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  Shale gas in the US: new opportunities and old problems (1)

Brigita Kupstaitytë
2013 07 29

A person used to technologies and various conveniences can hardly imagine a day without various forms of energy. Demand for energy is rising worldwide. Green technologies and innovations offer an environmentally sound alternative, yet we have to rely on economically feasible energy production technologies.

Shale gas represents a new potential energy source. It is quite cheap, ecologically safer than oil and found in many places of the world. The United States is a country which could become more independent in the area of energy sources due to the shale gas. It is assumed that this country has a total of 1883 billion cubic metres of shale gas. [1] 

The interest in shale gas determined higher investments to the production technologies. The newest technologies consist of horizontal drilling and hydraulic fracturing. Horizontal drilling involves drilling down vertically and then making a turn to proceed laterally away from the vertical well bore. Drilling manoeuvre capacity reduces extraction costs and environmental harm. Hydraulic fracturing is the fracturing of localised rock by a pressurised liquid; it creates cracks deeper in the rock formation to release more gas, whereas vertical wells allow the extracted gas go up to the surface. A mix of water and sand with various chemicals is used in the above process.

Shale gas production should have a positive impact on the entire U.S. economy. A real growth is envisaged in chemical industry (methylene production costs (methylene has been widely used in the U.S. chemical industry) have decreased due to shale gas production). In the next 5-10 years „Dow Chemical“, „Formosa Plastics“, „Chevron Phillips Chemical Co“ and other American companies are planning to invest to the development of methylene plants; this investment will create about 1 million jobs.

But society is also concerned about the threats of the shale gas production process. One of the major threats is growing water use (including drinking water) and water pollution in subsurface formations.  But oil production also requires a lot of water – today only one third of oil can be produced without water.[2]

If this process is unsafe, chemicals used during shale gas extraction process might contaminate drinking water. According to technologists, shale gas is extracted from deeper layers; pipelines on the ground water level are subject to more strict safety measures. Unfortunately, it is impossible to avoid interferences and accidents. It is worth mentioning that usually these accidents happen in oil extraction platforms or in tankers, they are less common in gas extraction and transportation.  

To win the place in the market shale gas must overcome reputation and regulatory obstacles since image and reliance determines majority business transactions and investment. The spread of distrust in the shale gas production by competing companies could also be expected. It is still not clear when gas prices in North America will rise, since gas supply still exceeds the demand; slowly recovering U.S. economy and high amounts of produced gas do not induce a rise in prices.

Negative impact of shale gas on the development of alternative energy is also discerned. According to forecasts, in the near future oil will remain the main energy source; all other sources, including shale gas, will only be supplementary, therefore shall gas revolution should be condemned with considerable caution. Alternative energy is penetrating into the U.S. energy but cannot yet compete seriously, whereas shale gas might become one of key energy resources. It is envisaged that by 2035 import of energy to the U.S. might drop from 13 to 1 percent because of the shale gas.[3]

The Congress obliged the U.S. Environmental Protection Agency to launch a survey for evaluation of the environmental impact of shale gas. The survey had to be completed in 2012, but later the final date was postponed to 2014. According to the 2011 survey in Great Britain, there was no evidence of environmental impacts of shale gas, but such surveys cannot guarantee absolute safety. It is not yet clear what are the permitted levels of harmfulness in pursuit of economic benefits and energy independence. It is worth noting that some U.S. states have different attitude toward shale gas, but investment might not be restricted to the U.S. territory.

Canada is the state which has already been affected by shale gas production. It is the third country in the world by volumes of natural gas exports delivering half of its gas to the U.S. market. The country will have to look for new markets to realise its natural gas. Canada has not proper infrastructure for gas export by sea roads, therefore in 2011 it allocated a 5 billion dollars aid for the construction of a liquefied natural gas terminal in the British Columbia; it also plans to deliver gas to Japan, South Korea, China and other countries.  

Shale gas will have to overcome quite a number of barriers in order to join the club of main energy sources. Yet, because of the increasing public interest and a fear of possible environmental impacts it is expected that shale gas will be evaluated seriously both by the competitors and by potential market developers. Contribution of the U.S. to the development of shale gas technologies will help to gain energy independence, create new jobs and change geoeconomic situation in the world.  

[1] Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States. Independent Statistics & Analysis. U.S. Energy Information Administration, 2013. Rasta:http://www.eia.gov/analysis/studies/worldshalegas/ 

[2]Water in Fuel Production. Oil Production and refining.  IFP Energies Nouvelles, 2010. Rasta: http://www.google.lt/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&ved=0CFQQFjAC&url=http%3A%2F%2Fwww.ifpenergiesnouvelles.com%2Fcontent%2Fdownload%2F70601%2F1513892%2Fversion%2F2%2Ffile%2FPanorama2011_11-VA_Eau-Production-Carburants.pdf&ei=vLXVUd2pNKL-4QTGo4CIAw&usg=AFQjCNENnFQS9U0LTA2yeSzUBSjarCY58g&sig2=pGUDNMlSd5zA1av18vf6kw 

[3]Shale Gas. A Renaissance in US Manufacturing? Pricewaterhouse Cooper LLP, 2011.

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