This controversial horizontal drilling method into a shale bed utilizes lots of nasty chemicals.

The good, the bad of natural gas

Part of the difference is that Obama’s source (the Potential Gas Committee) had included “probable”, “possible” and “speculative” resources in their report. But as Nelder notes, “By the same logic, you can claim to be a multibillionaire, including all your probable, possible, and speculative resources.”

“We have a supply of natural gas that can last America nearly 100 years.” — Barack Obama

“We might have a 100-year supply of gas, or we might have an 11-year supply.” — Chris Nelder, energy analyst.

Part of the difference is that Obama’s source (the Potential Gas Committee) had included “probable”, “possible” and “speculative” resources in their report. But as Nelder notes, “By the same logic, you can claim to be a multibillionaire, including all your probable, possible, and speculative resources.”

Obama’s fantasy world is mostly based on the recent boom in shale gas production in various areas of the U.S. This controversial method, which utilizes horizontal drilling and lots of nasty chemicals, has helped to stave off the decline of conventional gas production in America.

So much so, that total natural gas production is now up 16 per cent from what it was in 2005.

However, some of the main formations (such as the Barnett Shale in Texas and the Haynesville Shale in Louisiana) have already started to decline after just a few short years.

The current rock-bottom price of natural gas would seem to support the contention that North America is sitting on a gold mine.

However, there are at least two mitigating factors.

One is that we have just come through a very mild winter (the third warmest for Canada and the fourth warmest for the U.S.), so not nearly as much natural gas was used for heating.

The second factor relates to drilling leases south of the border.

Companies down there are not showing any profit when they produce natural gas priced at the current US$2 per thousand cubic feet.

In fact, many producers need $4 or $6 or $8 gas prices to eke out a decent profit. But in order to retain their leases, they have to maintain active production.

Thus, there is the further downward pressure on prices.

Thankfully, our provincial governments north of the border don’t stipulate these kind of archaic rules.

Companies operating here can at least refer to the laws of supply and demand when they decide whether or not to put natural gas on the market.

There is another important difference when it comes to shale gas production in Canada versus the U.S.

The fall in production over a well’s first year is much flatter north of the border. Whereas the first year decline rates in the U.S. can be as high as 80 per cent or 90 per cent, it is closer to 50 per cent in the Montney and Horn River formations in B.C. That makes for much better economics.

But if our shale gas resources have inherently better economics, we can’t be so sure about the environmental effects.

There are the potential hazards associated with the toxic fracking fluids (which I’ve talked about in other columns).

And it is now starting to come to light that shale gas may not be much cleaner than dirty old coal.

The burning of shale gas is much cleaner than the burning of coal.

However, the danger occurs when so-called “fugitive emissions” of unburnt gas escape into the atmosphere. The fracking fluid absorbs methane (the main constituent of natural gas, and also a greenhouse gas that is 25 times more effective than CO2), which is then potentially released when the fluid is brought back to the surface.

The technology exists to recover the fugitive methane, but it remains to be seen whether it is economically feasible . . . especially with natural gas prices at $2.

T. Boone Pickens, the Texas billionaire has promoted the idea of switching over America’s fleet of heavy trucks and commercial vehicles to natural gas.

However, given all of the problems mentioned above, it seems that his vision has no more validity than President Obama’s science fiction scenario.

Evan Bedford is a local environmentalist. Direct comments, questions and suggestions to wyddfa23@telus.net. Visit the Energy and Ecology website at www.evanbedford.com

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