Beyond Economics

Perhaps. You may have heard about hydraulic fracturing (“fracing”, pronounced “fracking”) and horizontal drilling, a technique to release natural gas trapped in hardy shale-rock formations. These sources of natual gas around the world have been known about for some time but not thought to be economically viable. This article from The Economist has major implications for geopolitics, climate change, and energy independence based on both the quantity and location of these unconventional reserves.

NIMBY and environmental concerns may be a contraint. The Comments at the bottom are worth reading and provide both support and skepticism.

An Unconventional Glut
Newly economic, widely distributed sources are shifting the balance of power in the world’s gas markets
Mar 11th 2010 | HOUSTON | From The Economist print edition

The availability of abundant reserves [of unconventional natural gas] in North America contrasts with the narrowing of Western firms’ oil opportunities elsewhere in recent years. Politics was largely to blame, as surging commodity prices emboldened resource-rich countries such as Russia and Venezuela to restrict foreign access to their hydrocarbons. “The problem is, where do you go? It’s either in deep water or in countries that aren’t accessible.” This is forcing big oil companies to get gassier…The oil majors watched from the sidelines as more entrepreneurial drillers proved shale’s viability. Now they want to join in.

[One] idea that would have ramifications for the global oil sector is to gasify transport. T. Boone Pickens, a corporate raider turned energy speculator, has launched a campaign to promote this, and has support from the gas industry. All this is some way off. The coal industry will not surrender the power sector without a fight. The gasification of transport, if it happens, could also take a less direct form, with cars fuelled by electricity generated from gas.

A gasified American economy would have profound effects on both international politics and the battle against climate change. Displacement of oil by natural gas would strengthen a trend away from crude in rich countries, where the IEA believes demand has already peaked as a result of the recent spike in oil prices.

But two factors could reverse the picture again. The first surrounds the uncertainty about how fruitful shale exploration will be outside North America. Second, there are reasons for caution above ground, too. Despite natural gas’s greener credentials than oil’s or coal’s, shale drilling has critics among environmentalists, who worry that water sources will be poisoned and landscapes despoiled.