In Obama’s Second Term, Shale Gas Production Not Likely to Slow Down
Now that the election numbers are in, it’s time to take a brief look at a key element of both the Romney and Obama energy platforms: increased domestic natural gas production. It is generally expected that the Obama administration will continue to push for more oversight and regulation of shale fracking.
The April 2012 EPA decision to reduce air emissions from fracking could well be followed by an effort to end exemptions from certain elements of the Safe Drinking Water Act. In the case of the EPA air emissions oversight, the rules were relaxed somewhat, and industry was given two years to bring activities into compliance. In the case of water regulation, the conversation may well continue to drag along slowly for some time to come. In the end, there is only so much regulation that is likely to occur at the national level. The 2005 Energy Policy Act essentially gave most regulatory responsibility to individual states, and it will probably remain there.
Regardless of the final regulatory outcome, gas production is likely to soar, especially as gas use grows in transportation, industry, and electric generation. And don’t forget the significant potential for LNG exports, as numerous license requests have already been tendered. The Marcellus area, and Pennsylvania in particular, should continue to see rapid growth. A new study from ASDReports announced today suggests that production could increase more than seven-fold from 2011 levels, from just over 1,000 billion cubic feet equivalent (bcfe) in 2011 to almost 5,000 bcfe in 2015, before finally leveling off at over 7,600 bcfe in 2020.
Just in the eastern US, the shale gas reserves are enormous. The US Geological Survey has pegged Marcellus at an estimated recoverable total of 84 trillion cubic feet (TCF). In October, it released its first estimates for the neighboring (in Ohio) or underlying (in Pennsylvania and New York) Uticashales of 38 TCF, plus 940 million barrels of unconventional oil resources and 208 million barrels of unconventional liquids. The current dominant players, such as Chesapeake, Range Resources, Talisman Energy, and Cabot Oil and Gas have locked up a good deal of the acreage, but they may be joined by others. The drilling will continue, and the conversation will go on as to how to produce domestic shale gas in the most efficiently, clean, and safe manner. The stuff is there, and it’s not going away.