Report: World Gains From US Natural Gas Abundance

The development of new drilling operations in shale rock has led to a dramatic increase in U.S. natural gas reserves. While there are some environmental concerns about the practice of fracturing rock deep underground to release gas, drilling operations have expanded from Texas to Pennsylvania, keeping gas prices low as demand increases. A new study says the U.S. natural gas boom also may help ease energy problems in other parts of the world.

Just five or six years ago, U.S. demand for natural gas was outpacing supply and countries with large reserves were developing plans to use special container ships to export gas to the United States.

Russia's Gazprom was planning to bring liquified natural gas to ports on the U.S. east coast, and Qatar had similar plans for a terminal on the Texas Gulf of Mexico coast.

Domestic production surges

But a report from the James Baker Institute at Rice University in Houston, called “Shale Gas and U.S. National Security,” indicates the United States no longer needs to bring gas from far away.

The Baker Institute's Ken Medlock, who along with Amy Myers Jaffe and Peter Hartley, authored the report, spoke to VOA by phone.

“There was just a really strong push to bring liquified natural gas to the United States, and so what basically has happened with growth in domestic production is that all that expectation has been turned upside down,” said Medlock.

Easing global demand

Medlock said this not only helps the U.S. economy and expands the job market in the energy sector, it also helps other countries in need of natural gas through what economists call displacement. The gas that would have been shipped to the United States, he said, can now go elsewhere on the world market.

“By displacement, what we have done in this country is push LNG [Liquefied Natural Gas] so that it can actually find a home in Europe and Asia.”

This effect has been especially important for Europe, where reliance on natural gas from Russia had become a strategic liability.

In 2006, Russia cut off gas delivery to Ukraine over a price hike dispute, and many neighboring countries that once were under the dominance of the Soviet Union, notably Poland, have been seeking ways of developing their own shale gas. Some have come to Texas to learn more about U.S. drilling operations.

Possible natural-gas boom

Medlock said fracturing shale deep underground, a process called fracking, could lead to a natural-gas boom in several other countries.

“You do see a lot of activity on the shale front, not only in Poland, but in other European countries as well," said Medlock. "There is shale all over the place. You have to remember what shale is, it is a source rock, so anywhere there has been conventional gas production, historically there is a shale resource located in that region.”

Medlock said a major increase in natural gas supplies also helps in the effort to contain Iran and counter its ambitions to develop nuclear weapons, since leaders in Teheran will be less able to use their country's abundant gas reserves as an enticement.

The U.S. expansion of natural gas could be blunted in the years ahead if environmental studies show significant harm from the fracking practice. There have been numerous reports of contaminated water and other problems in areas where energy companies have set up drilling operations.

Determining environmental impact

Medlock says there is little evidence, however, the process itself has caused the problems, and a study being conducted by the U.S. Environmental Protection Agency likely will identify the cause of the problems that have occurred. Medlock also notes that many environmental activists favor expanded use of natural gas, even if only as a bridge to new, cleaner fuels of the future, because it is a much cleaner-burning fuel than coal or oil.

He said many coal-fired electrical power plants are likely to close down in the years ahead because they will not be able to comply with new government pollution restrictions, making way for more use of natural gas.

“To the extent that that happens, you are going to see a boost in gas demand, and quite frankly if you are moving from coal to gas, you are reducing CO-2 emissions dramatically,” said Medlock.

The EPA study on fracking is expected to be completed by sometime next year and a separate study being done by the University of Texas is expected within a few months.