by David Baumann McClatchy-Tribune News Service.June 17, 2010
With oil fouling the Gulf of Mexico and U.S. oil dollars spewing into the Middle East at the rate of $700 billion per year, America’s energy policy is in dire need of practical and cost-effective alternatives to oil.
Financier T. Boone Pickens thinks natural gas makes sense. In his “Pickens Plan” television commercials he states, “natural gas is cleaner, cheaper, abundant, and it’s ours.”
But is Pickens right?
Is natural gas cleaner than oil? The only byproducts of burning natural gas are carbon dioxide and water. Natural gas does not produce the complex unburned hydrocarbons that are common in burning oil and its derivatives (requiring catalytic converters on cars and trucks), nor does natural gas produce sulfur dioxides or nitrous oxides present in coal emissions. Natural gas produces only half the carbon dioxide for the equivalent heat produced by coal and 70 percent of that produced from burning oil. In terms of greenhouse gases, natural gas is definitely cleaner.
At the same time, of course, no energy source is completely free of environmental side effects, as evidenced in this case by local concerns about water quality where natural gas drilling is occurring. Care must be taken to safeguard water resources in gas-producing areas.
Is it cheaper? At $4.94 per one million British thermal units (BTUs), the July 10 price on the New York Mercantile Exchange, natural gas is a bargain. We currently pay approximately $12 to obtain one million BTUs from oil. Oil has historically commanded a premium over natural gas because oil has a higher energy content per unit and is easier to transport.
According to industry officials, even natural gas extracted from shale – a common rock formation that is less permeable and porous than the more traditional sand reservoirs – is economically viable at a price of $6.50 to $7. This is still 40 percent cheaper than oil.
Is natural gas more abundant? Today, the total recoverable natural gas reserves in the United States are around 2,000 trillion cubic feet. Of that about three-quarters of the total are from traditional gas reservoirs and approximately 500 trillion cubic feet from shale reservoirs.
Shale gas “plays,” or areas where companies are actively looking for natural gas in shale rock, have been under way for more than a decade in Louisiana, North Dakota and Texas. California is another promising location. The newest shale gas play is the Marcellus field in the Appalachian Basin in the eastern United States, sometimes referred to as “the beast of the east.”
Recoverable reserves in the three state area – stretching from West Virginia through Pennsylvania to New York – could be as much as 500 trillion cubic feet. This would double the known shale reserves and boost total U.S. recoverable reserves to more than 2,500 trillion cubic feet.
Is it ours? Compared to America’s domestic oil reserves, which stand at a three-year supply, the United States has at least a 110-year supply of natural gas within its own borders. We are not dependent on anybody else, anywhere, for any of this.
So it appears that T. Boone Pickens’ claims are true. Natural gas is cleaner, cheaper, abundant, and it’s ours.
Considering the benefits to U.S. national security and the environment, U.S. energy policy should increase it focus on natural gas. It may not be “the” solution to America’s energy problems, but it’s part of the solution.
David Baumann is a research associate at the American Institute for Economic Research, 250 Division Street, Great Barrington, Mass. 01230;
(c) 2010, American Institute for Economic Research. Distributed by McClatchy-Tribune Information Services
