US News & World Report – An Energy Lifeline: Fracking a Game-Changer for U.S. Economy

The natural gas boom in the United States could change the global energy picture — and life for the people of southwestern Pennsylvania in particular

By Meg Handley

  • MSC president Kathryn Klaber: Natural gas is “a world-class resource”

WASHINGTON COUNTY, PA.—Driving along the narrow roads of southwest Pennsylvania through the hamlet of West Middletown, you can’t miss the legacy the declining coal industry has left behind. Barbed, leafless tree branches reach across the road as the wild landscape slowly reclaims the town’s once majestic homes.

But head just a few miles down the road from the crumbling town and a different picture of the area emerges. Pristine new white fences cordon off lush farms; million-dollar state-of-the-art barns have replaced rickety, decaying wooden ones.

Perhaps most important is the increasing number of forest-green well pads that now dot manmade gravel mounds in the Pennsylvanian foothills, an emblem of the booming natural-gas industry that has sprouted from the dying embers of the coal industry in just a few short years.

As much as the discovery of massive stores of natural gas in the Marcellus Shale formation has already started transforming the state’s economy and landscape, it also has the potential to fundamentally change the nation’s role in the energy security conversation.

But the staggering amount of natural gas discovered around the country doesn’t come without cost and controversy. Although extraction of the resource has brought with it immense economic benefit and thousands of jobs, it also has riled up environmental activists and locals who’d rather not deal with the side effects of a booming industry.

Global energy demand is projected to increase almost 35 percent from 2015 to 2035, according to the U.S. Energy Information Administration, with developing nations such as China and India continuing to put pressure on the world’s energy supply. As nuclear energy has fallen out of favor after the Fukushima disaster, natural gas—previously a forgotten fuel relegated to second-class status—has become increasingly important in the equation of how to meet the world’s growing energy demands.

Today, natural gas provides about a quarter of the electricity in the United States and heats about 60 million American homes. If geologists and scientists are right about the large amount of natural gas in the United States and Canada, the energy source will likely become a much bigger part of the mix around the globe, especially since its price has dropped so drastically because of heightened production. “It’s all happened very quickly—a decade ago natural gas was considered almost a boutique fuel,” says Katie Klaber, president of the Marcellus Shale Coalition. “Now it’s a world-class resource.”

All of these new opportunities are thanks in part to the landmark discovery of geologist Bill Zagorski, the vice president of geology at Range Resources and the “Father of the Marcellus,” who in 2004 met with the same fate as many well drillers had before: a failed natural-gas well. Back then it wasn’t news that the Marcellus Formation, which covers a large swath of Pennsylvania and parts of Ohio, New York, and West Virginia, contained deposits of natural gas. “This stuff was public for 30 or 40 years [but] it was never considered to be a reliable source of gas because it was either too expensive or there were all kinds of urban myths [such as] if you touch the formation with water it’ll swell up,” Zagorski says. “There were all kinds of reasons why it was never [mined].”

But it was actually water—lots and lots of water—that turned out to be the key to unlocking the natural gas trapped in the shale. A fortuitous call with a fellow geologist working on another shale formation prompted Zagorski to try a new method on his failed well: a combination of horizontal drilling and hydraulic fracturing, or “fracking.” This time he hit the jackpot. “It just took the right combination of circumstances, technology, and timing to make these discoveries occur,” he says.

Today scientists know even more about the shale rock formation. Although the Marcellus is probably the best known, it’s actually sandwiched between two other formations, the Upper Devonian and Utica, which further magnifies the potential of the entire area. This area “seems to be a geologic overlap of all the major shale plays, so it’s almost like a triple play here. That’s what’s exciting,” Zagorski says. “I bet we haven’t even scratched the surface of 5 to 10 percent of this yet as an industry.”

The sheer magnitude of the reserves of natural gas found across the various shale plays in the United States—potentially a 100-year supply depending on consumption, according to some estimates—puts the country at a distinct advantage as a player in the global energy market. Industry leaders have gone from puzzling over ways to import natural gas and other fuel sources just a few years ago to scrambling to retrofit facilities to export the fuel to energy-hungry countries abroad. Where Congress was once discussing incentives for more ultra-deepwater drilling in the Gulf to extract more energy resources, they and industry leaders are now facing a different problem: too much natural gas, which has driven down the price to historic lows. All of this has “the potential to literally change the geopolitical construct around energy and the power shifts that result from that,” Klaber says.

The increased development of the Marcellus is expected to contribute $42.4 billion annually to Pennsylvania’s economy by 2035—up from just $7.1 billion in 2010—according to financial analytics firm IHS Global Insight, and job growth in the region has been some of the best in the nation. Landowners whose property goes for as much as $5,000 an acre have made a windfall from leasing to natural gas development companies. Still, some politicians’ plans to turn Pennsylvania into the “Texas of the natural-gas boom” don’t sit well with some environmentalists and local residents.

Since operations have ramped up in the Marcellus, there’s been no shortage of complaints about air pollution, spills, and potential contamination of drinking water. Pennsylvania has made many strides in regulations to allay some of the public’s fears, including updating well standards and hiring more staff to deal with the influx of permit applications.

But it’s really the water—about 4 million to 5 million gallons per frack job—and chemicals used in hydraulic fracturing that continues to be a sticking point among critics. Although the chemicals make up only about 0.2 percent of the fracking fluid, environmentalists continue to be concerned about the potential for the mixture to contaminate surrounding groundwater.

But it’s not so much what’s happening deep underground that worries some opponents, it’s the impact it’s having on communities in the thick of the push to dramatically increase well drilling and natural-gas production in the Marcellus. Jobs might be up and local economies booming, but there are also trucks roaring down what were once quiet, peaceful country roads. Gas companies such as Range Resources are trying to minimize the impact of drilling operations in local communities by increasing communication and buy-in from residents who are affected as well as repaving roads used frequently to transport equipment, but there’s still a human cost to the natural-gas boom. “This is the sacrifice zone,” says Terry Engelder, a Penn State geologist who’s studied the Marcellus Shale formation for decades. “You have to put up with truck traffic noise, but it’s a matter of industrialization and doing business.”

Despite the concerns, it seems as if the burgeoning natural-gas juggernaut in North America is more unstoppable than ever. Natural gas emits far fewer pollutants than coal and arguably has less stigma attached to it than nuclear. Furthermore, natural gas can more easily supplement growing reliance on renewable sources such as wind and solar energy. It’s fast becoming a question not of whether natural gas will play a larger role in the world’s energy mix, but a question of how big that role will be. “We’re clearly only getting started—we potentially have centuries worth of this resource but we’re just in the first inning of the game,” Klaber says.

Can anything derail the industry’s meteoric rise? Public perception is key, Klaber says, and if the industry doesn’t navigate those choppy waters with grace, the resulting backlash could put more obstacles in the way of drilling and natural-gas extraction. Still, with the economic shot in the arm the industry gives the local and national economies, there’s little chance development will slow anytime soon.

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