A boom in natural gas production from nontraditional sources has sent prices tumbling and has even spurred proposals to export cheap natural gas.
But some of the most vocal opposition to exporting natural gas has been voiced by Dow Chemical and other chemical manufacturers that have benefited from cheap gas, an energy advocate said in Billings recently.
Horizontal drilling and hydraulic fracturing, also known as fracking, are the twin technologies that have ignited a boom in producing natural gas from shale.
Late in 2012 the U.S. Department of Energy released a report that concludes that exporting natural gas would provide a net benefit for the nation’s economy.
“In all of these cases, benefits that come from export expansion more than outweigh the losses from reduced capital and wage income to U.S. consumers, and hence LNG exports have net economic benefits in spite of higher domestic natural gas prices,” concludes the Energy Department report, released last December.
J. Winston Porter, a former Environmental Protection Agency administrator who speaks frequently on issues involving energy policy, said cheap natural gas has spurred a renaissance in the chemical industry. Several companies are investing in ethane crackers and similar kinds of plants that convert natural gas into plastics and other products.
Because the chemical industry benefits from cheap natural gas, it’s not surprising that Dow would express concerns about exports, Porter said.
In an interview, Porter expressed doubt about whether it’s possible to curtail natural gas exports.
“I’m not sure you want to stop the free enterprise system,” he said. “Dow Chemical doesn’t want this stuff to be exported, and they’ve been doing a lot of planning based on gas being priced at $3 to $4 per million BTUs.” Porter runs a consulting company, and the American Petroleum Institute is one of his clients.
The Energy Department’s report on natural gas exports precedes a time when the agency is deciding whether to permit about a dozen natural gas plants located around the Gulf Cost to export liquefied natural gas.
“The fight is now between Dow and a few other chemical companies versus the oil and gas industry and the U.S. Chamber of Commerce,” Porter said.
As the shale gas boom spreads across the country, environmental groups have expressed concerns that fracking could damage domestic wells and other sources of groundwater.
But Porter said he has seen no evidence that fracking has damaged water wells. That's primarily because oil and gas formations are typically thousands of feet deeper than water wells.
What’s more, he doubts that a national approach to regulating hydraulic fracturing would benefit the energy industry and protect the public.
Porter believes that states are better able to regulate fracking than applying a “one size fits all” of EPA regulation.
Fracking is the process in which water, sand and chemicals are injected into deep wells to crack open rock formations to release oil and natural gas.
The oil and gas industry takes numerous precautions to make sure that fracking fluid, as well as oil and gas, don’t migrate toward the surface where water wells are located, he said.
“You have to make sure everything is tight for the first 1,000 feet,” to eliminate any migration, he said.
“The big issue with fracking is water management,” Porter said. “It’s not something that’s not unmanageable. Most states are coming up with strong regulations.”
And many companies have begun recycling their fracking fluid, Porter said.
He hasn’t yet visited North Dakota, the epicenter of the Bakken oil play that has boosted oil and gas production.
He also supports the proposed Keystone XL pipeline, which would transport oil from Canada’s tar sands to the United States.
“It looks to me like that oil is going to be moved out of Canada and the Bakken one way or another,” Porter said. “So if people say they can stop oil from coming to Louisiana or Texas, they’re barking up the wrong tree, because there’s a huge amount of rail cars that are starting to haul oil around. But it won’t be nearly as economical, in my opinion, as the pipeline.”