Black has always been a popular color for raw materials in the Appalachians. Coal made the region famous and supported the growth of a nation for almost 100 years. Concerns about greenhouse gas emissions, more recently, have tarnished the image of coal and made using it politically incorrect. But technology is bringing a new ‘energy killer app’ to market from those same hills and valleys, this time it’s gaseous, cleaner and just as hard to get to as the old lumpy stuff.
Unconventional Natural Gas is Remaking America’s Energy Landscape
In 2002, the US Geological Service estimates that there may be as much as 1.9 trillion cubic feet of natural gas in the Marcellus shale.  More recent estimates by Penn State geologists suggest Marcellus may have as much as 500 trillion cubic feet of gas—enough to supply the entire US natural gas need for two years.  The Marcellus play covers eight states stretching from the NE corner of Alabama to Western New York State. The knowledge that natural gas is there is not new, but because it exists in cracks and pockets between the shale layers of the region it was difficult to get out with traditional drilling techniques that worked in larger gas formations elsewhere. New technologies for horizontal drilling and fracturing or cracking the rock to release the gas have been successfully applied to on-shore natural gas with outstanding results.
The Marcellus play is not the only new source of domestic natural gas from “unconventional sources”. Others include the Barnett shale in Texas and Bakken play in North Dakota to Canada and new horizontal drilling opportunities in the Rockies. These new technologies are also opening domestic production for oil in some of the same shale and oil sands across North America. The Bakken formation covers 25,000 square miles in the Williston Basin in North Dakota and Montana and beyond into the prairie provinces of Canada. USGS calls Bakken the largest continuous oil accumulation it has ever assessed and it may actually be larger once the USGS analysis of the Three Forks-Sanish formation is completed to determine whether it is actually a separate oil-producing formation or a drainage basin for flows from the Bakken shale. And there are other such oil and natural gas plays being explored and produced including the Fayetteville Shale in north central Arkansas and the Haynesville shale in northwestern Louisiana
Gas on Gas on Gas Competition Enhances America’s Energy Security
Together this growth in unconventional sources of natural gas has singlehandedly thwarted the rise of liquefied natural gas (LNG) imports and killed off scores of proposed LNG terminals on both coasts. Today the potential for gas from lower 48 unconventional sources even threatens the economics of a new Alaska pipeline. Indeed new natural gas production from unconventional sources has been the biggest news and the best hope for more domestic energy production in years and is changing the American energy security landscape for the better.
Only a few years ago it seemed as if America’s domestic natural gas industry would be globalized with growing dependence on imports of liquefied natural gas (LNG) from some of the same parts of the world that send us oil. This growth in LNG imports posed a clear and present risk to America’s energy security and the expected increase in costs from LNG threatened to push even more of our industrial production off shore. Today, that prospect is completely undone with global competition for LNG shaping up to pit Europe and Asia against each other for LNG imports from Algeria, Russia, Australia, Indonesia and elsewhere and North America serving as a dumping ground for unsold LNG at much lower prices.
America’s greatest contribution to the energy industry is technology and the expertise to deploy it. But for too many years, America’s energy policies forced major oil and gas companies to search elsewhere for opportunities to put that technology to work. And there were many opportunities from low hanging fruit for a while, but those opportunities for scalable plays have been dramatically diminished by the rise of national oil companies and sovereign wealth funds. This new class of players along with OPEC have locked down some of the best opportunities but lack the technology and expertise to exploit them on their own.
Then there is politics. Russia seeks international investment to climb out of its economic collapse after the fall of the Soviet Union and big oil rushes in to take advantage of opportunities only to have the Russians push them out once the technology proves the reserves and ramps up production. Venezuela and Mexico allow national politics to result in dramatic declines in their national oil and gas productive capacity and virtually kill the golden goose that has fed both treasuries. Conflicts in Iran, Iraq, Nigeria, Angola and elsewhere sideline other key global players. Saudi Arabia keeps pumping but is experiencing declining rates of output as its basins mature. Even the North Sea is maturing and technology there and elsewhere is more efficiently sucking the oil out of these plays.
For America, unconventional gas growth shows the way for a more secure and optimistic energy future not just in Appalachia but in the upper Midwest, in Texas and the Southeast, in the Rockies. These technologies also shows the way not just in the immediate growth in natural gas, but in the potential for oil both onshore as well as along the continental shelf on both coasts.
The question is whether America will use this opportunity from the squeeze of big oil from many bigger international plays by national oil companies, the weaker demand in global markets, and the near-term leverage potential from proven technology to restore America’s energy balance and long term energy security by making it more attractive for oil and gas investments at home than abroad. Doing so is good for the economy, good for our energy security, create many well paying jobs just when we need them most, and flow tax revenue into Federal and State government coffers.
What’s not to like about this?
 Milici, Rober C., and others (2002). USGS Assessment of Undiscovered Oil and Gas Resources of the Appalachian Basin Province, 2002. Fact Sheet 009-03. United States Geological Survey.
 Engelder, Terry and Lash, Gary (2008). Unconventional Natural Gas Reservoir Could Boost U.S. Supply. Penn State.