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Rediscovering Natural Gas By Hitting Rock Bottom

A shale gas well bore is lined by steel pipe, shown here in 100-foot sections in Washington County, Pa., at the drill site of Range Resources. Between its vertical and horizontal sections, a well bore will extend 9,000 feet or longer and require more than a million pounds of steel.

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In recent years, natural gas producers in the United States have struggled, mostly in vain, to be taken more seriously in the energy world. Big oil companies like Exxon had concluded that natural gas reserves in the United States were not sufficiently abundant to warrant big investments in exploration and drilling. When small independent gas producers argued otherwise, they were often ridiculed.

"I once had to tell the Exxon people in front of a congressional committee that I respectfully disagreed with every single thing they had presented," recalls Robert Hefner, 74, a veteran gas producer from Oklahoma.

But the natural gas folks now have numbers on their side due to new successes in getting gas out of shale rock. Geologists have always known that shale rock, often found in combination with coal and oil deposits, holds substantial amounts of natural gas. If a piece of shale rock is broken and lit with a match, it will actually burn for a few moments with a small flame.

The shale gas was previously considered unreachable, but advances in drilling techniques have changed that assessment. The result is a dramatic increase in estimated natural gas reserves. The Potential Gas Committee, loosely affiliated with the Colorado School of Mines, reported in June that natural gas reserves in the United States are actually 35 percent higher than believed just two years ago, and some geologists say even that estimate is too conservative.

Drowning In Natural Gas

"I used to say the nation is awash in natural gas," Hefner says. "Now I say we're drowning in it."

One area getting new attention is the Marcellus basin, a 400-million-year-old shale formation stretching from New York to West Virginia. That basin alone is believed to hold as much as 500 trillion cubic feet of natural gas, the equivalent of about 80 billion barrels of oil. (There are also large shale gas basins in Texas, Wyoming, Arkansas and Michigan.) It is not clear how much of the shale gas is recoverable, but the new production techniques have boosted all previous estimates.

Shale formations are deep underground — 6,000 feet or more — and the rock is relatively impermeable. Deep drilling is expensive, and in the past the amount of gas that could be reached was not considered sufficient to justify the cost.

Horizontal Drilling

In recent years, however, gas producers expanded the use of "horizontal" drilling. After boring more than a mile below the Earth's surface to reach the shale layer, a drill operator will slowly "steer" the drill bit to one side, until it is heading sideways across the shale layer, thus achieving access to more of the shale than a traditional vertical well could provide.

Even so, the tightness of the shale rock would mean that relatively little of the trapped gas would seep into the pipeline. Gas producers therefore fracture the rock by forcing a water and sand mixture into the formation at very high pressure. This "water fracturing" technique opens millions of tiny cracks in the rock, enabling more of the gas to seep out.

Horizontal drilling and water fracturing are not new techniques in the oil and gas business, but only in recent years have producers used the procedures in combination to produce shale gas, and the results have been dramatic.

"It's the biggest thing I've ever even heard of," says Ray Walker, vice president of Range Resources, a gas exploration and production company. "It's huge. The ability to produce these shale reservoirs is going to revolutionize this industry all over the world."

Walker moved to Pennsylvania from Texas two years ago to direct his Fort Worth-based company's exploration of the Marcellus basin. Since then, Range Resources has dug more than 40 horizontal wells in Pennsylvania, and several dozen more are in preparation. In Texas, Wyoming and other areas, it's the same story.

Spreading The Word

"[Shale gas] is the most important energy development since the discovery of oil," says Fred Julander, founder and chief executive of his own Denver-based gas company, Julander Energy.

But the word has not yet spread as far as gas advocates would like. Ian Cronshaw, the top gas analyst at the Paris-based International Energy Agency, highlighted the jump in estimated gas in his most recent energy outlook report, but noted that the news had gotten little notice. "If that had happened in the oil industry, it would be a headline item," Cronshaw said at a recent meeting in Washington. "But because it happened in gas, nobody seems to be paying any attention."

As an energy source, natural gas is cheaper than oil, and when burned it produces only about half the carbon dioxide that comes from burning coal. As long as natural gas reserves in the United States were believed to be nearing depletion, the fuel did not get much attention, but with the upward revision of estimated reserves, that has changed.

