Got Shale?

Let's start with a simple picture about the natural gas picture in the United States.  According to the Energy Information Administration, 2009 proved reserves of natural gas were 284 Tcf (trillion cubic feet).  Proved reserves are those volumes of natural gas that "geologic and engineering data demonstrate with reasonable certainty to be recoverable under existing economic and operating conditions."  Proved reserves are what we know is out there, and what we can recover without subsidies or experimental technologies. 

69% of the proved reserves are within the lower 48 states, of which 183 Tcf are onshore and 13 Tcf offshore in the Gulf of Mexico.  61 Tcf are said to be proved reserves in shale, or 21% of the total proved reserve base.  Shale has always been classified among "unconventional resources," along with coalbed methane and tight gas.  Shale's proved reserve totals have grown sharply in recent years, coinciding with the beginning of their separate reporting in 2008. 

It would be interesting to look at the methodology and cost estimates that went into describing the "current economic and operating conditions" for shale.  We have such patchy data and limited history, but even with all the hoopla, shale reserves are at best 21% of the proved reserve base.

When one looks at production of natural gas in the U.S., shale weighs at 14-20% of production, depending on the year and the way the data are reported. 

Let's pursue the 69% of our natural gas reserves that in the lower 48. How's that for an idea!  Let's forget BP and take the freeze off operations in the Gulf of Mexico to grow the production and reserve base out there.  There's plenty of onshore gas, according the EIA statistics, in Texas and other southwestern states. 

Imports currently account for about 11% of domestic consumption (again the number might vary slightly).  Gas prices have been flat and appear to be falling.  In an environment of falling prices, it's not good economics to produce from sources which may  have higher total costs, especially external, environmental costs like shale. 

The New York Times reports today about situations in Pennsylvania where landowners sign leases for gas production in order to get a steady monthly income stream; now the owners find their drinking water contaminated, and tailings from the drilling left on the property and simply reseeded.  The companies tell then, "It's your problem, now." These owners are at a tremendous information disadvantage when dealing with the gas companies, which are behaving almost as badly as those in the original  Pennsylvania oil rush. 

Shale, in some ways, seems just like the ethanol gold rush.  We jump headlong into an energy source of marginal economic, social and environmental value, with lots of consequences that were poorly understood while trade associations  beat the drums and regale the politicians. Sound familiar?

Even for natural gas, we may be able to be relatively energy efficient simply because the economic forecasts are for flat to down gas consumption in the coming years due to the lingering economic slowdown and energy saving efforts. There are large supplies of LNG that could be imported, for which we have the capacity and which would have few environmental issues.  Going for zero gas imports, given the alternative of ramping up shale production doesn't seem like an obvious trade-off to me. 

How about some more nuanced and thoughtful discussion of these issues?