Natural Gas Setbacks – Water Contamination and Escaped Gases

Natural gas would like to be bridge fuel as we deal with oil shortages, but it keeps running into obstacles.

A big obstacle is the fact that the price is now too low, relative to what it costs to extract the natural gas. Arthur Berman has shown based on his detailed analysis of drilling data that shale gas seems to need a much higher price than today’s $4 per thousand cubic feet to be profitable. I have shown something similar, looking at aggregate drilling costs. However, if the prices go up enough to be profitable for producers, natural gas will not look like nearly as good a “deal” for the homeowner.

But today I would like to talk about two new setbacks:

  1. An EPA ruling against Range Resources regarding the contamination of two wells in Texas’ Barnett Shale.
  2. An EPA analysis that says escaping greenhouse gases are more of a problem than previously assumed, particularly for well completions and hydraulic fracturing after completion.

The latter analysis is only an interim report, but adds further fuel to the debate about how “green” natural gas is. Indicated green house gas emissions based seem to be as high as coal emissions, although this is not explicitly stated in the report. There are no doubt steps that can be taken to reduce these emissions, but if the report is correct, without change, the indication is that natural gas is not very “green”. Continue reading