The next big thing? It’s already here
The impact is staggering.
The combination of hydraulic fracturing (“fracking”) and horizontal drilling has led to a revolution — an energy revolution — the likes of which the world has never before seen.
We’re talking about recovering oil and natural gas from massive shale deposits — energy sources thought inaccessible barely a decade ago.
Ken Cohen, a spokesman for Exxon Mobil, tells The Wall Street Journal, “We are not dealing with an era of scarcity. We are dealing with abundance.”
By 2015, Cohen said, energy companies will tap more oil in North America from shale alone than the total output of all members of the Organization of Petroleum Exporting Countries (OPEC), except Saudi Arabia.
And by 2040, after decades of all-out production, two-thirds of the earth’s crude deposits will still remain!
In the meantime, hydrocarbon demand will soar, with relatively clean natural gas making the biggest gains, followed by oil. According to the Journal, coal usage will drop sharply. Nuclear energy will increase, largely overseas, and solar and hydroelectric power will make modest gains.
By 2040, oil and natural gas will meet 60 percent of the world’s energy needs. And as the U.S. approaches energy independence, oil and gas will be exported — a mind-boggling prospect just a few years ago.
There seem to be no limits. The technology is now being used to squeeze more oil out of old fields. Fracking and horizontal drilling have, for example, rejuvenated the huge Permian Basin in west Texas, where production peaked in the 1970s.
The energy boom isn’t limited to the U.S. Shale discoveries have spurred activity in the U.K. and Poland. Mexico, with massive reserves, has opened exploration to the outside world. And Israel, with offshore deposits in the Mediterranean, is becoming a major player in natural gas.
Then there are the fallout benefits, which are equally impressive. Here are a few examples.
South Korea, the leader in liquefied gas transport, has built over 100 supertankers since 2009.
Germany’s BASF, the world’s largest chemical producer, announced plans to double its investment in U.S. plants and, with the prospect of cheap energy, earmarked $4 billion for capital spending here through 2017.
A Brazilian combine is seeking permits to build a multi-billion-dollar complex in West Virginia to convert shale ethane to ethylene, a plastics intermediate. A Dutch refiner plans a similar project in Pennsylvania.
Coattail industries are flourishing — sand from over 100 mines in Wisconsin for fracking, fiber-optic sensors for mapping deposits, all manner of drilling equipment, environmentally safe biocides and lubricants, software for monitoring production. The list goes on and on.
Unfortunately, there is a downside to all of this. Fracking has led to a host of environmental problems affecting air quality and groundwater. The problems are real, but correctable. States are tightening regulations, and already we’re seeing progress.
Meanwhile, the energy revolution rolls on. And electricity becomes cheaper. And fuel supplies stabilize. And we become less dependent on the violent Middle East.
The biggest benefit may be the time this buys us to develop cheap renewable energy — affordable biofuels and solar and wind power on a large scale. That’s the real endgame.