Shale Gas Deposits

By JAD MOUAWAD

Thanks to new drilling technologies that are unlocking substantial amounts of natural gas from shale rocks, the nation’s estimated gas reserves have surged by 35 percent, according to a study due for release on Thursday.

The report by the Potential Gas Committee, the authority on gas supplies, shows the United States holds far larger reserves than previously thought. The jump is the largest increase in the 44-year history of reports from the committee.

The finding raises the possibility that natural gas could emerge as a critical transition fuel that could help to battle global warming. For a given amount of heat energy, burning gas produces about half as much carbon dioxide, the main cause of global warming, as burning coal.

Estimated natural gas reserves rose to 2,074 trillion cubic feet in 2008, from 1,532 trillion cubic feet in 2006, when the last report was issued. This includes the proven reserves compiled by the Energy Department of 237 trillion cubic feet, as well as the sum of the nation’s probable, possible and speculative reserves.

The new estimates show “an exceptionally strong and optimistic gas supply picture for the nation,” according to a summary of the report, which is issued every two years by a group of academics and industry experts that is supported by the Colorado School of Mines.

Much of that jump comes from estimated gas in shale rocks, which drilling companies have only recently learned how to tap. They have developed a technique called hydraulic fracturing, in which water is injected at high pressure into wells to shatter rocks deep underground, helping to release trapped gas. The method, perfected in recent years in places like Texas and Pennsylvania, has set off a boom in new drilling, but is coming under increasing regulatory and environmental scrutiny. Shale gas accounts for 616 trillion cubic feet of reserves, or a third of the total, according to the report.

“New and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources — especially ‘unconventional’ gas — which, not that long ago, were considered impractical or uneconomical to pursue,” said John B. Curtis, a geology professor at the Colorado School of Mines and the report’s principal author.

The huge increase in estimated gas supplies comes just as concerns about energy security and climate change are prompting the most profound shift in energy policy since the oil shocks of the 1970s.

The Obama administration has taken a cautious approach to conventional energy resources, freezing leases to develop oil shale reserves and carefully reviewing future offshore leases for oil and gas.

Shale gas currently provides a small fraction of the nation’s total gas production. But many experts believe the rising supply of natural gas means it can substitute for other fossil fuels.

With the output of conventional gas forecast to decline, the Energy Department expects that shale production will rise substantially to meet higher demand, as will imports.

Natural gas accounts for about a quarter of the nation’s total energy use, and 22 percent of electrical production. Coal accounts for about half of the nation’s power generation, while oil dominates transportation fuels. While gas generates less carbon dioxide than oil or coal, it still accounted for about 20 percent of domestic energy-related emissions in 2006.

The Energy Department estimates that demand for natural gas will rise by 13 percent by 2030. In the power sector, utilities have been switching to natural gas from coal, but further increases in the use of gas will most likely depend on whether Congress puts a price on carbon dioxide emissions, as it is considering. That would favor cleaner fuels like gas.

In recent years, industry executives and analysts have been surprised by the discovery and successful development of new supplies of shale gas, like the Barnett Shale in the area around Fort Worth.

But higher drilling costs and the extensive use of water to fracture shale rocks have raised concerns about the long-run commercial potential of these supplies. Some environmental groups fear that hydraulic fracturing will pollute drinking water, and Congress is considering tighter regulation of the practice.

Mr. Caruso said that gas prices needed to be around $4 to $6 per thousand cubic feet to justify developing shale beds. They have fallen below that level at times in recent months, though gas settled Wednesday at $4.25.

Even conservative estimates suggest the Louisiana discovery — known as the Haynesville Shale, for the dense rock formation that contains the gas — could hold some 200 trillion cubic feet of natural gas. That’s the equivalent of 33 billion barrels of oil, or 18 years’ worth of current U.S. oil production. Some industry executives think the field could be several times that size.

Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.

The discoveries have spurred energy experts and policy makers to start looking to natural gas in their pursuit of a wide range of goals: easing the impact of energy-price spikes, reducing dependence on foreign oil, lowering “greenhouse gas” emissions and speeding the transition to renewable fuels.

“The availability of natural-gas generation enables us to be much more courageous in charting a transition to a low-carbon economy,” says Jason Grumet, executive director of the National Commission on Energy Policy, who was a senior adviser to President Obama during the campaign.

Just three years ago, the conventional wisdom was that U.S. natural-gas production was facing permanent decline. U.S. policy makers were resigned to the idea that the country would have to rely more on foreign imports to supply the fuel that heats half of American homes, generates one-fifth of the nation’s electricity, and is a key component in plastics, chemicals and fertilizer.

