By Dave Trecker
It’s hard to overstate the importance of the energy revolution. The shale gas bonanza in this country has been called the most important happening of the 21st century.
John Deutch, an MIT professor and former Cabinet member in the Clinton administration, wrote last year that it would “transform the world.”
Now, in a detailed new book, “Comeback,” Charles Morris makes the case that shale gas from “fracking” will trigger an unprecedented economic boom. It will, he says, revive old industries and lead to explosive growth in new ones.
It will do this by providing cheap energy. Morris posits cheap natural gas will provide the low-cost power needed to revive steel and aluminum manufacture in the U.S. and boost production of bulk chemicals. That, in turn, will stimulate downstream production of a whole range of high-value goods from appliances to computers, from plastics to synthetic fibers.
And here’s the best part. The manufacturing renaissance will occur here, in the United States not in India or China or Dubai. We have the cheap natural gas right here, and we know how to recover it.
Growth in the energy sector is already happening. Fracking alone has created 1.7 million new jobs. Morris says this will jump to 3 million by 2020. Then there are the downstream jobs in pipelines, storage, liquification and transport. Morris sees new capital spending of nearly $200 billion by 2020.
Shale gas will also create jobs in energy-intensive industries bulk chemicals, rubber products, paper, fabricated metals, as well as steel and aluminum. The American Chemical Council estimates jobs in these sectors will jump by 1.2 million over the next three years.
In the chemical industry alone, economists list 97 new projects taking shape. In Texas, Louisiana and Pennsylvania, chemical plants are being built next to gas fields to draw off ethane for production of plastic intermediates.
And there’s more. Truck engines powered by natural gas, not diesel, are coming on the market. And a host of coal-fired power plants are converting to cleaner natural gas.
All of this because of a new technique, barely 20 years old, for recovering gas once thought to be unrecoverable.
Fracking works like this. Wells are drilled vertically and then gradually curved to insert horizontally into shale formations. The horizontal drilling can continue for miles. (In Texas, lateral drilling extends under the Dallas-Ft. Worth Airport and under the Texas Christian University football stadium.)
When drilling is completed and casings emplaced, charges are triggered to perforate the casing and surrounding rock. Water with suspended sand and a small amount of chemicals is then pumped at high pressure to fracture the shale, prop it open and release the trapped gas, which rises through the pipe and is collected at the surface.
Shale gas was produced commercially for the first time in 1998. Today there are eight major fields under development in the U.S. How much natural gas do we have? In his 2012 State of the Union address, President Barack Obama said, “We have a supply that can last America for nearly one hundred years.” That may be optimistic. But even with rapid drawdown and no new discoveries, reserves should last at least 20 years. Best guess is somewhere in between. Perhaps 40-50 years of cheap energy.
That’s a huge upside. But there is also a downside.
Methane, the main component of natural gas, leaks from some wells. That has led to groundwater contamination and fouling of drinking water. And there is concern that methane, which has a far greater “greenhouse” effect than carbon dioxide, could worsen global warming.
The problem is real, but it’s solvable. Fortunately, methane leaks are not widespread. And a recent study by Duke University shows they don’t come from fracking. They come from poorly sealed wells, from “casing and cementing problems.” In other words, methane leaks can be prevented.
The industry is taking this seriously. Recent monitoring shows production companies are taking steps to contain methane, as well as flaring vented gas and cleaning up recovered wastewater. There really is no choice. Containment and cleanup are essential if fracking is to succeed. And if fracking succeeds, everyone benefits.
Even California is becoming a believer. Our greenest state just rejected a bill to ban fracking. It turns out California sits atop the massive Monterrey Shale formation. University of Southern California academics estimated fracking could deliver half a million new jobs and add $25 billion in tax revenues by 2020.
It would take a lot of windmills and solar panels to top that.