Shale gas a game changer for U.S. energy economy

October 4, 2012
Huge new shale gas discoveries are a game changer for energy in the U.S., potentially reshaping the electricity and transportation industries, according to officials at the Governor's Conference on Energy.
And though federal regulations are a burden on the U.S. energy industry, don't count coal out as a globally important power source, speakers at the conference in Richmond said Wednesday.
"It looks like we have a couple of hundred years' natural gas supply liberated by the fracking process," said Robert P. Powers, executive vice president and chief operating officer of American Electric Power.
"Who knew we were entering an era of energy abundance?" said Karen A. Harbert, president and chief executive of the U.S. Chamber of Commerce's Institute for 21st Century Energy.
"We used to say, 'Where are we going to get the natural gas?' " said Bill Cooper, president of the Center for Liquefied Natural Gas.
Of the natural gas consumed in the United States in 2011, 94 percent was produced domestically, according to the U.S. Energy Information Administration. The U.S. supply of natural gas is not as dependent on foreign producers as is the supply of crude oil, and delivery is less subject to interruption, the EIA said in July.
"The availability of large quantities of shale gas should enable the United States to consume a predominantly domestic supply of gas for many years," the Energy Information Administration said, "and produce more natural gas than it consumes."
But, Harbert said, "We have a policy based on rationing, not exploiting," available resources, while U.S. energy demand will increase 20 percent in 20 years.
She noted that 85 percent of the U.S. outer continental shelf is closed for oil and gas exploration and production, and though the U.S. has 400 years of coal reserves, coal-fired power plants are being closed wholesale.
Reducing the regulatory burden "would unleash enormous potential in the power industry," said Jeffrey R. Holmstead, partner with the Washington law firm of Bracewell & Giuliani and a former assistant administrator of the U.S. Environmental Protection Agency. "It's become exceedingly difficult to build anything, especially in the energy sector."
"We may not be building coal-fired (power stations), but the rest of the world is," said Consol Energy's Paul Brock, and "we still sell a lot of metallurgical coal."
Not everyone at the conference shared the enthusiasm for using the U.S.'s vast reserves of natural gas, oil and coal to fuel the nation.
Presentations at the event "reflected the one-sided nature of the conference," said Glen Besa, executive director of the Sierra Club's Virginia Chapter. "Not once did I hear climate change discussed as a policy concern."
"There's not an honest discussion with regard to the real choices we need to make regarding energy policy," Besa said.
Several hundred businesses, government, academic and stakeholder representatives are attending the conference, which continues today at the Metropolitan Richmond Convention Center.
Income from oil and gas production is the federal government's second-largest revenue source, said Kate MacGregor, a professional staff member with the U.S. House of Representative's Natural Resources Committee.
Six federal agencies, from the EPA to the Department of Homeland Security, have a say in regulating gas and oil development, MacGregor said. One result, she said, is that "the name of the game today is regulatory uncertainty."
"Virginia's going to have to wait, at the very least, till 2017," MacGregor said, before seeing oil and gas leasing offshore from the state.
Drilling for natural gas using hydraulic fracturing has been done for more than 60 years, with more than 1 million wells drilled, without harm to the environment, said Randy Albert, chief operating officer with Consol Energy.
"The public should fear not fracking. Oversight is good. Overkill is bad. That's what we're getting now, overkill," he said.
The EIA projects U.S. natural gas production to increase from 21.6 trillion cubic feet in 2010 to 27.9 trillion cubic feet in 2035, a 29 percent increase.
Almost all of this increase in domestic natural gas will come from shale gas production, which is expected to grow from 5.0 trillion cubic feet in 2010 to 13.6 trillion cubic feet in 2035, the agency said.
"This is a once-in-a-lifetime-opportunity," Albert said, "and we must get it right."