Critique of Natural Gas Boom Explores More Important Risk: Fear of the Future

Fracking, Ohio, Natural Gas Boom

Public concern about fracking is the most important impediment the oil industry faces in advancing the American energy boom. Photo by Google.

This week, Ohio counted over 130 drilling permits that it had approved since last summer to a select group of big energy companies to drill for oil and gas in counties along the upper Ohio River. The state says 45 wells, aimed at the oil- and gas-saturated Utica shale, have already been drilled. River towns that have been growing old and shedding their talented young people for two generations are suddenly awake with jobs and new kinds of opportunities. The possibilities for the dead end counties of southern Ohio, the deteriorated buckles in the rust belt that the Ohio River has defined for decades, are looking up. Young people are hiring into jobs that pay honest wages. Local businesses are registering increases in sales. The entire region sees a future, and it isn’t so bleak. Among the biggest players in the development is Oklahoma-based Chesapeake Energy,

Job growth is one way to view the oil and gas boom that appears ready to engulf Ohio, crossing the Ohio River from Pennsylvania.

Here’s another way to look at it. Low natural gas prices, which are expected to stay low because of ample supply, are joining  new federal air pollution rules in prompting big coal-fired utilities to fuel switch to natural gas. That reduces air pollution, the need to expand eastern and western strip mines, and cuts emissions of climate changing gases. Last week, according to Penn Future, a respected environmental group in Pennsylvania, “GenOn announced plans to deactivate seven coal-fired power plants totalling 3,140 MW of generating capacity. Five of those plants are located in Pennsylvania; two are in Ohio, and one is in New Jersey.”

“According to Reuters,” said Penn Future, “more than 30,000 MW of U.S. coal-fired power plants will be retired over the next decade. Gas fired plants are displacing coal in record numbers. Since 2000, the market share of gas for electricity generation has risen from 16 to 26 percent, while coal’s market share has declined 52 to 42.5 percent.”

Rolling Stone magazine also jumped into the gas boom in recent days with a long article that seeks to eviscerate Chesapeake Energy and its chairman, Aubrey McClendon. It describes the boom as a scam, accusing companies of inflating estimates of recoverable reserves, and projecting a speculative bubble that is ready to burst. It sorts out some of the environmental issues and reaches the conclusion that a calamity approaches. It quotes Robert Kennedy Jr., the environmental attorney, to the effect that the development of shale gas reserves is a “disaster” in the making. Kennedy, by the way, said the same thing about a proposed offshore wind farm near his family’s Cape Cod compound. You can read the article here.

There are several interesting internal disclosures in the Rolling Stone piece about how the company operates.  But there’s not much more that I recognize from my own reporting of the energy boom that rings true to me. The oil and gas reserve estimates published by states, the federal government, and energy companies and trade associations differ in specifics but all consistently point to mammoth new supplies that can be tapped with new technology. And the various risks of oil and gas production to water, air, and the climate are demonstrably lower than producing similar amounts of energy from coal.

Moreover, the oil and gas boom comes at a time when state and federal regulatory infrastructure and law are in place, and experience is long. Forty years of environmental and public health protection policy is readily available and is being applied to this  huge new industrial sector. No industrial expansion of the scale and speed now exhibited by the energy boom comes without risk. But the country is much better positioned to avoid the sort of near-term “disaster” predicted in the Rolling Stone piece.

The disaster we need to worry about is utterly failing to take advantage of the 20-year economic reprieve provided by the oil and gas boom and developing cleaner alternatives in large enough quantities before this period ends. The regulatory infrastructure America constructed since 1969 is being deployed, and can, with ample civic oversight and pressure, provide the measure of safety  the public says it needs to enable this bridge to the cleaner energy future to be built.

– Keith Schneider

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2 comments on “Critique of Natural Gas Boom Explores More Important Risk: Fear of the Future

  1. laura vecsey says:

    Keith,

    From last I heard, they UPPED the natural gas reserves in shale because of the Utica play underneath the Marcellus.

    How would you distill your argument for the best way forward on this energy source?

    Good piece.

  2. Laura, the environmental community has a significant opportunity to lead on this by:
    1. Insisting that regulators minimize risk with enforcement of existing statutes and regulations, and then organizing to assure that enforcement is carrried out.
    2. Organizing to gain much higher severance taxes to gain a substantive economic return that raises, instead of diminishes, public accounts for education, research, environmental protection, and housing.
    3. Understand that saying “No!” has absolutely no relevance in this discussion. Over $100 billion is spent annually now in the U.S. and Alberta, Canada to develop these unconventional reserves. Markets for the products are too big. Job numbers are too large. Public support outside the green community is growing. But saying yes to using this 20-year energy reprieve to move the country steadily closer to an economy fueled by alternatives makes a lot of sense.
    Take care, Keith