Wednesday, January 25, 2012

State of the Union Supports Shale Gas

As a longtime follower of everything shale gas related I was quite pleased to hear our president come out in support of shale gas development last night, and the reasons are clear. Natural gas production from the Marcellus, Utica, Barnett, Eagle Ford, Woodford, Fayetteville shale plays, and others have drastically impacted us all. The graph below makes it obvious that without shale gas development coming along at a time when we were facing steep declines in natural gas production from other more"conventional" sources, we would all be paying more for energy. Shale gas development kicked in at a very good time indeed.

Source: U.S. Energy Information Administration |
Annual Energy Outlook 2012 Early Release Overview

President Obama also sited that "Experts believe shale resource development will support more than 600,000 jobs by the end of the decade." In a time of high unemployment and threats of higher energy prices and tighter supplies, shale gas development, along with shale oil development, could simply not be ignored. 

And acknowledging the controversy over fracking and environmental concerns the president had this to say, "America will develop this resource without putting the health and safety of our citizens at risk."  

So there we have. We absolutely must find ways to reduce risk and development this "shale resource gift" safely. I believe that it can be done, and that it will be done. There will always be some risk, but just like there is some element of risk in all that we do, from driving down the highway, to boarding an airplane, or piloting an oil tanker, this is a risk that we will mitigate and accept.

I will take some exception with the president's  statement that

"The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. And, by the way, it was public research dollars over the course of 30 years that helped develop the technology to extract all of this gas out of shale rock, reminding us that government support is critical in helping business in getting new ideas off the ground." 

While I have read that government research did indeed "help" in some significant ways (see the investigation sited at the Breakthrough Institute), not giving a nod to George Mitchell and the continued great scientific work and investment, all done in the private sector,  gives too much credit to the government in my opinion. More information here, Oil And Gas Investor