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The Rocky Road to Energy Production

May 12th, 2011

OMAHA (Capstone Energy Services) – This week, it was announced that the Department of Energy would initiate a study to evaluate the “best practices” for drilling in the Marcellus Shale in the northeastern United States. This follows previous announcements by the EPA and Interior Department to investigate the dangers in Marcellus Shale drilling and, specifically, in hydraulic fracturing. Also this week, a Duke University study reported methane gas water contamination linked to Marcellus production, raising more public concerns while industry spokesmen called the study biased and flawed. In addition, environmental groups are pushing for tighter regulations, environmental damage lawsuits are being filed and local political leaders are calling for restrictions or outright prohibition on Marcellus drilling. This flurry of activity surrounding the Marcellus Shale is an excellent example of the difficulties encountered today to produce energy in the United States. Similar problems are being encountered in crude oil production and electric generation, including all forms of generation fuels: coal, diesel, natural gas, nuclear and even renewable sources such as biomass, wind and solar. Over the years, the number and scope of new energy production difficulties have been increasing, raising the question of the longer term effect on both supply and prices.

The electric power industry is migrating away from coal to natural gas as the fuel of choice for new base load generation. The nuclear option is very long term and a contentious option today in light of the recent natural disaster in Japan. Renewable generation sources are less reliable and much more expensive than traditional base load generation fuels. They have their own environmental critics and pose significant logistical integration problems into the existing power grid infrastructure. The logical short to medium term power generation solution is natural gas, precisely the direction the industry is heading. The discovery of the lucrative shale production areas in the United States creates an opportunity for increased energy independence. It can provide a long term natural gas supply source (without LNG imports) and create both short and mid-term solutions to the electric generation fuel problem while cleaner, safer, more efficient and cost effective technologies are developed and perfected.

The hydraulic fracturing required to produce natural gas from these shale formations creates some significant technological and environmental problems that need to be addressed carefully and rationally. The current disjointed regulatory, legal, political, environmental and local (“not in my back yard”) environment regarding shale production, and new energy production in general, creates realistic and material concerns regarding the longer term supply, availability, cost and reliability of energy in the United States.

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By Ed Freeman

Energy Facts

Energy Facts

Natural gas can be used as a raw material in a variety of products, including paint, fertilizer, plastics and medicines.

Natural gas produces fewer emissions than other fossil fuels, with less nitrogen, sulfur, carbon and fine particulates.

Texas produces the largest amount of natural gas in the USA.

The biggest consumer of coal in the US is the electric power sector.

There are 17,658 electric utility generators in the USA.
 

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