Government agencies are studying whether added environmental regulation of fracking and wastewater disposal is needed. So far, hazards seem manageable. Mainly, the boom should be left alone to build on its considerable gains. Since 2000, U.S. natural gas production has risen by a quarter, with the increase coming mostly from shale gas. From 2000 to 2012, its share of production zoomed from less than 2 percent to 34 percent. By 2040, the Energy Information Administration, the source of these figures, expects overall gas production to increase by nearly 40 percent. The share of shale gas would rise to about half.
By one study, the gas boom has created nearly 500,000 jobs for producers and their suppliers. Surging output has reduced wellhead prices more than half from stratospheric 2008 levels. In 2012, residential gas bills (which also cover transportation and distribution costs) are down 21 percent from 2008. Manufacturers consume about a third of U.S. natural gas as both a heating fuel and a petrochemical feedstock. Low prices are promoting investment by energy-intensive firms. Companies have announced at least 100 new projects or expansions worth an estimated $90 billion, estimates Dow Chemical.
Greenhouse gas emissions have also been curbed because natural gas, when used as an alternative to coal to generate electricity, produces about half as much carbon dioxide. Finally, fracking and horizontal drilling have been applied to oil, spawning a parallel boom. In 2012, U.S. oil production is up 25 percentfrom 2008. That’s about another 400,000 production and supplier jobs, estimates the consulting firm IHS.
The complaint that LNG exports might unwisely drive up natural gas prices comes from politicians and gas consumers. Sen. Ron Wyden (D-Ore.) argues that the Obama administration should ensure that “unfettered natural gas exports don’t harm U.S. consumers and manufacturers.” Dow Chemical says a “rush to export liquefied natural gas” could jeopardize the “tremendous competitive advantage for American industry” from low-price shale gas.
In theory, LNG might divert large volumes of natural gas because the wellhead price of U.S. gas is, on an energy-equivalent basis, much cheaper than oil. But in practice, this isn’t likely: LNG isn’t easily substituted for oil and is costly. The expense of liquefying it to minus-260 degrees Fahrenheit and transporting it long distances in refrigerator tankers raises the price sharply. LNG projects are fabulously expensive. Sabine Pass in Louisiana, a project approved by the Energy Department, will cost $11 billion and could provide customers in Britain, South Korea, India and Spain with gas equal to about 3 percent of present U.S. supply.