But new technologies and a drilling boom have helped production rise 11% in the past two years. Now there’s a glut, which has driven prices down to a six-year low and prompted producers to temporarily cut back drilling and search for new demand.

The natural-gas discoveries come as oil has become harder to find and more expensive to produce. The U.S. is increasingly reliant on supplies imported from the Middle East and other politically unstable regions. In contrast, 98% of the natural gas consumed in the U.S. is produced in North America.

Market forces are already helping natural gas make inroads against coal and oil. Gas is now cheaper than coal in many parts of the country, leading utilities to burn more gas. Of the 372 power plants expected to be built in the U.S. over the next three years, 206 will be fired by gas and just 31 by coal, according to the Energy Information Administration.

Natural gas is gaining market share far more slowly in transportation. Earlier this year, AT&T announced it would convert up to 20% of its truck fleet to run on natural gas, largely because it has been cheaper than gasoline in recent years. Cities including New York, Los Angeles and Atlanta have converted part of their bus fleets to run on natural gas, for air-quality reasons.

Regardless of how lawyers and judges ultimately define the scope of the ruling, Elton said it holds lessons for Interior as the agency moves forward with amendments to the current plan, as required, and a proposed new five-year plan that could open more offshore acreage to development.

Elton said it shows that the department needs to thoroughly investigate all development scenarios and not make hurried assumptions based on the work of the previous administration.

“We too often end up doing things in a rushed way without recognising the fact that the paradigm is likely to be challenged,” he said.

“And if we don’t do our upfront work we allow a group of people wearing black robes or a person wearing a black robe to set policy.”

Though industry officials and some Republicans in the US Congress have called for a quick approval of further offshore development, Elton said the latest ruling should convince people that rushing to formulate land-use policies leave them open to challenge in court.

“The lesson is clear that if you don’t inject a certain amount of pragmatism, if you don’t have a deliberate approach you open the door for somebody else,” he said. “If you work carefully beforehand you can get to a policy position that might be sustained.”

By IAN TALLEY WSJ

WASHINGTON — A federal appeals court Friday threw out some of the U.S. government’s largest leasing programs for offshore oil and gas exploration, potentially halting development in the Gulf of Mexico and Alaska.

The Washington federal court of appeals told the Department of Interior in its ruling that the agency needed to better consider the environmental impact of oil exploration in those regions.

An assessment by the Interior Department conducted during the administration of President George W. Bush on the environmental sensitivity of some areas was “irrational,” the three-judge panel said. The agency must first reconsider its assessment, the court ruled, before moving ahead with its 2007-2012 lease sale program, especially in the Beaufort, Bering, and Chukchi seas off Alaska.

It wasn’t entirely clear whether the decision applies to other areas of the same expanded offshore drilling program, including tracks in the Gulf of Mexico and along the Atlantic Coast.

Attorneys for the environmentalists and the industry said they think it would cancel the entire program, not just the Arctic region. Officials at the Interior Department could not immediately answer the question.

The appeals court ordered the Interior Department, now run by President Barack Obama’s appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead with the program.

This ruling is a huge potential hammer for those of us who want to protect the environment from new offshore drilling.

Jane Kay, SF Chronicle Environment Writer

Surfers splashed with organic chocolate “oil spills” and environmentalists dressed as jellyfish and furry polar bears gathered in San Francisco on Thursday gave a theatrical message to Interior Secretary Ken Salazar: Don’t start new drilling off California’s coast.

In the fourth and last stop on Salazar’s national tour to hear public comment on his agency’s proposal to open up more than 1 billion acres for petroleum development off the nation’s coasts, he heard a resounding “no.”

A panel of congressional delegates, along with Gov. Arnold Schwarzenegger’s Resources Secretary Mike Crisman, coastal county political leaders and citizens told Salazar they didn’t want the risk of spills and industrial activity for a short-term supply of crude oil.

Speaking for the Western States Petroleum Association, the trade group for the oil companies, Joe Sparano said petroleum development would boost California’s economy by creating jobs.

But U.S. Sen. Barbara Boxer said California’s economy is based on tourism, fishing and recreational activities that are tied to a clean, thriving coast.

“Our state is saying to you clearly, ‘No,’ ” the Democrat told Salazar to a standing ovation from hundreds of people at the UCSF Mission Bay campus conference center.

Speakers said the state is developing solar and wind power, green jobs and energy efficiency, with a goal of reaching 20 percent from renewable sources by next year.

