Unconventional Gas: Getting Out of Balance Fast

There's no doubt that natural gas is a much better fuel for electricity generation than coal, particularly if we are serious about safety, land and water use issues and about greenhouse gas emissions. Lately, though, the whole discussion has become a rush to unleash drilling in the U.S. for unconventional gas. In the course of the policy discussion, for which our legislators are severely over matched as usual, a number of half truths have been uttered by the industry.

First of all, let's define what we mean by the term, unconventional natural gas resources. We mean tight gas sands, coal bed methane, and gas shales. Methane hydrates are a scientific research curiosity at this point and are not in our use of the term.

It is universally accepted from a geological point of view that unconventional natural gas resources occur in a much more complex and challenging environment than do conventional gas resources.

It is true that North American producers have had roughly five decades of experience producing natural gas from shale. However, this production has generally been at relatively low levels, and it has occured in shallow, fractured shale formations. The experience is not indicative or instructive of what will be encountered in the high volume production of shale gas from deep, low permeability formations like Barnett, Marcellus, Haynesville and the Horn River. The technology to drill is there, but the industry's experience in these kinds of formations is relatively limited.

There has been legitimate concern about the presence of methane near drinking water supplies which are within the northeastern formations. Industry experts, perhaps rightly, conclude that there is no direct association with deep drilling for shale gas. However, it is curious that there are no other obvious explanations for the source of the methane either. We've had a similar occurrence here in Minnesota, in terms of finding methane contamination, and it has been attributed to unauthorized chemical dumping by a manufacturer decades ago. The case for explaining this occurrence is not clear either.

Broadly speaking, according to IEA projections, the US and Canada would be relatively self-sufficient in natural gas in 2035, on the assumption that shale will grow to account for one-third of North American production by then. Natural gas imports will fall from about 10% of supply now to 6% in 2035. Oddly enough, total greenhouse gas emissions from our energy portfolio increase slightly over the forecast period, because the strong growth in unconventional gas production comes at the expense of coal (good) and nuclear (not so good).

The worldwide oil and gas industry knows all about producing hydrocarbons in all kinds of deep water and hostile environments, but that experience has been forged over fifty years or more. On the knowledge curve, for unconventional gas from deep shale formations, the industry has a lot to learn yet. It shouldn't put drinking water supplies and public health at risk by claiming otherwise. Universities, research institutes, the industry, and government agencies need to work together to birth this new energy source in a responsible manner.

On a side note, the sudden, capricious decisions by the governments of Germany and France to scuttle their nuclear industries mean that by 2035 they will be much more dependent on gas imports probably from Russia by pipeline and from Qatar by LNG. This may create balance-of-trade issues as well as heighten security concerns in the future.