Energy industry analysts are predicting a global shale gas boom that could turn the cleaner-burning fossil fuel into the oil supply of the coming century. They are watching the gas industry undergo a global transformation that is starting to reshape the geopolitics of energy supply all over the world.
A dozen major natural gas pipelines that are either under construction or in the planning phases will link suppliers and markets in Europe, Africa and Central Asia, in anticipation of large new supplies of shale gas in need of transport to energy markets.
Confirmation that these analysts are reading the tea leaves properly comes in part from the recent behavior of the big oil and gas companies and oil field suppliers — Exxon, Shell, Schlumberger — which were initially slow to recognize the potential of the shale gas business. Now they're paying top prices to take over bold, pioneering firms and staking claims throughout Europe and Asia.
It's another fossil fuel boom in the making, but although cleaner-burning than coal, shale gas still poses a severe threat to environmental security. The drilling method that frees the gas requires the use of a cocktail of toxic chemicals that many fear could contaminate underground sources of drinking water that supply millions of people.
Concern over the drilling method called hydraulic fracturing ("fracking" for short) is most advanced in the U.S. Last week, the New York State Legislature imposed a moratorium on drilling in the gas-rich deposits of the Marcellus shale, also a source of drinking water for residents of New York City. In Washington D.C., Congress is conducting an inquiry into the fluid mix the industry uses in the process. Each company uses its own formula, and up to now they have opted to keep the specific chemicals used secret.
Paradox of Higher Prices
Still, it has been the rapid expansion of shale gas drilling in the U.S. that has created an oversupply and depressed natural gas prices not only at home, but globally. Analysts predict that if any of a host of proposed federal regulations is imposed, the cost of shale gas would rise, which would paradoxically provide an incentive for increased drilling.
“The most severe of the proposed regulations, which have to do with the monitoring of each well, are the most costly and are probably unlikely to happen,” Sebastian Brinkmann, a research analyst with MSCI told SolveClimate News. “But there definitely has to be a coming together where these companies will have to be more transparent.”
Fracking entails injecting water and a cocktail of chemicals into the gas-bearing shale at high force to bust open the rock. The fluid mix is extracted and then dumped into lined pits above ground, where producers are responsible for treating and managing it, but in some cases that water has contaminated soil and groundwater. Poorly lined wells have also resulted, in some areas, in natural gas and fracking chemicals getting into water supplies.
According to Brinkmann, what is most likely to happen is a tightening up of the regulations around the treatment of the process water.
“What that could do is reduce the potential of some reserves,” Brinkmann said. “For more marginal reserves, it would make it uneconomic to produce from those wells.”
While the fracking debate has become a stumbling block for the shale gas industry in the United States, a source within the Department of Energy with access to policy discussion, who asked to remain anonymous, echoed analysts’ predictions and said shale gas will unavoidably be a major part of U.S. domestic energy policy moving forward. The United States is not going to exempt itself from leading the development of the next big hydrocarbon market, the source said.
Brinkmann also said that in addition to being able to export technology and expertise to countries getting into the shale gas business, American companies could even end up exporting the gas itself.
Low-Emissions for China and India
China and India are both pursuing shale gas development, as it could provide an abundant and cleaner source of energy for economic development.