The American Petroleum Institute outlined to reporters on Wednesday what it believes are the economic benefits of shale natural gas production.
API Chief Economist John Felmy said shale natural gas has great economic potential for the energy industry. Production quadrupled from 2006-10 and shale gas production will likely comprise more than 40 percent of U.S. gas production by 2020.
API said the most significant trend in U.S. natural gas production is the rapid rise in production from shale formations, which is due in great part to technological advances such as hydraulic fracturing.
Natural gas is gas that comes from shale formations through a process called hydraulic fracturing. The process, known as "fracking," has come under fire from environmentalists as being dangerous to underground sources of drinking water.
Fracking involves injecting chemicals and sand into shale to break apart rock and release gas. Opponents say the process allows chemicals to leak into drinking water.
A study released in May by scientists at Duke University found there were no fracking chemicals in water but there was methane gas contamination caused by drilling the wells.
"As tests continue to show across the country, there are no confirmed cases of an underground source of drinking water contaminated as a result of a hydraulic fracturing operation," Felmy said.
The U.S. Department of Energy estimated in a 2009 report that natural gas supplies about 22 percent of the nation's energy.
The New York Times recently reported that critics of natural gas argue gas companies are intentionally overstating the productivity of wells and the size of reserves, citing e-mail from energy executives, market analysts and others.
Felmy said those criticisms come from unconfirmed sources. Also, given the oversight companies are under and because companies must demonstrate the size of reserves, Felmy said he found it hard to believe they would overstate well productivity and reserve size.
Amy Mall, a policy analyst at the Natural Resources Defense Council, agreed that natural gas will be an important source of energy for the United States but said it should be part of a transition to cleaner, renewable energies. Natural gas burned in power plants is cleaner than coal, she said.
Mall said there are still environmental concerns, such as the damage to animals' habitats from construction of roads, pipelines and facilities involved in natural gas production. Another issue is the effect on air and water quality and toxic waste from production.
"It is not as clean as we think our energy portfolio could be in the long term," she said.
In September, NRDC petitioned the U.S. Environmental Protection Agency to regulate toxic wastes associated with the exploration, development and production of oil and gas under the hazardous waste provisions of the Resource Conservation and Recovery Act.
The Energy Department's report stated that at the U.S. natural gas production rates for 2007, there should be enough natural gas to supply the United States for the next 90 years.
Mall said she thinks 100 years is the best-case scenario, under the current demand and current prices, which are likely to increase. But because natural gas is a finite resource, NRDC supports it having only a transitional role in moving toward renewable fuels.
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