The People of America's Oil and Natural Gas Indusry

Realizing the Promise of Shale Natural Gas

Mark Green

Mark Green
Posted September 26, 2012

This week’s question on the National Journal’s Energy Experts Blog asked about the future role of natural gas in the U.S. energy mix. In his response API President and CEO Jack Gerard likens natural gas from shale to a winning lottery ticket. The question is, will America cash in that winning ticket? Gerard:

“The energy reality is that natural gas and oil supply 62 percent of the energy we use today and are projected to supply more than 55 percent of it in 2035 – even with growing and important contributions from other energy sources. So, while we continue developing other sources let’s keep our eye on the ball by recognizing the primary role of gas and oil in powering our economy and by making wise decisions today that can foster our energy security down the road.”

OK, so what’s needed to realize the promise of natural gas? What policies need to be changed or new ones put into place to ensure that a 100- to 200-year supply of U.S. natural gas is developed in a way that benefits individual Americans and our economy?

First, shale gas already is playing a huge role in our country. Here are the figures that circulated at last week’s shale gas conference in Philadelphia: $11 billion in value-added economic impact in 2010, 140,000 jobs supported, $1 billion in state and local tax revenue generated. XTO Energy President Jack Williams told the gathering that nationally, shale gas is expected to support 1.5 million jobs and contribute nearly $200 billion to GDP by 2015 – numbers that could double by 2035. "Wherever we look,” Williams said, “we see energy development creating multiplier effects that ripple through the U.S. economy.

The economic figures spring from resource estimates that overall, the U.S. has more than 1,000 trillion cubic feet of natural gas onshore and offshore. The key is access to those reserves. Especially in the western states, where so much acreage is under federal control, industry needs to be able to explore and develop areas that currently are off limits. It also needs common-sense leasing and permitting rules for areas that are open, so that new investment is encouraged, not discouraged.

Industry supports sensible oversight, with state regulators in the lead. Unfortunately, while the administration has embraced the promise of natural gas and talked about eliminating unnecessary regulation, it has fostered a climate of regulatory uncertainty. The Bureau of Land Management recently unveiled proposed rules for natural gas production on public lands that in a number of cases duplicate existing state regulations and which would impose new, unnecessary approval layers on drilling operations. The bureau is one of 10 federal agencies considering hydraulic fracturing regulation. API Upstream Group Director Erik Milito from earlier this week:

“We have seen numerous examples of regulatory decisions that simply move in the wrong direction and that contribute to uncertainty and inefficiency...Our industry could do much more of these good things if allowed to produce at home more of the energy our nation will need spared from the burden of unnecessary, costly regulations.  Unfortunately – judging from its policies – the current administration doesn’t see regulations as a problem and has little or no interest in expanding development.”

Sensible regulation will be based on transparency – the ability of all stakeholders to take part in a system that operates in ways that are clear and unambiguous – and on a sound scientific foundation. It will be based on legitimate cost-benefit analysis that measures actual environmental/health benefits against economic impacts. It will avoid duplicating effective state regulations as well as a one-size-fits-all standard set in Washington. XTO’s Williams:

“Government should create conditions that allow American-made technology to flourish; maintain a stable, transparent and unbiased regulatory environment that encourages investment; and not stifle growth with laws that are overly restrictive, laws based on fear rather than fact, or laws that try to pick which technologies will ultimately prevail with consumers.”

Industry must continue to develop shale natural gas safely while being responsive to community concerns. Williams again:

“It's not a question of technology – the technology for safe and responsible production of shale resources is already here. It's whether our industry and government – and a willing public – will take the right steps to ensure our country remains a leader in this field, so that our citizens and communities will enjoy the full economic benefits of these ‘made in America’ energy technologies.”

Again, think of shale gas as that winning lottery ticket – so much potential until redeemed. Gerard:

“Safely and responsibly developed, natural gas embodies enormous energy and economic opportunity. It’s ours, it’s within our reach. If we choose to keep developing it wisely, natural gas can fuel a new era of American prosperity.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.