"Natural gas is the fuel that can change everything for our nation," says Robert Hefner, who lays out his case in a new book, The Grand Energy Transition. Hefner argues that a big boost in the use of natural gas would dramatically lower greenhouse gas emissions and reduce the U.S. dependence on foreign oil. Much of the nation's electrical power now generated by burning coal could instead come from natural gas, and a switch to natural gas-powered automobiles would produce dramatic results.

"If we were to convert half of our existing vehicle fleet [to natural gas], we would eliminate a little over half our oil imports," Hefner contends. He and other natural gas advocates have been supported in recent months by environmental organizations.

"There's a huge capacity of natural gas that is lying idle," says Timothy Wirth, a former Democratic senator from Colorado who now heads the United Nations Foundation. "That makes absolutely no sense at all when what we're trying to do is clean up the atmosphere."

A 'Transition' Fuel

Natural gas is still a fossil fuel, and when burned it does produce greenhouse gases. Environmentalists working for the use of renewable energy sources nonetheless see natural gas as a transition fuel. One idea is to build mini-power generating stations, each connected to the natural gas pipeline infrastructure. A station attached to a hospital or a shopping mall could produce heat as well as electrical power, cutting energy costs dramatically.

"You can combine that with improvements in end-use efficiency and the development of renewable energy sources, and really see these as a partnership," says Christopher Flavin, president of Worldwatch Institute, an environmental research organization.

"Even the International Energy Agency is saying the path for oil is downward, and suddenly we've got this very different picture for natural gas," says Flavin. "I think it's unfortunately not fully percolated into the understanding of what's possible among policymakers. But I think as that takes hold in the next few years, it's really going to change the game."

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Transcript

STEVE INSKEEP, host:

Amid all the talk of alternative energy sources like wind power or solar, there's an old-fashioned fuel that might be even more important. Natural gas is cleaner than other fossil fuels and it's produced in the USA. This week, we're going to take a look at the role of natural gas in our energy future.

NPR's Tom Gjelten is helping us. He's in the studios. Tom, good morning.

TOM GJELTEN: Hi, Steve.

INSKEEP: Okay. Many people already use natural gas to heat our homes. What are the possibilities of doing something else with it?

GJELTEN: Well, for a long time gas was not taken all that seriously. I mean, it was a nice fuel but the view was that there just wasn't enough of it to really get excited about it, and that's what changed. It now looks like we have way more natural gas in this country than we'd thought we did. This could change the whole energy picture.

It's the idea that there is more supply of natural gas than we thought.

INSKEEP: Were there new discoveries?

GJELTEN: No. What we're talking about is actually gas that we've known has been there all along, but it's embedded in rock, shale rock, a mile below the surface of the earth. And until just a few years ago, it didn't seem practical to get the gas out of the rock. So, when we tallied gas reserves in the country, we didn't even bother to count the gas that's in that shale rock.

And what's changed is that gas producers - and this is fairly recent development - gas producers have figured out how to get the gas out of the rock, and as a result there's this gas rush all over the country. Like this place I went to in Pennsylvania. Turns out there is a lot of natural gas under the farmland there.

I found this gas man named Ray Walker, who's moved up to Pennsylvania from Texas a couple years ago to drill new gas wells. He's been in the gas business for about 20 years, but you get Ray talking about this shale gas, he can barely contain himself.

Mr. RAY WALKER: It's the biggest deal I've ever even heard of. It's huge.

GJELTEN: Mr. Walker's standing on a drilling rig about 160 feet tall. The rig serves as a giant brace for an eight-inch drill bit that's slowly turning, working its way deep down into the earth, down 6,000 feet to a layer of shale rock.

(Soundbite of drilling rig)

GJELTEN: The rock is part of what's called the Marcellus formation - 400 million years old, and stretching all the way from New York to West Virginia. It's where Ray Walker is finding gas.

Mr. WALKER: If we were able to get a big enough chunk of Marcellus shale up to the surface and I could break it for you right here, you could strike a match to it and it would light for a little bit.

GJELTEN: But he would have to break the shale, because the gas is embedded in the rock. It seeps out only where there's a crack. And the trick is to break that shale a mile underground. For that, Ray uses water.

Mr. WALKER: So, if we put water in there and enough pressure, the rock has to break. And so as that rock breaks, things slip and shear and all those things start taking place.

GJELTEN: And a little gas seeps out. It's called water fracturing.

Ray Walker's company, Range Resources, uses it extensively, along with horizontal drilling.

