Natural Gas Will Repower America

Natural Gas Will Repower America

While doing business in North Dakota this summer, I noticed something that you don’t often see in America these days: “help wanted” signs. There everywhere. The service industry in the state is paying top-dollar. Even fast food restaurants are hiring at outrageous rates. The unemployment rate in North Dakota hovers around three and a half per cent, meaning, as one local laconically observed: “the only people not working are them that don’t want to work”. So what’s responsible for creating this island of prosperity in the sea of privation that America has become? The answer can be summed up in one misunderstood word: fracking.

Fracking is slang for the process of hydraulic-fracturing of geologic formations to release natural gas. Recently, fracking has been used in a big way to extract natural gas from deep shale formations. This practice has transformed the way we look at our energy resources and has the potential to be a big part of securing America’s energy independence for a long time to come. That is, if a combination of environmental activism, media ignorance and political fear-mongering doesn’t destroy this opportunity to create a tremendous amount of wealth and jobs.

The numbers are remarkable. Between 1995 and 2005 domestic withdrawls of natural gas hovered at a steady rate of about 2 trillion cubic feet per month. In 2006 shale gas exploration kicked into high gear and production has increased at a rate of about 100 billion cubic feet per year ever since. Shale gas wells are responsible for the vast majority of that growth. After peaking in 2008, natural gas prices dropped and have remained steady ever since. A Department of Energy staffer told me that the department sees no resumption in the cycle of price highs and lows as long as supplies continue to increase at such a prodigious pace.

America has become, in the eyes of energy professionals, the Saudia Arabia of natural gas thanks to shale gas. The DOE estimates that shale gas reserves alone are 750 trillion cubic feet. Combined with other domestic sources of natural gas, the United States has enough natural gas to last for over a century, and the numbers continue to climb.

This should be good news for environmental activists, since using natural gas to generate power is much less carbon intensive than burning coal, especially when highly efficient technologies like advanced combined cycle gas turbines are used. But being happy isn’t a good way for environmental activists to raise money from donors, so they’ve done what they do best: they’ve sounded the alarm. Using the usual combination of outright fabrications and gross exaggerations, the environmental left has convinced their followers and the ever-gullible, technologically-challenged mainstream media that fracking is dangerous and foolish, a clear and present danger to human health and the environment. It’s all nonsense of course, but it plays to the climate of fear that the environmental activists depend on to remain relevant.

An Established Technology

There’s nothing all that new about fracking. The process goes back more than sixty years. What has changed is the way that the industry uses the technology and where the industry uses it. Advances in horizontal drilling technology allowed explorers to grab the natural gas in deep shale formations in a cost-effective way. And, as they started to recover gas, they were astounded to find just how much was trapped in those formations.

Here’s how it works: A driller will typically sink a well several thousand feet down into the shale formation. Then, “laterals” are drilled. These are horizontal sections of the well that fan out from the main vertical section. The “fracking” occurs when a massive amount of water is injected into the well, carrying with it a special type of sand and a small amount (about one half per cent) of innocuous, commonly-used chemicals. The water pressure fractures the shale, releasing the natural gas. The sand holds the tiny fractures open so the gas can flow. The chemicals enhance production by doing things like helping the sand particles slide into place, preventing bacteria from forming and clogging the fractures and by reducing scale deposits in the pipe.

After a period of few days, the fracking process is done and the well is ready for production. The driller recovers the water used during the “completion” phase. After completion, the well goes into production. Some wells may go through the fracking process more than once in the course of their productive lives, depending on geological conditions.

Again, let me emphasize that there is nothing new about fracking or the materials used in fracking. We’ve been fracking wells for a long time. It’s the ability to drill horizontally that made it cost effective to frack large, relatively thin shale formations. Thus there is nothing new or scary about the recovery technique, it’s simply that they are using it a lot more in the industry these days, due to the astounding reserves found in shale gas.

Boom Times

In areas where shale gas drilling is happening, the good times are rolling. Not only are people making money from the energy sales, jobs are created down the line, from the companies who support drilling operations down to the service industries that provide workers with food and shelter. In eastern Pennsylvania towns that were hit hard with the decline of the steel industry are rising again. Other states with significant shale formations, like Arkansas, Texas and North Dakota tell the same stories.

