Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Can shale gas be produced safely?

signs.top.jpgRoad signs in rural Pennsylvania illustrate the pros and cons of natural gas development. By Steve Hargreaves, Senior writer


TOWANDA, Pa. (CNNMoney.com) -- In northeast Pennsylvania, the epicenter of one of the biggest energy developments in a generation, there's a battle underway to win hearts and minds.

Throughout the countryside, billboards tout the benefits of natural gas drilling: It's clean. It's domestic. It provides jobs.

The campaign is being waged by the gas companies, who know that not everyone here is happy with the boom in shale gas. People hate the traffic, and they are afraid for their water.

But the campaign is clearly working.

"We might take a little bit of the hurt for it, but it's a good thing for the nation," said Brianna Morales, owner of the BriMarie Inn in Sayre, Pa. "It's a good sense of security."

Others are more blunt, saying natural gas can lessen America's dependence on foreign oil.

"It appeals to me to give the whoevers a taste of their own medicine," said Joe Snell, who owns a hardware store in town. "They're been giving it to us for 30 years."

Indeed, natural gas burns cleaner than oil and coal and is produced in the United States.

But some question whether natural gas is really cleaner because of the environmental problems involved in extracting the gas.

Shale development requires companies to truck in water. Those trucks burn a lot of fuel. And natural gas, which is basically methane, is a potent greenhouse gas if it leaks from the well heads or pipelines. Also, chemicals used to fracture the rock have been known to spill contaminating local water supplies.

"It is not at all clear that gas is clean," said Robert Howarth, a Cornell ecologist who is studying the issue. "A complete consideration of all emissions from using natural gas seems likely to make natural gas far less attractive than oil and not significantly better than coal."

But conventional wisdom still holds that gas is cleaner. Maybe not the 50% cleaner that it was once thought, but still significantly better than coal, the mining of which often involves open pits, strip mines or the removal of entire mountain tops, said Dave Hamilton, director for global warming and energy projects at the Sierra Club.

The real questions is this: Can shale gas be developed economically while still protecting the ground water?

Many industry experts say yes.

The best new wells in Pennsylvania can produce natural gas for about $4 per million BTUs, said Robert Ineson, senior director for global gas at IHS Cambridge Energy Research Associates.

So long as natural gas remains below the $6 BTU range, utility analysts say it will be competitive with other energy sources like wind or coal.

Room for profit. Kevin Book, an analyst at ClearView Energy Partners, said regulators could require greater treatment of the fluids used to drill a well and place tighter restrictions on where companies get water.

They could also impose stricter standards for the casing that lines a well hole, expand ground water monitoring and give the federal government a greater role in this process.

All this, said Book, might add between 15 cents and 75 cents per BTU to production costs.

That means there is room for both profit and additional regulation.

Or, as Cambridge's Ineson puts it, additional regulations are "warranted, likely and affordable. You're not going to kill the shale boom on the basis of these costs."

Pennsylvania has recently enacted some of these additional regulations, but not all of them.

Environmentalists are calling for more. They want 3D seismic imaging of drilling areas to detect cracks where the gas could seep into. They also want old wells to be plugged.

It's not known exactly how much these other measures would cost. At some point a balance must be reached between producing shale gas economically and protecting the environment. The hard part is finding it.  To top of page

Index Last Change % Change
Dow 16,643.01 -11.76 -0.07%
Nasdaq 4,828.33 15.62 0.32%
S&P 500 1,988.87 1.21 0.06%
Treasuries 2.19 0.02 0.83%
Data as of 2:04pm ET
Company Price Change % Change
Freeport-McMoRan Inc... 10.50 0.31 3.04%
Bank of America Corp... 16.36 -0.08 -0.49%
Apple Inc 113.29 0.37 0.33%
Intel Corp 28.42 0.70 2.53%
Alcoa Inc 9.41 0.55 6.21%
Data as of Aug 28
Sponsors

Sections

Efforts to unionize low-wage employees of fast-food franchisees and outside contractors get lift from decision of NLRB. More

China's Vice Finance Minister Zhu Guangyao said if there is "systemic risk to the financial system, we must take action." More

The market volatility in China and the U.S. could hit private companies, especially late-stage unicorns. More

How do you run a successful crowdfunding campaign? Indiegogo's CEO Slava Rubin offers his top tips and mistakes to avoid. More

Looking for something good on Netflix? These entertaining films will help you learn more about finance and investing. More

Approved.blancoo
shargreaves.oblanco