According to the New York Times, Cuadrilla’s chief executive, Francis Egan, who joined the company four months ago after a career in the international oil industry at giants like Marathon and BHP Billiton, believes there are 200 trillion cubic feet of gas within the company’s reach. The U.S. Energy Information Administration estimates that there may be as much as 600 trillion cubic feet of recoverable shale gas in Europe – enough energy to last about 40 years of consumption.

“That is a huge amount of gas,” says Cuadrilla. He says, even if only 10 percent were extractable, it would be enough to fuel Britain’s current consumption for about seven years.

In order to retrieve the natural gas, a methods of drilling called hydraulic fracturing or “fracking,” must take place. This is the method currently used in the United States, but the opposition for fracking in Europe is strong. Environmentalist and people living near shale gas sites worry about the effects fracking could have on their communities.

Cuadrilla is backed by a leading U.S. energy private equity firm, Riverstone Holdings. David Leuschen, acting Senior Managing Director, founded Riverstone after an extensive career heading the Global Energy & Power Group for Goldman Sachs.

“If companies like Cuadrilla can make one example work, we believe that bans in other countries may be lifted” said Menno Koch, an analyst at Lambert Energy Advisory in London.

The results of shale gas exploration have been mixed so far. For example, Poland was once considered among the most promising shale spots, but Exxon Mobil pulled out after drilling two wells, claiming the deposits were not commercially viable.

Europe continues to face challenges in this realm, including figuring out what exactly is underground, and convincing the public that fracking is safe.

Source: New York Times

Hydraulic fracturing or “fracking” is the process of extracting natural grass from shale rock layers deep within the earth. Fracking methods are used to efficiently produce natural gas in shale plays that were once unreachable with conventional technologies. Fracking in has streamed the media as controversial as environmentalist fear that fracking is not staff. However, multiple studies have been conducted to indicate that fracking is safe.

What is shale?

“The development of shale gas plays has become a “game changer” for the U.S. natural gas market.”- U.S. Energy Information Administration

The United States has an abundant supply of “clean-burning, domestic, reliable” natural gas. The abundance of natural gas promises more affordable energy and more stable prices. Natural gas plays a huge advantage in the United States in respect to manufacturing jobs, to farmers, to household heating and cooking, to businesses for electricity and fuel for transportation needs, and to society to help address climate change concerns because of its low carbon-content.

“The use of horizontal drilling in conjunction with hydraulic fracturing has greatly expanded the ability of producers to profitably recover natural gas and oil from low-permeability geologic plays—particularly, shale plays” – U.S. Energy Information Administration

What is the future of fracking?

In the recent elections Obama turned the opening of renewable energy plants into high-profile events and purposefully did not join the anti-fracking movement emanating from the left, according to Bloomberg’s Jim Snyder.

In the Ohio, a fracking state, jobs are finally coming back to a region.

“You’re seeing more optimism than we’ve seen here in a long, long time,” said Representative Tim Ryan, a Democrat who represents the Youngstown area.

“Right now there is a tidal wave of support behind the natural gas industry.” As many as 40 percent of Local 396 of Ohio’s pipe-fitters’ union members were out of work in the depths of the recession three years ago. Roland “Butch” Taylor, business manager of the union, said factory expansions and new construction now have all 700 of its members working.

The future of fracking looks promising.

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According the the American Wind Energy Association, Iowa’s wind energy industry created close to 7,000 jobs in the state. The wind energy capabilities in Iowa are estimated to reach up to 4,322 megawatts producing 23 percent of all the power generated in the state, the second highest wind energy producing state in the U.S.

Why is wind energy production slowing down? Business have started to dry up over the last year as the Production Tax Credit for wind farm developers is due to expire Dec. 31. The credit has been renewed repeatedly in short term increments making it harder for wind energy developers to plan long term.

“It’s forced a lot of people (wind developers) to look outside the United States,” said Peter Gray, a spokesman for ACCIONA North America in West Branch

Source: Gazette
Image Source: GreenGo

With the election right around the corner, President Obama and Republican nominee Mitt Romney have promised to keep this trend growing. Romney promises to be more aggressive on drilling for oil and natural gas by opening areas that are currently under utlized, including off the Pacific Coast. Obama on the other hand, is pushing an “all of the above” approach. Obama would increase drilling, but will continue to leave some areas off limits.

“No matter who is elected, we will be more energy independent every year for the next decade, unless there are some extreme policy changes,” said James Williams, an analyst for WTRG Economics.

The American Petroleum Institute also wants to increase drilling by opening more more oil and natural gas source. If the rate continues as it is, U.S. production could provide 74 percents of the country’s liquid fuel and biofuels by 2024. According the HeroldNet, if you increase production, the U.S. wouldn’t need petroleum from any other country.

