Natural Gas Drilling Boon - Technology Boon

The new drilling boom uses advanced technology to release gas trapped in huge shale beds found throughout North America — gas long believed to be out of reach. Natural gas is the cleanest fossil fuel, releasing less of the emissions that cause global warming than coal or oil.

Rising production of natural gas has significant long-range implications for American consumers and businesses. A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive.

While the recent production increase is indisputable, not everyone is convinced the additional supplies can last for decades. “The jury is still out how big shale is going to be,” said Robert Ineson, a natural gas analyst at Cambridge Energy Research Associates, a consulting firm.

Still, many people in the natural-gas industry believe a new era is at hand, and a rising chorus of Wall Street analysts and Congressional lawmakers supports that notion. Competition among companies for rights to the new gas has set off a frenzy of leasing and drilling.

“It’s almost divine intervention,” said Aubrey K. McClendon, chairman and chief executive of the Chesapeake Energy Corporation, one of the nation’s largest natural gas producers. “Right at the time oil prices are skyrocketing, we’re struggling with the economy, we’re concerned about global warming, and national security threats remain intense, we wake up and we’ve got this abundance of natural gas around us.”

Senior Democrats in Congress are getting behind natural gas, portraying it as an alternative fuel for transportation that can serve as a stopgap until renewable sources of energy, like solar and wind power, become economical on a broad scale.

“You can have a transition with natural gas that is cheap, abundant and clean,” the House speaker, Nancy Pelosi of California, said Sunday on “Meet the Press” on NBC.

She also said that an investment she and her husband had made in a company that produces natural gas for use in automobiles, revealed last week by The Wall Street Journal, was not a conflict of interest because “I’m investing in something I believe in.”

Representative Rahm Emanuel of Illinois, the chairman of the House Democratic caucus, has introduced legislation to offer more tax credits to producers and consumers of natural gas and mandate the installation of natural gas pumps in some service stations.

Domestic gas production was up 8.8 percent in the first five months of this year compared with the period a year earlier, a rate of increase last seen in 1959, during the great drilling boom that followed World War II.

Most of the gain is coming from shale, particularly the Barnett Shale region around Fort Worth, which has been under development for several years. The increase in gas production stands in sharp contrast to the trend in domestic oil production, which has been declining steadily since 1970 and dropped 21 percent in the last decade alone.

The Barnett region proved that, using new technology, shale gas could be extracted on a large scale. But lately, companies have set their sights on shale formations that could produce far more gas than the Barnett.

Testing to determine the productivity of fields has been completed on just a tiny fraction of the potential acreage. According to a new report by Navigant Consulting, paid for by a foundation allied with the gas industry, there could be as much as 842 trillion cubic feet of retrievable gas in shales around the country, enough to supply about 40 years’ worth of natural gas, at today’s consumption rate. But thousands of wells need to be drilled before the exact reserves will be known.

Domestic natural gas prices have already plunged 42 percent since early July, an even faster drop in price than oil or most other commodities, in part because the rapid supply growth has begun to influence the market. Price spikes remain possible, of course, but throughout the industry the shale discoveries are causing a shift in thinking about the long-term outlook.

Black or brown shales are a type of sedimentary rock, high in organic matter, found beneath millions of acres in at least 23 states, including New York. The rock has been known for more than a century to contain gas, but it was considered virtually worthless until a decade ago because typical wells on such sites would produce gas briefly and then die.

Now, companies are drilling long, horizontal wells and pumping in water to fracture the rock, releasing vastly more gas than could the vertical wells of old.