Shale gas exports will strengthen U.S. economy
In an effort to block exports of natural gas, an assorted mix of politicians, pundits and anti-oil and gas groups is pulling out all the stops. If they succeed, they will prevent realization of the great market potential of domestically-produced natural gas, and our nation’s economy will suffer.
Rep. Edward Markey of Massachusetts says large-scale gas exports would lead to a “massive wealth transfer from working Americans to oil and gas companies.” Sen. Ron Wyden of Oregon, who is the incoming chairman of the Senate Energy and Natural Resources Committee, says we may be “trading away the enormous economic advantage of having a large, low-cost domestic natural gas supply.” And Michael Brune, executive director of the Sierra Club, says that a push to export natural gas ignores environmental problems associated with increased gas production.
All of their arguments are unsound. The United States has made astounding economic and environmental progress due to the shale-gas revolution, and more progress can be expected. Today we have large and growing reserves of cheap natural gas thanks to a combination of hydrofracing and horizontal drilling, processes that are safe and efficient and well-regulated by individual states, which have opened up enormous shale-gas reserves in more than a dozen states and turned this country from an importer of natural gas to a potential exporter.
By converting their product to liquefied natural gas, or LNG – a condensed and pressured form of the fuel – natural gas companies can ship to markets overseas in Europe and Asia, where the price of natural gas is as much as 15 times higher than it is in the United States.
America’s gas bounty is so great that the U.S. Energy Information Administration estimates there is enough of the clean-burning fuel to last more than 100 years at the current rate of consumption. What’s more, the supply is likely to surge because of the existence of huge, unexploited shale gas deposits like the Monterey shale in California and the potential for more new discoveries in the future. That means there will continue to be plenty of natural gas for households, electricity production, industrial use, transportation, and exports.
As a result of dramatically increased oil and gas production from unconventional sources like shale, more than 1.7 million new American jobs have been created so far, a number that could rise to as many as 3 million by the end of this decade, according to a study by Cambridge Energy Research Associates. The majority of those jobs are in a wide variety of manufacturing and other sectors like steelmaking that support oil and gas drilling.
But the benefits of shale gas production are not only economic they are environmental as well. Greater use of natural gas instead of coal in the United States has led to a significant drop in greenhouse-gas emissions. This is due to the fact that gas produces up to 60 percent less carbon dioxide than coal when used for electricity generation. And gas emits no soot, mercury, lead or other toxic pollutants. The recent smog crisis in China due to its heavy reliance on coal and oil for power generation is a clear example of why natural gas needs to become the global bridge fuel between the heavier carbon fuels and renewable energy sources.
America’s bright energy prospects are far from guaranteed, however. While the massive shale deposits like the Utica here in Ohio and the Marcellus in Pennsylvania, West Virginia and New York could, if fully developed, profoundly change our energy future, demand for gas has not kept pace with supply. That’s indicated by the extremely low price of gas. It will take time for demand to grow. In the meantime, many drillers are shutting in their wells and moving their drilling rigs to areas where the production of natural gas liquids and oil is more prolific.
Growing exports of LNG may push up prices somewhat, adding 3 percent to 9 percent to consumer gas bills and between 1 percent and 3 percent to electricity bills between 2015 and 2035, according to a study by the Energy Information Administration. But that’s precisely what the market needs. Higher prices are necessary if the shale-gas revolution is to continue, with all the economic benefits that it brings to our state and our nation. LNG exports will help increase economic growth, reduce the nation’s trade deficit, and create jobs.
In addition, just one LNG export terminal could create nearly $11 million in new tax revenue every year for federal, state and local governments, according to the Center for Liquefied Natural Gas. At a time when states and local communities are being forced to cut public services, total government revenue from a single export facility could exceed $25 billion over 30 years.
The shale-gas revolution has truly arrived, and its effects are being felt all over the world. Let’s not let opponents of gas exports prevent the realization of the full economic potential of shale-gas production.
Dr. Robert W. Chase is chair and professor of the Department of Petroleum Engineering and Geology at Marietta College, 215 Fifth St., Marietta.