The state has leveled off its per-capita energy use as consumption has grown elsewhere in the nation, they said.

“It’s not what we’re against. It’s what we’re for. We’ve done it, we are doing it, and we’re going to go vastly forward,” said Assemblyman Wesley Chesbro, D-Arcata, whose district in Mendocino and Humboldt counties is part of the Interior Department’s proposal.

Salazar has not committed to which regions will be put forward for further study for leasing. But he promised that the administration will pay attention to the local communities. He expects a decision by the end of the year.

Jen Phillips – Mother Jones

At a University of California San Francisco campus this afternoon, environmentalists made quite the display. People dressed as polar bears (at least 5), sea turtles (4), dolphins (2), jellyfish/coral (2), a kangaroo, and a seal. Two surfer girls in bikini tops walked past, leaving a trail of what looked like crude oil on the cement. (“It’s actually chocolate,” one confided.) The polar bears and surfer girls mingled in front of the university’s conference center in hopes of influencing Deparment of the Interior Secretary Ken Salazar, who was in San Francisco to hear public comment on offshore drilling plans. While Salazar criticized Bush’s plan to drill “the entire Eastern seaboard, portions of offshore California and the far eastern Gulf of Mexico with almost no consultation from states, industry or community input,” he and Obama are considering expanding existing offshore operations.

At the podium, Salazar received emotional suggestions and comments from the hundreds who packed the hall. Salazar often asked follow-up questions, sometimes uncomfortable ones. Scott Johnson, from CalWind, asked Salazar to consider offshore wind projects, but when asked how much electricity on-shore turbines in California currently generated, Johnson couldn’t quote a figure. The goal, Salazar told the crowd, wasn’t to favor one form of energy over another. “We need to have a comprehensive energy plan going forward,” Salazar said. “We recognize that some of the energy sources we have are necessary to keep the nation going economically.” Oil and gas, Salazar said, “have never been off the table” and warned the crowd that “we may not be able to do what’s popular.”

As the hall cleared for lunch, polar bears and politicians wandered out into the hot sunshine. In front of the Peasant Pie shop, non-profits and activist organizations tended booths and a small stage to further voice their concerns, not all drilling-related. Shay Wolfe, a biologist with the Center for Biological Diversity, was in a polar bear suit, manning the tables. “We’ve been here since 7:30,” she said. Her organization was concerned with offshore drilling, yes, but not perhaps as much as last-minute Bush regulations that “took away the scientific review requirement under the Endangered Species Act.” Wolfe said Salazar has until May 9 to revoke those regulations. A San Francisco Baykeeper representative said her group was there to show support for the other environmental groups, but also yes, to say no to drilling. None of the groups brought up economic issues.

As the rally continued, Center for Biological Diversity attorney Miyoko Sakashita and her infant son Kai danced to the music in matching furry white polar bear suits (Pictured – AP Photo/Eric Risberg). “I think people can relate to polar bears,” said Wolfe. “We hope he [Salazar] got our message… we sent polar bears to greet him.”

By MARY PEMBERTON

ANCHORAGE, Alaska — Interior Secretary Ken Salazar heard a wide range of opinion Tuesday during a hearing on whether the government should allow oil and gas drilling in federal waters off Alaska.

“I understand the passion that I feel in this room today,” Salazar told a standing-room only crowd at the Dena’ina Convention Center. “I hear what you are telling us about this issue.”

Salazar opened the daylong hearing with his prescription for a new national energy plan. He quickly got down to what many Alaskans in this energy-producing state wanted to hear – the need for America to produce more of its own oil and natural gas.

“Development will be part of our equation,” Salazar told the crowd, many of whom wore “OCS Yes!” buttons. “Development has to be part of a broad energy portfolio.”

Gov. Sarah Palin emphasized Alaska’s rich resources while also underscoring the need for “wise and responsible” development of conventional fuels when testifying.

Palin warned against the country’s dependence on foreign oil coming from “dangerous regimes” that she said don’t like Americans. With production falling on the North Slope, the amount of oil carried in the trans-Alaska pipeline could fall below carrying capacity in the next decade, the governor said.

“Alaska has decades of safely developing our oil and gas,” Palin said. “There are solutions here in Alaska to America’s energy challenges.”

Sens. Lisa Murkowski, R-Alaska, and Mark Begich, D-Alaska, sent Salazar a similar message: Alaska knows how to drill for oil and gas in an environmentally responsible way.

