Low natural gas prices, and ample supplies that are likely to keep prices down far into the future, are the rewards that could come from tapping into the vast supplies of shale gas trapped deep below the United States, an energy industry analyst said Thursday.
Rayola Dougher, a senior economic adviser for the American Petroleum Institute, an industry trade group, said the potential of shale gas, such as the Marcellus Shale that stretches from New York to West Virginia, could have tremendous economic implications for both consumers and the overall economy.
"The energy, the value and the affordability is going to change the lives of a lot of people," Dougher said during a lecture at the University at Buffalo that drew about 125 people.
But drilling in the Marcellus Shale, while going full bore in Pennsylvania, has been on hold in New York, which has banned the hydraulic fracturing process needed to release gas from the deep horizontal wells that are used to tap into the energy resource.
New York put a hold on horizontal drilling three years ago while it conducts an environmental study to find safe ways of using the techniques that are in use elsewhere.
Environmentalists are concerned that the chemicals used in hydraulic fracturing could contaminate groundwater supplies and also have worries about the millions of gallons of wastewater produced by the hydraulic fracturing process, which must be treated in specially-permitted plants to remove harmful materials.
"How you're going to manage that wastewater is the primary issue," Dougher said. "It's gotten to be a very complicated topic," said Marcus Bursik, the chairman of UB's geology department and one of the organizers of the series of eight Thursday evening lectures at the school's North Campus. "It's very important for our state right now."
Already, Dougher said the explosion in shale gas drilling across the country has helped drive down natural gas prices to the point where it costs half as much to generate the same amount of energy from natural gas as it does from oil.
The price of natural gas, which frequently traded in the $8 range two to three years ago, now has been hovering in the $4 to $5 range; a drop that she said reflects the more abundant supplies from the new sources of shale gas.
The vast amount of dark shale in the United States also could make natural gas a powerful domestic source of energy, with about a 60-year supply of gas now locked in shale deposits, based on current rates of consumption, she said.
"We always knew we had this gas. We just couldn't access it economically," she said. The change came within the last decade, when drillers developed a process that allows them to drill about a mile beneath the surface and then gradually turn the drill bit horizontally. By running the well horizontally through the narrow shale deposit, drillers can tap into much greater amounts of gas than they could through traditional vertical wells.
Shale gas, which now accounts for about 14 percent of the U.S. natural gas production, could be the source of 46 percent of the nation's gas by 2035, according to a forecast from the U.S. Energy Information Administration. Supporters of horizontal drilling in New York believe it could be an economic boom for the state, producing upwards of $2 billion in new economic activity and generating as many as 18,000 jobs.
"The potential is really something," Dougher said. "It's come on quick and it's come on hard." The Marcellus Shale covers upwards of 50,000 square miles from New York to West Virginia. Other areas of shale, from Texas to Wyoming, also are being tapped as prime sources of natural gas.
The new drilling techniques that are tapping into shale gas also have the potential to turn the United States, which currently imports about 11 percent of its natural gas, into an exporter of gas in the decades to come.
National Fuel Gas Co., for instance, is reversing the flow of some of its pipelines to allow them to carry gas from the Marcellus region in Pennsylvania into Canada.
"It's a very different world because of the new technology," Dougher said.
"It really has changed the vision of what our energy future can be," she said, noting that the new supplies will be a powerful force that could hold down gas prices for years to come.
"I think it's looking very bright for the U.S.," Dougher said. Natural gas "really hasn't reached its full potential yet."
Langhorne Smith, the state geologist, will give the next lecture in the UB series at 8 p.m. on April 7 at Baird Hall on the university's North Campus.