Yields vary of course, but an entrepreneur can recoup the investment in drilling a new well in as little as three months of withdrawl. And, in many cases the wells also yield “petroleum liquids”. These are liquid hydrocarbons that can be sold to oil refineries as feedstock, providing another revenue stream to the owner of the well, while displacing foreign crude.

Companies that make the products needed for fracking operations are booming as well. For example, the sand used has to be of a particular size and shape. The companies that process the sand can’t build new plants fast enough. And, if you’re lucky enough to own land that might have the right kind of sand, you’ll find that frack sand companies will gladly give you several thousand dollars just to drill a test hole or two.

Attacking Fracking

Shale gas has been such an amazing success story that it’s no surprise that environmental activists started demonizing it. They want an America full of windmills, solar panels and egg-shaped electric cars, no matter how destructive and hideously expensive that vision actually is. So, even though natural gas is far cleaner than coal and can result in the emissions of far less greenhouse gases, it has become their newest enemy and they’re attacking shale gas on all fronts.

For example, environmental activists frequently claim that fracking fluids contain dangerous chemicals that can contaminate ground water. In fact, shale gas formations are typically found several thousand feet below the surface, while drinking water comes from aquifers located a few hundred feet below. There is no realistic way for the two to “communicate” given all the layers of geological strata in between. With tens of thousands of shale gas wells up and running, there is not one demonstrated case of ground water being contaminated by fracking fluids.

And, even if fracking fluids could mix with drinking water aquifers, the quantities of chemicals in fraking fluid are extremely small and the chemicals themselves are extremely innocuous. Environmental activists say that if the formulations are so innocuous, why won’t the companies who make the fluids release formulations to the public? The reason is not that these companies are trying to cover up a dangerous risk, it’s that they are trying to protect their intellectual property. They sell their formulations based on performance and the last thing they want is to let a competitor copy their product. And so fracking fluid formulations are generally kept confidential and regulated at the state level.

There are also wild claims that tapping into shale releases natural gas in a dangerous, uncontrolled manner. The most famous example of this claim was shown during the HBO documentary Gasland when a homeowner demonstrated how much gas was being released by lighting a kitchen sink faucet on fire. The only problem with that demonstration was that the condition existed before any shale gas development occurred. Some people just happen to live in areas where large natural reservoirs of methane seep into groundwater. Deep shale gas formations have no impact.

Some environmental activists say that shale gas wells generate more emissions of methane (a greenhouse gas twenty one times more powerful than carbon dioxide) than conventional wells. That’s actually true in some cases, but it’s not nearly always so. Uncontrolled emissions of methane occur during the completion phase of drilling when the amount of natural gas exiting the well as the water is recovered can present handling problems. Recall that completions occur over a matter of days, not as a regular feature during the decades that a well will be in operation.

A process called “green completion” is sometimes used to recover the excess natural gas and get it into the pipeline, but for complex technical reasons this isn’t always possible. Sometimes, when a green completion isn’t feasible, drillers will burn the excess natural gas, converting it to carbon dioxide and reducing the greenhouse gas effect by twenty times. Finally, there are times when a driller will vent the excess directly to atmosphere. Recently proposed USEPA regulations would prohibit the latter practice, requiring green completions when technically feasible, or combustion of the excess if not. That should presumably satisfy environmental activists on this issue.

Yet, in a larger sense, the net reduction in greenhouse gas emissions associated with using more natural gas and less coal should satisfy even the most ardent of Al Gore’s disciple, no matter how much methane is released during the few days of a well’s completion. And make no mistake: tens of thousands of megawatts of coal will be taken off the grid in the years to come and there’s not going to be any significant number of new coal plants built to replace that power. A combination of state initiatives, regional programs and federal action have effectively ensured that coal will play a smaller and smaller part in generating electricity in the future. Some energy source will have to replace coal. We’re afraid of nuclear power and both wind and solar can only satisfy a limited (and expensive) portion of demand. That leaves natural gas as the one source of energy that can be used to provide reliable power in the quantities that Americans demand in this electronic age. Shale gas is thus vital to ensuring that the coming repowering of the nation proceeds smoothly and affordably. Environmental activists may hate the technology that’s used to recover gas these days, but the fact that we need it is – as one of their heroes famously said – an inconvenient truth indeed.

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