Natural Gas Boom Not Worth Costs and Risks, Study Warns

Utility-funded report warns of environmental risks of 'fracking' and $700 billion cost of switching from coal to gas

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Just last month, the Massachusetts Institute of Technology portrayed gas-fired electricity as a natural “bridge” between coal and zero-carbon sources, in a highly regarded report.

But that’s not so, says new research commissioned by the American Public Power Association, a collection of 2,000 community-owned utilities trying to keep costs of a U.S. energy transition in check.

“The magnitude of the investment that would be needed … seems inconsistent with the oft-touted idea of natural gas as a temporary ‘bridge’ fuel,” said the 100-page report, “Implications of Greater Reliance on Natural Gas for Electricity Generation.”

Catherine Elder, a senior research associate at consulting firm Aspen Environmental Group, who conducted the study, analyzed the economics of shutting down all U.S. coal plants and shifting to cleaner-burning natural gas in a carbon-regulated economy.

“The primary difference between our study and MIT’s is that ours focuses primarily on the infrastructure issues” surrounding the switch, Nicholas Braden, a spokesperson for APPA, told SolveClimate.

Currently, coal powers half the nation’s electric generation. The changeover would cost roughly $1 million per megawatt, Elder claims.

“Replacing 335,000 MW of coal-fired generation thus should cost in the range of $335 billion,” the study said.

Further, it would require an additional $348 billion of new pipeline capacity — if anything close to that scale is even possible.

Elder warned that natural gas production is now at its peak of 23 trillion cubic feet a year. That’s slightly higher than the sector’s prior record in 1972 of 22 trillion cubic feet a year.

Any boost in demand seems “unwise” without expecting prices to shoot “to much higher levels,” she wrote.

Beyond the infrastructure challenge, Elder questions whether there is sufficient supply. There are only enough proven natural gas reserves “to last ten years if we continue to use what we used last year,” according to the report.

However, potential resources — known in the industry as “probable,” “possible” or “speculative,” depending on their level of uncertainty — are another story. Recent estimates say they could be large.

The MIT report, for instance, said the nation has enough to equal over 90 years’ worth at present domestic consumption rates.

But much of that is from unconventional sources, including shale gas, whose future may be threatened from coming environmental regulation.

A ‘Fracking’ Boom

With easy-to-find gas fields in decline, the industry began drilling deep under the surface in recent years to tap gas trapped in shale rock formations, sparking a sudden boom for the lucrative resource across Texas, Pennsylvania and Louisiana.

Now, millions of acres of the sedimentary rock have been located in over 20 states.

The problem, observers say, is that unlocking shale gas could produce potentially toxic effects.

The process, known as hydraulic fracturing, or “fracking,” blasts millions of gallons of water and chemicals deep into horizontal wells to fracture the rock and release gas.

“The chemicals that are added contain some amount of materials that may be toxic and residents are fearful that these chemicals might migrate and potentially contaminate drinking water supplies,” the study said.

And fracking is not a one-shot deal, Elder added. Some shale gas production may require refracturing every five years in wells that have a lifespan of 20 to 40 years.

Complaints Over Water

The APPA report suggests that uncertainties around fracking could pose hurdles for the natural gas sector, which is clearly banking on shale for its success as a bridge fuel.

A 2007 study by the National Petroleum Council, a federal advisory group representing the oil industry, called “Facing the Hard Truths About Energy” said that natural gas supply is declining with little chance of increasing production.

Two years later those projections changed dramatically.

In 2009, the Potential Gas Agency at the Colorado School of Mines and the U.S. Geological Survey reported “an unprecedented increase” in the U.S. natural gas resource base, due to a new survey of unconventional sources, which had been considered impractical to access due to technological limitations. 

About one-third is said to be found in untapped shale formations.

In 2004, EPA reviewed studies about the impacts of fracking and ruled it was safe. The 2005 Energy Policy Act exempted it from regulation under the Safe Drinking Water Act.

But as fracking has increased, so have local opposition and legislative efforts to stop it. Most recently, two blowouts triggering an unchecked release of gas at wells in Pennsylvania and West Virginia have highlighted potential environmental dangers.

In May, the Pennsylvania House of Representative passed a bill that would ban drilling near rivers, lakes and drinking water sources, and would require disclosure of chemicals. Going further, State Rep. Phyllis Mundy (D) last week introduced a bill calling for a moratorium on shale drilling in the state.

In early 2010, in response to growing concerns, EPA announced that it would conduct a $1.9 million, two-year study into the potential adverse impacts of fracking.

“The study will be conducted through a transparent, peer-reviewed process, with significant stakeholder input,” EPA declared.

“EPA … could develop new regulations that could place limits on its use,” Braden said.

The agency is currently holding public meetings on the matter. A state lawmaker in New York recently introduced legislation calling for a moratorium on hydraulic fracturing in that state until the EPA review is completed.

Hydraulic fracturing has further been associated with earhquakes in California, Texas and Switzerland. Potentially complicating matters for shale gas — and natural gas drilling more generally — is the Deepwater Horizon oil spill disaster in the Gulf of Mexico, which will soon enter its third month with no end in sight.

“It remains to be seen if the spill will change public reaction and expectations about offshore drilling or drilling in general,” the APPA report said.

See also:

Cities Push Back as EPA Begins Study of Fracking’s Impact on Water

Congress Considers Fracking Regulation Amid Hodgepodge of State Drilling Rules

Exxon CEO Defends Fracking on Capitol Hill

‘Fracking’ Accidents Prompt Calls for Oversight