Energy Costs & Savings
Domestic Reserves of Natural Gas
To Go Untapped?
Democrats are rethinking policies allowing extraction of gas locked up in rock. An ExxonMobil venture hangs in the balance.
By Andrew C. Schneider, Associate Editor, The Kiplinger Letter
December 22, 2009
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Stricter environmental oversight of natural gas drilling is in the works. Congress is poised to lift an exemption from safe drinking water rules for hydraulic fracturing, a process for extracting gas from shale formations by injecting a mix of sand, water and chemicals into the shale at high pressure.
The process promises to greatly expand domestic production of natural gas, increasing energy independence. Moreover, to the extent it encourages power companies to shift from coal to natural gas as a fuel for generating electricity, hydraulic fracturing could ease the shift to a lower carbon economy.
“This hydraulic fracturing is a technique that has made major advances in the past few years and totally changed the outlook for natural gas supply,” says William J. Hederman, senior vice president for energy policy at Concept Capital’s Washington Research Group.
But despite the technology’s promise as a way to help reduce greenhouse gas emissions, it is winning few friends among environmentalists and public health advocates. Critics have long alleged that the chemicals used in the process seep from the wells into the surrounding soil, contaminating the groundwater. In addition, drillers draw the large volumes of water they use in hydraulic fracturing from nearby rivers and streams, threatening agriculture, fishing and recreational businesses along those waterways. The issue has become particularly controversial in New York state, where any groundwater pollution could endanger the drinking water supply of New York City.
The Bush administration’s Environmental Protection Agency released a study in 2004 concluding that hydraulic fracturing posed little or no risk of contamination to groundwater. The report was contradicted almost immediately by an EPA whistle-blower, who noted that five of the seven members of the report’s external review panel appeared to have conflicts of interest. Nevertheless, the Republican-led Congress followed the agency’s official position, waiving Safe Drinking Water Act requirements for companies using the process.
The Obama administration’s EPA is preparing its own study on the potential water contamination risks of hydraulic fracturing. That will provide congressional Democrats with much of the leverage they’ll need to repeal the waiver sometime next year.
As a result, vast reserves of shale gas may go untapped for years. Many independent drillers will abandon the effort rather than bear higher costs of safeguarding water. “Independents do most of the drilling in the U.S.,” says Frank Verrastro, director of the Energy and National Security Program at the Center for Strategic and International Studies. “If independents aren’t able to afford it, big majors could move in, but they also have LNG [liquefied natural gas] investments.”
But deep-pocketed energy firms may focus on LNG imports and other natural gas sources rather than spend extra resources to comply with stricter regulations. For example, Exxon Mobil Corp. last week announced that it would purchase Fort Worth, Texas-based XTO Energy for $31 billion. The merger agreement, however, includes a clause that would nullify the deal if Washington enacts legislation that would make hydraulic fracturing too costly.
Rep. Ed Markey (D-MA), chairman of the energy and environment subcommittee of the House Energy and Commerce Committee, has already taken an interest. Markey says that, while the Exxon-XTO deal highlights the importance of natural gas to reducing America’s carbon footprint, “this proposed merger also raises a number of issues with respect to the future direction of the U.S. domestic oil and gas industry, competition within the industry, and the potential environmental impact of increased unconventional natural gas development.” He plans to hold hearings on the merger early next year.
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Reader Comments (8)
Posted by: hard facts at 12/22/2009 01:39:19 PM
Translation: The democrats want to be paid.
Posted by: Hindenburg at 12/22/2009 04:19:35 PM
We seem determined to enslave ourselves to foreign oil.
Posted by: rob ferguson at 12/22/2009 09:04:58 PM
Bravo for congress for standing up to the energy industry! Natural gas extraction or "Fracking" is a environmental disaster of enormous scale. If this practice is not stopped, aquifers across the country will be poisoned. For the Bush administration to have waived application of the Safe Drinking Water Act for companies engaging in this dubious practice is just outrageous. To allow this to happen in the quest of cheap energy and the almighty dollar would be an unconscionable betrayal of the public trust. Clean water is vital for a heathy future. Let's not allow powerful moneyed interests to destroy our future vitality.
Posted by: John Cooper at 12/23/2009 08:17:13 AM
What about oil shale? Does this affect that?
Posted by: d.m.roy at 12/23/2009 08:59:50 AM
...Fracking has been used for 60 years with not one negative effect on grounwater, see IBD article today. Get the facts and stop using talking points for environmental moonbats. We keep going on this destructive environmental direction and we won't have an economy worth worrying about.
Posted by: Leo Leone at 12/23/2009 09:30:27 PM
OPEC never had better friends than our corrupt Democratic Congress and their gullible Green Peace lackeys. Doubtless a generous check is in the mail for them both.
Posted by: Gary Bridier at 12/25/2009 07:20:16 AM
I read the comment from rob ferguson and even the "opinions" in the article with dismay. Let me make it clear that I am an engineer in the oilfield so I might be construed as having a conflict of interest. However, get your facts straight before making off-the-cuff remarks that have no basis in fact. Frac jobs do not use millions of gallons of water in a well. The volume is basically equal to the well bore and the area being frac'd around the well bore. The reservoirs are much deeper than the groundwater or else you would already be drinking fizzy water contaminated with gas condensate! I do not think natural gas is the saviour to America's long term energy needs but it will go a long way to divorcing us from the petro-economy where we are enslaved to the dictates of OPEC and a few other bad actors. We need to use natural gas to give us room to build up our economy, develop and encourage alternatives such as wind, solar and nuclear and most importantly take us out of the competition for oil with the likes of China. We are spending our country to ruin by buying imported oil and since Americans cannot seem to get it through their thick skulls that we need to lessen our utilization of oil, then we need to use our "smarts" to engineer a solution. What we do not need are sound-bite politicians and wanna-be eco nuts who let their emotions rule instead of their intelligence, guiding this country! I am for a comprehensive energy plan the espouses conservation, lessens dependence on foreign sources of energy and makes us take the hard steps of reducing our energy footprint on this planet! Will we achieve that? Not as long as we have politicians pushing agendas and going for face time on the news programs or eco-nuts who should know better taking the opposite view against any practical, fully engineered, solutions just because they might come from the enemy (Big Oil)!
Posted by: rb at 06/17/2010 10:23:25 PM
dig baby dig! cheap coal , that is.