will fall behind others such as China unless more is done to produce shale acreage, Mulva says.
“The shale-gas revolution here occurred on private and state land, not federal land,” says Mulva.
“Think of the economic development and job-creation potential if more land was opened and if less red tape tied up the acreage that is leased.”
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