horizontal drilling. All that required a good deal of experimentation. Devon drilled seven such wells in 2002. “By 2003,” said Nichols, “we were becoming very confident that this drilling truly worked.” Devon drilled another fifty-five horizontal wells in the Barnett that year. It did work.4
Shale gas, heretofore commercially inaccessible, began to flow in significant volumes. Combining the advances in fraccing and horizontal drilling is what would unleash what became known as the unconventional gas revolution.
Entrepreneurial independent oil and gas companies jumped on the technology and quickly carried it to other regions—in Louisiana and in Arkansas, and Oklahoma, and then to the “mighty Marcellus” shale that sprawls beneath western New York and Pennsylvania down into West Virginia.
THE “SHALE GALE”
Something was very strange about the numbers. As they rolled in for 2007 and then 2008, they showed something unexpected that did not make sense—a sudden surge in domestic production of U.S. natural gas. How was that possible ? Where was that coming from? The United States was supposed to be facing a sharp decline in domestic production—for which LNG was the only sure answer. Then it started to become clear: a technological breakthrough was beginning to make its impact felt. The rest of the industry now realized that something new was happening. And that included both major oil and gas companies, which had heretofore been more focused on big international LNG projects, and which was thought to be required to offset the apparent shortfall in North American natural gas.
Over the next few years, the output of shale gas continued to increase. Some now started to call it the “shale gale.” As the supply increased and skills were further developed, costs came down. Shale gas was proving to be cheaper than conventional natural gas. In 2000 shale was just 1 percent of natural gas supply. By 2011 it was 25 percent, and within two decades it could reach 50 percent.
The shale gas transformed the U.S. natural gas market. Perennial shortage gave way to substantial surplus, which turned the prospects for LNG in North America upside down. Just a few years earlier, LNG had seemed destined to fill an increasing share of the U.S. market. Instead it became a marginal supply rather than a necessity. Electric utilities, remembering gas shortages and price spikes, had been reluctant to use more natural gas. But now, with the new abundance and lower prices, lower-carbon gas seemed likely to play a much larger role in the generation of electric power, challenging the economics of nuclear power and displacing higher-carbon coal, the mainstay of electric generation. As a source of relatively low-priced electric power, it created a more difficult competitive environment for new wind projects. Shale gas also began to have an impact on the debate on both climate change and energy security policy. By the beginning of this decade, the rapidity and sheer scale of the shale breakthrough—and its effect on markets—qualified it as the most significant innovation in energy so far since the start of the twenty-first century. As a result of the shale revolution, North America’s natural gas base, now estimated at 3,000 trillion cubic feet, could provide for current levels of consumption for over a hundred years—plus. “Recent innovations have given us the opportunity to tap larger reserves—perhaps a century’s worth—in the shale under our feet,” President Obama said in 2011.5 The potential here is enormous.6
At the same time, the rapid growth in shale gas has stoked environmental controversy and policy debate. In part, demographic differences have brought the controversy to the fore. Lower-density states like Texas are accustomed to energy development, and encourage it as a major source of income for the population and revenues for the state government. Residents in more populated eastern states, like New York and Pennsylvania, are not accustomed to drilling in their region (although Pennsylvania is certainly long experienced with coal mining and was the birthplace of the oil industry. While some welcome the jobs, royalties, and tax revenues, others are taken aback by the surface disruption and the sudden increase in large truck traffic on what had been quiet country roads.
But, more than traffic, the environmental debate is centered on water. Critics warn that fraccing may damage drinking water aquifers. The industry argues that this is highly unlikely, as the fraccing takes place a mile or more below drinking water aquifers and is separated from them by thick layers of impermeable rock. Moreover, the industry has a great deal of experience with fraccing: more than a million wells