Photograph by Robert Nickelsberg, Getty Images

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Engineers maneuver a motor and drill bit on a natural gas drilling platform in Fort Worth, Texas. The 11,600-foot well, owned by Chesapeake Energy Company, is tapping into the Barnett Shale, one of the largest gas fields in the United States.

Photograph by Robert Nickelsberg, Getty Images

Plenty of Gas, But No Easy Fix for U.S. Energy Challenge

Innovation has sparked a boom in production of this low-carbon fuel. Taking advantage of its benefits is another matter.

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.

It's the oil rush all over again, except this time it's not black gold gushing to the surface, but gas: natural gas.

New technologies—or rather, a combination of older technologies—have made it possible to mine huge quantities of natural gas out of the deep, solid rock called shale.

Because these deposits are found all over the United States, which until recently had been bracing for shortages of this key fuel, the implications are staggering.

Natural gas fires the blue flame on stovetops, it heats half the homes in the United States, and is also the fuel that can generate electricity with 50 percent lower carbon dioxide emissions than coal.

However, whether the new natural gas abundance can really help the country to get on track to reducing its greenhouse gas emissions, as the Obama administration, the industry itself, and even some environmentalists are saying, is not so clear.

Nonetheless, insiders at CERAWeek, an annual energy conference in Houston last week, gushed at the potential.

“Simply the most significant energy innovation so far this century,” said Daniel Yergin, chairman of the consulting firm, IHS Cambridge Energy Research Associates, best known as author of the Pulitzer-winning chronicle of the oil industry’s history that was re-released last year, The Prize: The Epic Quest for Oil, Money & Power.

A widely watched industry group—the Potential Gas Committee of the Colorado School of Mines—calculated a 40 percent increase in U.S. gas reserves last year, the largest jump in its 44-year tracking record.

The “shale gale,” said an IHS CERA report, could “cause a paradigm shift in the fueling of North America’s energy future,” with 100 years of supply available at today’s rate of demand.

And U.S. Energy Secretary Steven Chu, in a speech aimed at prodding energy executives to get on board with the notion that global warming policy was on its way, forecast a key role for the fossil fuel with the lowest greenhouse gas emissions—natural gas.

Jim Mulva, chief executive of ConocoPhillips, dubbed natural gas “nature’s gift to the people of the world” and called those who have doubts “hydrocarbon deniers.”

Those deniers, however, turn out to be a diverse crowd.

Although hydraulic fracturing, using blasts of water and chemicals to break up the rock, has been around since the 1940s, some of the shale gas rush is happening in areas that haven’t seen new energy development for decades.

Water pollution incidents have worried local residents from Wyoming to Pennsylvania. Study is even underway focusing on whether one portion of the shale gas process that is separate from the hydraulic fracturing--the injection of waste salt water into underground wells--caused minor earthquakes near Dallas-Fort Worth.

The supposed first-line beneficiaries of this new gas bounty—electric power companies—have their own concerns.

Duke Energy chief executive Jim Rogers, who runs one of the largest utilities in the country, has called natural gas the “crack cocaine” of his industry.

It’s a quick fix to expand electricity output, because the plants are relatively inexpensive, quick to build and raise few of the pollution concerns of coal. But many of those who have come to rely on this appealing fuel regret the habit when they’ve seen the dizzying price spikes--during the California energy crisis, after Hurricane Katrina and in tandem with the Gulf War oil price run-up.

Rogers thinks natural gas will be only part of the climate solution, so in addition to adding two new natural gas facilities to its fleet, Duke is building new coal generation, including a plant that could test carbon capture technology, and it is proposing two new nuclear power stations.

In market impact so far, the shale gale feels more like a light breeze, with U.S. natural gas production up 4 percent and the fuel’s share of electricity generation up 2 percent from 2008 to 2009, to just over 23 percent. Coal electricity generation is down, with its share of the nation’s power at about 45 percent, but the weak economy and U.S. electricity demand appear to be a greater factor than a deliberate move to natural gas.

Joseph Romm, a former Energy Department official and senior fellow at the Center for American Progress, author of the widely read ClimateProgress blog, believes the power industry won’t make the switch without a policy push—a price on carbon that makes coal substantially more expensive.

“The coal plants that have been built, they’ve been paid for and they’ll keep running,” he says. “I don’t see how moderately priced natural gas in abundance changes this.”