NEWS: Washington Post Reports Shale Gas Revolution Powering Industrial Revolution

November 15, 2012

The front page of today's Washington Post reports that America’s shale gas revolution is powering an industrial revolution and putting people back to work. Hydraulic fracturing has transformed the nation’s energy landscape –taking us from resource scarcity to energy abundance. This newfound wealth of affordable, American natural gas supplies has helped bring manufacturing jobs back to America. 

The new boom: Shale gas fueling an American industrial revival
November 15, 2012

By Steven Mufson

The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.

Consider the rising fortunes of Ascension Parish, La.

Methanex Corp., which closed its last U.S. chemical plant in 1999, is spending more than half a billion dollars to dismantle a methanol plant in Chile and move it to the parish.

Nearby, a petrochemical company, Williams, is spending $400 million to expand an ethylene plant. And on Nov. 1, CF Industries unveiled a $2.1 billion expansion of its nitrogen fertilizer manufacturing complex, aiming to displace imports that now make up half of U.S. nitrogen fertilizer sales.

These companies all rely heavily on natural gas. And across the country, companies like them are crediting the sudden abundance of cheap natural gas for revving up their U.S. operations. Thanks to new applications of drilling technology to unlock natural gas trapped in shale rock, the nation’s output has surged and energy experts almost unanimously forecast that prices will remain low or moderate for a generation. The International Energy Agency says that by 2015, the United States will overtake Russia as the world’s biggest gas producer.

“The supply of natural gas and the price are the driving factors, and we’re swimming in natural gas down here,” said Mike Eades, president of the Ascension Economic Development Corp.

Ascension Parish falls inside the Haynesville geological region — one of the nation’s big shale gas prospects.

“It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago,” U.S. Steel Chairman John Surma said in a speech this year.

Industrial companies are betting that the surge in the domestic production of natural gas is much more than a blip. Cheap and plentiful supplies of natural gas are flooding the U.S. market, and prices in the United States are as low as a quarter of what they are in Europe or Asia.

“For the foreseeable future, thanks to the recovery of vast U.S. underground gas deposits of shale, natural gas is likely to remain 50 to 70 percent cheaper in the U.S. than in Europe and Japan,” said a recent report by the Boston Consulting Group.

“That will translate into significantly lower costs for electricity generation, for fuel used to power industrial plants and for feedstock used across many industrial processes,” said Justin Rose, a BCG principal and co-author of the report.

Manufacturers have plans to invest as much as $80 billion in U.S. chemical, fertilizer, steel, aluminum, tire and plastics plants, according to Dow Chemical. And the main reason, said George J. Biltz, Dow Chemical’s vice president for energy and climate change, “comes back to the massive competitive advantage the United States has with natural gas today.”

A changing conversation

The shale boom has not just changed corporate plans. It has also altered the way we think and talk about oil and gas.

For decades, most of the conversation about U.S. oil and natural gas has revolved around the idea of scarcity, declining output and rising prices. The seminal work by M. King Hubbert — the Shell geologist who accurately predicted in the 1950s that U.S. oil production would peak in 1971 — defined this framework.

Natural gas supplies traditionally have been seen as limited and gas prices have been volatile — burning utilities that bet too heavily on gas-fired power plants in the 1990s.

But past assumptions have been challenged by new technologies — and new uses of old technology. Years of pioneering work on drilling techniques by an independent oilman, George Mitchell, paid off. Despite concerns about water pollution risks linked to hydraulic fracturing of shale, drilling and production have soared.

The United States is rife with these shale plays, some rich in natural gas and others rich in oil. The United States is still producing less oil than in 1971, and prices are high. But the country is producing more oil than in any year since 1994, and production is rising. …

Read the full article online HERE.

 

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