Rep. Don Young, R-Alaska, said Alaska will be left out if it doesn’t act now, especially with China and Russia already staking claims to the North Pole.

“My interest in this is jobs,” Young said.

Industry and labor representatives said drilling needs to get started now to help end the nation’s dependence on foreign oil, but commercial fishermen cautioned Salazar about the potential for an oil spill disaster. Some Alaska Natives said offshore drilling threatens their existence.

“You need water to live. If you contaminate the ocean and the water how are we going to live?” Marilyn Savage of Fort Yukon asked Salazar. “We don’t want to die.”

But even in the Native community, there was a divergence of opinion.

Richard Glenn of Barrow, vice president of the Arctic Slope Regional Corp., told Salazar the issue “is testing the fiber of each of our communities.” But, he said, the North Slope economy is dependent on oil development. It is what has built the region’s schools, firehouses and health clinics, he said.

“We believe drilling exploration … can be done in a way that is safe,” he said.

Alan Parks, a commercial fisherman from Homer, told Salazar that offshore drilling “needs to be taken off the table.” He said in 1989 he was preparing to go herring fishing when the Exxon Valdez oil spill occurred in Prince William Sound. He thought the oil would be cleaned up and things quickly would return to normal.

“I haven’t been herring fishing in Prince William Sound since then,” Parks said.

Pat Fallon, a member of a local labor union, said drilling for oil and gas can be done in a safe and responsible way.

WHAT: Activists bused in from around the State will hold a protest against the Minerals Management Service’s (MMS) proposed five-year plan for oil and gas development on the Outer Continental Shelf (OCS). Demonstrators will be making speeches, waving signs, speaking at the hearing to tell the MMS and public how the increase in offshore oil drilling and this proposed plan could critically impact some of the world’s most pristine marine ecosystems and lead to the destruction of important habitats that are home to a diversity of wildlife.

WHO: Join Surfrider Foundation activists, members, volunteers from around California, Oregon and Washington, surfers, beach enthusiasts, and local, regional and national elected officials

WHEN: Thursday, April 16, 2009
Doors will open at 8:00 AM. Hearing begins at 9:00 AM and will conclude by 8:00 PM at Robertson Auditorium

You are invited to join Surfrider Foundation and its supporters for a noontime rally and demonstration that will feature speeches from various elected officials and activists, along with live music.

Mission Bay Conference Center at UCSF
1675 Owens Street
San Francisco, CA 94158
Phone: 866.431.UCSF

Directions from the North Bay/Golden Gate Bridge:

• After crossing the Golden Gate Bridge, drive east on 101 (Doyle Drive) towards downtown.
• Exit at Marina Boulevard and follow Marina Boulevard past Fort Mason.
• Turn left onto Bay Street.
• Turn right onto the Embarcadero.
• After passing under the Bay Bridge, the Embarcadero will become King Street.
• Turn left onto 3rd Street just past AT&T Baseball Park.
• Cross 3rd street (Lefty O’Doul Bridge) and continue south on 3rd Street.
• Turn right on 16th Street.
• Turn right onto Owens Street.
• Turn right into Parking Garage.

NEW ORLEANS — U.S. Interior Secretary Ken Salazar on Wednesday said the Obama administration is not “at war” with the oil and gas industry.

“Some have said we are at war with the oil and gas industry … I would beg to differ,” Salazar told an audience of about 100 people Wednesday morning at Tulane University.

Later, with pro-oil exploration Sen. Mary Landrieu, D-La., standing politely at his side, Salazar later acknowledged energy industry uproar over a 5-year plan for $31 billion in administration-proposed taxes.

“It’s a hot issue,” Salazar said. “We will continue to look at it.”

The proposed taxes and a longstanding ban on offshore oil exploration bubbled up during Salazar’s visit to New Orleans, the second of four coastal cities on his fact-finding tour.

In New Orleans, pro-energy advocates and environmental activists from across the Gulf Coast focused on voicing support — or opposition — to lifting the federal ban on offshore drilling.

“All areas of the OCS should be open without delays for oil and natural gas development,” Sara Banaszak, an economist for the American Petroleum Institute, representing 400 oil and gas companies. “This would mean more jobs, more revenues for local, state and federal governments and greater energy security.”

Paula Vassey, a community activist in Gautier, Miss., opposed ending the offshore drilling ban.

“Our cancer rates are among the highest in the country and the oil industry is one of the contributors,” Vassey said.

Kent Satterlee of Shell Oil said: “We have the technology. We have the expertise. The OCS can be explored and developed safely and responsibly.”