Technology Makes Gas Available But Brings New Problems As Well

Score another victory for technology! U.S. natural gas supplies have the potential of increasing by 20-40% because of advances in two major oil and gas field technologies. Increased abilities to do horizontal drilling and better ways to open shale gas formations - “fracing” – is resulting in new supplies of this major U.S. fuel.

In addition, supplies are available in new parts of the country, making delivery easier. Natural gas, with roughly 90% of supply coming from domestic sources, is one of the cleanest, most efficient economic fuels and technology has opened new reserves by making shale gas available for commercial use.

At the same time, however, these potential new supplies create issues that could affect that supply. Environmentalists have voiced two concerns. First, the question of water – is there enough in the new areas of possible production; what to do with the water produced from production, and the possibility of groundwater contamination from the drilling and production process.

Second, there are still some environmentalists who don’t want to see additional fossil fuel sources because of their belief that more carbon dioxide released in the atmosphere is leading to global warming. While much has happened recently to discredit this theory, there are some who believe it strongly. Both groups can have an important effect on natural gas production and consumption.

Natural gas has many good attributes – economical, clean-burning, easy to transport and use, and readily available. It is the second-most used fuel in the country with a few exceptions in recent years where coal was slightly ahead. Its main markets are space heating in residential, commercial and other locations, heating in process industries and as a raw material for many chemicals including plastics, fertilizers, fibers and others.

Natural gas consistently represents 22-24% of U.S. fuel consumed and potentially could increase in use considerably as a replacement for coal in power generation and, if an infrastructure for easier use could be found, as a motor fuel, especially for fleets and large trucks. To some extent it has not grown more because, until recently, supply security was a question.

To help in this area, several liquefied natural gas-receiving terminals were built and more are in the design-and-construction phase. No question that the additional supply available from shale gas deposits will play a big part in opening new gas markets and curtailing imports.

The importance is already seen from gas coming from the recently developed and growing Barnett Shale play centered in the Fort Worth-Dallas area. According to the Energy Information Administration (EIA) 2009 report on shale gas, Barnett supplies 6% of all gas produced in the lower 48 states.

Other major shale formations and approximate locations are the Marcellus in the Northeast stretching across New York, Pennsylvania, Ohio, West Virginia and dropping down as low as parts of Tennessee, Virginia and Kentucky with 2008 estimated reserves of 262 Tcf; Haynesville in Texas and Louisiana with estimated 251 Tcf; Barnett in Texas with 97 Tcf; SW Wyoming with 53 Tcf; and Fayetteville in Arkansas with 42 Tcf. Marcellus being in the Northeast and near major gas markets is a plus. At the same time, since it is in the high population density area of the country, production in these locations have some additional liabilities.