President Barack Obama
As the U.S. Congress begins an investigation to explore the environmental impact and risks associated with hydraulic fracturing – or “fracking” – of shale gas formations, growing concerns that the administration will put some sort of moratorium on shale gas drilling.
Will President Obama side with Waxman and call for a drilling ban for natural gas? Where would that leave the U.S. or for that matter, the opportunity to use natural gas to reduce carbon emissions and reduce U.S. dependence on foreign oil supplied by countries that are basically enemies of the U.S. The stakes here are huge, and given the falling approval ratings of Obama how can the president afford to risk such a great opportunity. The one thing we know for sure is that going back to the way things use to be done is not sustainable. In the case of the U.S. they must find a practical way to reduce their dependence on foreign oil from states that hate them, and they – like every country – also needs near immediate and practical means for reducing carbon emission through proven resources. The massive amount of natural gas that has been unlocked from shale resources in North America provides this solution.
However, many have raised concerns that Obama may just place a all out ban on shale gas while the congressional committee conducts there investigation or puts regulation into place that will make the drilling process for shale gas economically unfeasible. In his article, Obama’s Determined to Derail Nat Gas, Real Money Columnist, Jim Cramer, states:
The single biggest detriment to natural gas as a bridge fuel remains the president of the United States, and the only question I have is whether he will put a moratorium on further drilling until the EPA can launch a multiyear study of the hazards of natural gas drilling to the nation’s water supply. That will allow nuclear and clean coal to catch up to the fuel’s use and keep the focus on anti-carbons or sequestration.
I have never seen anything like this. This president is determined to frustrate natural gas.
It is very important to point out that the U.S. Congressional investigation is based on a few isolated incidents of concern – see HRN “U.S. Congress to investigate shale gas “fracking” process”. Calmer heads need to prevail here, and it is important to focus on the fact that technology has and will continue to improve and do so with minimal environmental impact. Successful solution always evolve and improve. Its what makes commerce work.
If Obama does ban shale gas drilling (not likely, some form of regulation is more likely which may prove to be just as disastrous for the U.S. natural gas industry and economy) the economic and geopolitical opportunities and impact are significant and far reaching.
First, the shale gas boom in North America has been made possible because of technology development in horizontal drilling and fracking. Like any technology it has been improved over a number of years, and continues to be improved. Today, the technology has reached some point of standardization whereby others are also able to incorporate it into their drilling processes and it is being exported and used in other markets. It is only a matter of another year or so when we will start to hear about massive shale gas plays being discovered in other countries providing cleaner domestic natural gas resources to those countries. HRN has discussed how these new discoveries will have significant geopolitical impact. Specifically in the EU where new supplies of natural gas within the EU will reduce the political clout that Russia uses as a tool to influence the eastern EU. A reduction in this Russian influence should not go unnoticed by the U.S.
However, it is the economic impact – or perhaps lost opportunity – that should be of greater concern to the U.S. Last year nearly $265 Billion left the U.S. economy to purchase foreign oil. This unsustainable dependence on foreign energy and massive export of capital is simply the key point behind T. Boone Pickens’ Plan. This critical problem is magnified when the price of oil increases, and all indications are that prices will appreciate over the long term. Cheap oil energy is a thing of the past. New energy sources from renewable technologies like solar, wind, geothermal etc are required. But all these sources require energy to build, and that energy comes from fossil fuels. What the U.S. and others need to consider, is using the cleanest fossil fuel available… and that is natural gas. By increasing the amount of natural gas used in the overall energy mix, and reducing oil and coal, Canada and the U.S. will reduce carbon emissions while meeting their energy needs from domestically available resources.
“Another year went by, another $265 billion siphoned out of America’s struggling economy, and we still haven’t adopted a real energy plan to reduce our dependence on foreign oil”. - T. Boone Pickens.
For the most part, T. Boone Pickens is pleased with the support that Obama has provided him and his Pickens’ Plan. According to recent quote in U.S. Today Mr. Pickens stated a press conference at the National Automobile Dealers Association meeting in Orlando “They haven’t done anything but support me”. Mr. Pickens believes the legislation he is driving to offer $65,000 tax incentives for conversion of 8 million 18-wheel long-haul trucks from diesel fuel to natural gas, has a good chance of bipartisan support in Congress. He also believes truck-st0p operators will be willing to invest $1.5 million or more per station to install natural-gas fueling equipment. But the Pickens’ Plan will not work without shale gas production.
While a ban on shale gas drilling in the U.S. would have huge negative implications for the natural gas industry there it would certainly lead to a economic boom in Canada’s natural gas industry – especially in Alberta – where drilling activity is down considerably. A U.S. ban would dramatically increase U.S. imports of natural gas and Canada is the largest exporter of natural gas to the U.S.
One of the key factors in fracking is the shale’s thickness. In areas where the formation is thick there is a greater opportunity to provide a buffer of rock that contains the cracking fluids within the formation. Fortunately, the Horn River basin enjoys a very thick shale formation that is up to 75 meters thick in parts. In addition, shale gas drilling in Canada was completed with the benefit of the more advanced technologies.
Shale gas represents a global opportunity to reduce carbon emissions and provide a bridge fuel. The industry should be supported, technology should be improved (and history dictates that it will be), and North America should move forward with using cleaner natural gas as a bridge fuel to reduce carbon emissions and become more self sustaining with meeting their energy needs. Shale gas has provided a game-changing opportunity to meet these objectives.
The Street.com: Obama’s Determined to Derail Nat Gas