Shale Gas Rig in Marcellus Shale (Photo credit: Ruhrfisch)

On September 24-25, the Howard Baker Forum and the Lawrence Livermore National Laboratory hosted an event on the role shale gas will play in America’s energy future. The  event featured prominent energy analysts like Daniel Yergin, Amy Myers Jaffe, Michael Levi and Alan Krupnick. Below is a quick summary of the highlights.

Most of the speakers recognized the strategic benefits that the “Shale Gale” has brought the United States. Due to breakthroughs in horizontal drilling and hydraulic fracturing, the nation is awash in natural gas, causing prices to plummet.

Low prices for natural gas have caused utilities to undergo a rapid shift from coal to natural gas in the electric power sector. This has led to lower carbon emissions, lower electricity prices, a manufacturing resurgence, and calls for more natural gas to be used in the nation’s automotive fleet.

With that context in mind, the speakers offered their views on what the “Shale Gale” means for global energy markets and geopolitics.

Daniel Yergin (author of “The Quest” and “The Prize”) spoke about the possibility of a growing self-sufficiency in the United States in both oil and natural gas. Drilling techniques used in shale gas production have also unlocked new oil resources, most notably in North Dakota. Moreover, he stressed, growing oil production from Canada, Brazil, and possibly Argentina, among others, will make the western hemisphere increasingly important in energy markets, diminishing the power of OPEC.

Amy Myers Jaffe emphasized the geopolitical consequences of shale gas. For example, she pointed to the fact that during the 2008 war between Russia and Georgia, the European Union sent French President Nicolas Sarkozy to negotiate on their behalf. They believed the French had more leverage with Russia than other European nations because France’s enormous fleet of nuclear reactors allows it to avoid having to depend on Russian gas for electricity generation. Other European countries rely much more heavily on Russian imports. Thus, Amy Myers Jaffe believes a shale gas revolution in Europe could provide an enormous geopolitical benefit to the European Union.

While many of the speakers detailed the benefits of shale gas, many also cautioned against too much optimism. Michael Levi, a Senior Fellow at the Council on Foreign Relations, noted that if the industry does not produce shale gas safely, public opinion could result in cutting off access to drilling. An array of problems have angered local residents in drilling areas – surface and groundwater contamination, truck traffic, air pollution and noise – and even has resulted in certain towns, cities and states banning hydraulic fracturing. Levi said there is a middle way – allow drilling to continue, but implement proper rules on development.

Expanding on that idea, Alan Krupnick, the Director on Energy Economics at Resources for the Future, described the research his organization has done on shale gas regulation. A state-by-state analysis demonstrated that there is a lot of “heterogeneity” in regulation – meaning some states have tougher regulations than others. Resources for the Future has identified a variety of risks in natural gas production, and reasonable rules and regulations to minimize that those risks. As most analysts believe shale gas will continue to move forward, getting the rules right is essential to responsible development, he stated.

The event was held at the Newseum near the U.S. Capitol. To see more details on the event, click here.

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