(Soundbite of drilling)

GJELTEN: After this drill bit gets down 6,000 feet to the shale rock, an operator slowly turns the bit until it's drilling sideways through the shale. That way the pipe can penetrate more of the rock. It's this combination of water fracturing and horizontal drilling that's made it possible to produce shale gas. It's all new. Range Resources has only been in Pennsylvania for two years. Ray, a senior vice president, didn't learn these techniques back at Texas A&M in the 1980s.

Mr. WALKER: What we used to think the way things worked is now all changed. The ability to produce these shale reservoirs is going to revolutionize this industry all over the world.

GJELTEN: Shale gas may be the number one new energy story right now. In June, the Colorado School of Mines said the new ability to reach unconventional gas deposits means natural gas reserves in the U.S. are now 35 percent higher than they were estimated to be in 2007.

Ian Cronshaw of the International Energy Agency says the production of gas in North America was heading downward as recently as two years ago.

Mr. IAN CRONSHAW (International Energy Agency): Suddenly, since then we've seen this dramatic increase and now we've seen U.S. unconventional gas rise.

GJELTEN: It's as if the United States were suddenly able to produce an extra million-and-a-half barrels of oil each day.

Mr. CRONSHAW: That had happened in the oil industry, that would've been a headline item, but because it's in gas no one seems to pay any attention.

GJELTEN: Nobody paying attention: an old lament of natural gas guys, like Robert Hefner. He's been in the business in Oklahoma for 50 years. All that time he's been claiming there's lots of natural gas in the United States. The big oil and coal companies just pooh-poohed him.

Mr. ROBERT HEFNER: I once had to tell the Exxon people in front of a Congressional committee that I respectfully disagreed with every single thing they had presented.

GJELTEN: But maybe now at the age of 74, Mr. Hefner has been vindicated.

Mr. HEFNER: The nation now - I used to say awash in natural gas - now I say we're drowning in natural gas.

GJELTEN: If Hefner is right, the implications are wide ranging.

Timothy Worth, a former Colorado senator, who now heads the United Nations Foundation, says natural gas can finally challenge coal as America's top domestic energy source.

Former Senator TIMOTHY WORTH (Colorado, United Nations Foundation): The coal industry has been arguing for years that we have to do everything we can to exploit this huge coal reserve. Well, the natural gas reserve is significantly larger. And what's important about it is that natural gas is much, much cleaner than coal.

GJELTEN: When burned, natural gas produces half as much carbon dioxide as coal. Much of the nation's electrical power now generated by burning coal could instead come from natural gas. That would mean a significant decrease in greenhouse gas emissions. And then there are the national security considerations.

Robert Hefner, the Oklahoma gas man, wants to see more American cars running on natural gas instead of the liquid kind that comes from oil.

Mr. HEFNER: If we were to convert half of our existing vehicle fleet, retrofit them to natural gas, we would eliminate a little over half our oil imports.

GJELTEN: There are still skeptics. If gas production is to be increased, it'll have to come from the shale deposits. The market price of natural gas has fallen sharply in recent months, and if it doesn't recover, gas companies may not be able to earn enough to justify the relatively high cost of shale rock operations.

But many environmentalists see natural gas a fuel the nation can use during the transition to renewable energy sources. Christopher Flavin is president of the Worldwatch Institute, an environmental research group.

Mr. CHRISTOPHER FLAVIN (President, Worldwatch Institute): Even the International Energy Agency is saying the path for oil is now downward, and suddenly we've got this very different picture for natural gas. I think it's unfortunately not fully percolated into the understanding of what's possible among policymakers. But I think that as that takes hold in the next few years, it's really going to change the game.

GJELTEN: But the natural gas industry needs to be well organized if it's to make its case. In the energy world, bigness generally wins out.

INSKEEP: NPR's Tom Gjelten is reporting on the possibilities of natural gas this week. And, Tom, is this industry not very big now?

GJELTEN: The problem, Steve, is that the natural gas sector is actually big but it's characterized by very small independent companies. Most of them have just a few dozen employees. The question of how they can compete against big coal, big oil, is a very interesting one. I'm going to get into that tomorrow.

INSKEEP: Okay. We'll be listening, thanks. NPR's Tom Gjelten.

GJELTEN: Thank you, Steve.

(Soundbite of music)

INSKEEP: And you can find an interactive map of natural gas resources in the U.S. by going to NPR.org.

(Soundbite of music)

INSKEEP: This is NPR News. Transcript provided by NPR, Copyright NPR.

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