—From “Let It Be” by The Beatles (written by John Lennon and Paul McCartney)
Shale gas has the potential to materially improve the economic lot of every citizen of the US. There is also the real possibility that, together with distributed cleaner energy such as wind and solar, cheap energy in the form of shale gas could improve the human condition worldwide. Such lofty rewards beg for a concerted effort by all concerned to solve the associated environmental risks. In the opinion of this author, that is an acceptable risk provided we employ a combination of innovative technology and regulatory oversight, and provided the industry will to do the right thing, nudged along by informed local activism in the locations where the industry operates.
The public has a right to know the timeframes involved in the rewards and the risks. While the intent of the book is to allow the readers to form their own opinions, I will attempt a response to the question.
The reduction in the cost to heat homes was already felt in the winter of 2011; one estimate is a $1,000 average reduction per household each year. This trend can be expected to continue.
Ethylene and derivatives and low-cost fertilizer will make their presence felt on the economy in the short term, two to five years. The quicker results will be from resuscitating previously mothballed plants. To the extent that there is a world price for ethylene and derivatives and low-cost fertilizer, export could dampen the direct benefit to farmers and other consumers. Policy measures could ensure the domestic benefit. In any case, the balance of trade would improve if for no other reason than through the reduction of imports.
Methanol displacement of gasoline and diesel is an exciting consequence of shale gas production. The needed legislation to require most cars to accept any combination of conventional fuels and alcohol could pass this year or the next. The compelling economics could drive change in the two to five years. The
slowest link in that chain will be adding methanol capacity and establishing fueling infrastructure. The high-compression engine which effectively would more than halve the cost of fuel will take longer—up to 10 years. This timeframe could move up if the public is vociferous in demanding it.
The positive effects on US national security for dimming the aspirations of Russia and Iran would occur in the two- to five-year time frame. A reduction in imported oil would take longer, closer to 10 years for a material effect.
On the environmental risk side, the public will want to know whether measures to manage the risk are working and how soon this will be known. Regulations requiring that flowback water be either reused or disposed of in UIC Class II wells only ought to be in place by next year, if states choose to impose them. Putting in place measures to assure prevention of earthquakes from disposal well activity ought to be a short-term activity. Proper measures ought to eliminate this phenomenon. Technology for reuse of flowback water already exists, but more will be needed to broaden its use and reduce costs. Re- use is the more desirable of the two options. Full-scale implementation ought to be possible in two to five years.
Since programmed releases to the surface will not be an option, any accidental spills during the two allowable handling methods would be observable events. With the industry trending toward the use of greener constituents in fracturing fluid, the only substantive issue with accidental spills should be the saltiness. Environmental degradation just from high salt would not be as long lasting as it might have been from organic compounds such as diesel, which would be forbidden from use in that application.
The use of salty water in place of fresh for fracturing is technically feasible today. Implementation ought also to be in the short term provided there is the will to do it. State legislation requiring the use of salty water would be desirable, and community activism would be helpful in persuading legislators.
Preventing well water contamination ought to be straightforward if my suggestions, based in part on the recommendations of the Pennsylvania governor’s Marcellus Shale Advisory Commission, are followed. A key aspect is that industry must make best practices on well construction and monitoring available to the smaller producers. Baseline testing of proximal water wells at industry expense prior to drilling activity, followed by routine testing after, will provide definitive proof of efficacy of well construction. There would no room for uncertainty. In the event of an observed leak, response time for remediation ought to be weeks, not months. From an operational standpoint, sound
Conclusions 167 well construction preventing fluid leakage is just a matter of following good practice. Consequently, failures to do so ought to carry severe penalties.
Methane releases during early stages of gas production are believed to occur in some instances. In each case, the gas is automatically collected as part of a process for separating it from the flow back water. So the operator knows how much there is and precisely where it is stored. This potent greenhouse gas must not be directly discharged. If no useful purpose is found, it ought to be burned on location (flared). Whether this gas is used or flared, the public ought not to have concerns on this score. If operators are required to report on all dispensation of the gas other than commercial export, the public would realize an even greater measure of comfort without undue burden on the operator. Automatic monitoring with remote reporting ought to be straightforward.
There is little doubt that shale gas is transforming the US energy-based economy. An importer of natural gas, with imports of 10 percent of need in 2010, we are headed to an era of domestic self-sufficiency. The argument has shifted to whether to permit export of liquefied natural gas. The sheer abundance of gas is keeping prices low, and models from two different sources indicate that the prices should remain low to moderate for decades. An important aspect of note is that the prices can be expected to remain stable, without the peaks and valleys experienced in the past. This stability is almost as much an attraction to industrial users as the low pricing is.
Even at the upper end of the modeled pricing range, $8 per MMBTU, gas-based electricity will be cheaper than that from new coal plants, even without a price on carbon. However, if prices stay in the lower end of the range for long, renewable energy sources will be slow to be adopted unless there is policy intervention. Another consequence of sustained prices at the low end will be emphasis on wet gas production, because the majority of the profit will be in the wet component. This will cause a glut in ethane, which, if properly anticipated through cracker capacity addition, could make the US the low-cost producer of ethylene, allowing for lucrative exports.
Low-cost energy is a tide that lifts all boats of economic growth. Shale gas is a powerful such tide. It has burst upon us so unexpectedly that we have become rattled by the flotsam it carried with it. I conclude that the flotsam is manageable, allowing us to enjoy the benefits of the tide.