The only thing standing in the way of increased production is the anti-drilling and fracking activists. Environmental concerns regarding fracking has caused the government to investigate and place heavy regulations on the fracking process. The investigations of regulations have caused production to slow down. While alternative energy source, natural gas, is still a fossil fuel, it produces half of the carbon emissions that traditional fossil fuels. Under the Administration’s Clean Air Act, all new manufacturing companies are required to reduce its carbon footprint. Most of these manufacturing facilities have turned to natural gas to reduce carbon emissions under the Act.

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The oil and gas industry is currently facing problems with escalating costs and regulatory concerns. The increase in cost and regulations could mean stalled growth.

“The combined effect of several factors has led to a noticeable slowing of activity and production growth,” Lynn Helms, director of the state’s Department of Mineral Resources, said in a monthly note.

Regulations mostly revolve around the controversy dealing with hydraulic fracturing techniques or “fracking.” Oil and gas companies have been using fracking techniques for decades. Recently, however, fracking has been at the center of debate, circling the media. North Dakota is home to one of the largest shale gas formation in a generation, and has become the second-largest oil-producing state in the country.

Fracking Regulations

Due to the controversy and speculations, the EPA has investigated a number of event involving fracking including, water contamination and seismic activity studies. These uncertainties regarding fracking has certainly affected a number of wells in North Dakota, said Helms.

On one hand, the current administration empowers the Clean Air Act and encourage natural gas production, energy from shale. On the other hand, the Obama Administration could potentially regulate fracking, which would increase cost. State governments are currently responsible for fracking regulations.

North Dakota Republican Senator John Hoeven, along with Alaska Senator Lisa Murkowski, said on Tuesday that he will introduce a measure to “put states first in the regulation of hydraulic fracturing”.

The measure will “ensure that states retain the right to manage hydraulic fracturing and gives them the ability to respond first to any violation,” Hoeven said in a statement.

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Shale production has been a controversial topic over the years. New York still debates whether to allow drilling practices on its portion of the shale. Only in the last five years has Marcellus shale has been a subject of serious drilling; however, analyst have already started predicting the shale’s success. New data from energy industry analysts and federal governments suggests Marcellus shale will become one of the largest natural gas producers.

According to Kyle Martinez, an analyst at Bentek Energy, in July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day. This represents more than 25 percent of natural shale gas production and more than double the output from April.

The top spot for the Marcellus “doesn’t surprise me,” said Jay Apt, a professor of technology at Carnegie Mellon University.  ”But will it lead to industries that spring up to use that gas?” he asked.  Apt is concerned the gas could end up being shipped to Canada, the Gulf Coast, or overseas, but hopeful that isn’t the case.

Apt said, Shell Oil Co.’s plan to build a petrochemical plant to turn Marcellus gas into other consumer and industrial products, including plastics.  It’s believe that Shell is going to move forwards  with the plan to build the $2 billion plant north of Pittsburgh.  It’s also believed that small industries will follow.

Marcellus shale is estimated to be the second largest natural gas resource in the world. The United State Geological Survey (USGS) estimates the formation’s total area is around 95,000 square miles.  The Marcellus shale could supply U.S. consumers’ energy needs for hundreds of years.

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Not only can the development of natural gas lead to energy independence for the U.S., the development leads to thousands of jobs within and outside of the oil and gas industry.

Colorado Gov. John Hickenlooper was among a number of governors, who signed a letter to top automotive execs encouraging the development of natural gas vehicles.

Mary Fallin, Oklahoma Gov. and Hickenlooper initiated a multi-state agreement to promote the use of natural gas as a transportation fuel. The letter stated, “Abundant, affordable, clean-burning natural gas presents a tremendous opportunity for America to realize an energy future using domestic resources to fuel our nation’s transportation needs…To that end, we are committed to exploring ways to aggregate our annual state fleet vehicle procurements to provide an incentive to manufacture affordable, functional natural gas vehicles.”

Natural gas drastically cuts harmful emissions from the atmosphere. Fracking, after much speculation, was said to be “OK,” according to EPA Administrator, Lisa Jackson. With the help of the EPA regulations, the number of emissions from hydraulic fracturing will continue to decrease every year.

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Vehicles: For example, most fleet vehicles (buses) already use natural gas.  The market is limited to vehicles that can make it back to headquarter for refilling. Crystler announced a pickup truck that will run on both gasoline and natural gas.

Power Plants: The Environmental Protection Agency (E.P.A.) drafted a new rule that would limit carbon dioxide emissions from new power plants to 1,000 pounds per megawatt-hour, which will force new power plants to use alternative energy, like Shale gas. While some believe that the E.P.A is starting a war with the Coal industry – The E.P.A is simply  following a shift that is already unfolding, while decreasing the amount of greenhouse gases omitted into the air.

Natural gas prices are forecast to increase more than 50 percent, but still more cost efficient compared to oil. The price for oil is expected to stay the same over time.

The reason why oil prices are higher has to do with international influences. Oil is an efficient international market, in which the product moves around the globe in tankers that can be diverted from on destination to another. A sharp change in demand or supply in any region of the globe is likely to show up in prices everywhere – Natural gas is difficult to send to international market and will continue to be influenced by domestic supply and demand.

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