Natural Gas: Pathway to Freedom?

A decade ago, America’s life changed. That’s when the country began to reap the benefits of unconventional oil and natural gas, making it the world’s largest such producer.

Not only had the nation found itself awash in a cleaner burning generation fuel but it had also started attracting new investment in the chemical and manufacturing sectors. It’s truly been a win-win scenario as the United States has both brightened its economic prospects while also cleaned its environment, having reduced its carbon emissions by 10 percent from 2005 levels.

“Unconventional-gas-and-oil resources are perhaps the single largest opportunity to improve the trajectory of the U.S. economy, at a time when the prospects for average Americans are weaker than we have experienced in generations,” says a report released this month by the Boston Consulting Group and the Harvard Business School.

The good news is that the U.S. economic growth has exceeded that of Europe and Japan in recent years, the report says, but that expansion could be improved. How? Unconventional energy development, the study emphasizes. That’s because natural gas is not just used as fuel for electric generators but also a feedstock for chemical and manufacturing enterprises. In fact, the abundant and cheap natural gas here is attracting industrials from all over the world.

Already, shale oil and gas have added $430 billion to the annual gross domestic product here while supporting more than 2.7 million American jobs – at pay that is twice the median salaries, the study says. More remains to be done, it adds, noting that the natural gas pipeline infrastructure must be expanded to accommodate even more growth. Meantime, workers need to be retrained to address these pending needs.

The prospects are particularly appealing in a state like West Virginia, which is seeing its coal-based economy diminish. To that end, a just-released analysis by the West Virginia University Law School and Downstream Strategies says that the state sits on a gold mine: the Marcellus Shale basin. West Virginia could benefit, it says, from the expanded use of natural gas both in the electric sector nationally as well as within its own boundaries.

At the same time, the state should explore opportunities to integrate more natural gas into its own electricity mix by building new combined-cycle natural gas plants and combined heat and power facilities as well as by co-firing natural gas with existing coal units where feasible.  

“Greater integration of natural gas resources in West Virginia’s electric system would diversify the state’s electric sector, create additional demand for West Virginia-produced natural gas, and play an important role in helping the state to meet CO₂ emissions limits under the (proposed) Clean Power Plan,” the report says.

“We arrived at the conclusion after compiling an extensive data base of West Virginia's electric generation resources – including heat rates and CO₂ emissions of generating plants – as well as reviewing multiple sources evaluating the state's potential for energy efficiency and renewable resources,” adds James Van Nostrand, a professor at WVU’s law school and a co-author of the report, in an interview.  

To be sure, obstacles exist to such a ground-breaking energy shift, both in West Virginia and nationally. The joint study by the Boston Consulting Group and Harvard makes special note of containing methane leaks – the most potent greenhouse gas of them all. And, of course, natural gas producers must be diligent, ensuring that their drilling processes have integrity to protect ground water supplies.

“The U.S. needs to achieve a ‘rational middle’ ground to capitalize on this historic opportunity,” that Boston/Harvard study concludes. “The stakes are too high to fail. Long-entrenched opposition and antagonism will not dissipate overnight. But we must get started.”

It’s part of America’s new pathway to economic freedom – and one that coal-dependent states need more than ever.
 

Ken Silverstein is editor-in-chief of Public Utilities Fortnightly. Contact him at ksilverstein@fortnightly.com.

Lead art © Can Stock Photo / alexwhite