An Energy Superpower
America is now the top producer of natural gas on the planet by a massive margin. This represents a tremendous advantage for the American economy and standards of living. How did we get here?
This energy abundance is relatively new. The initial wave of natural gas and oil production that allowed America to fuel its allies during WWII had largely receded as wells ran dry. Petroleum imports accounted for 60% of consumption, while coal powered most of the power plants now fueled by natural gas. As recently as the early 2000’s, there was tremendous interest in LNG import terminals to meet demand from natural gas utility customers. Politicians frequently discussed “energy independence” and reducing dependence on foreign, frequently hostile, powers for the energy that made modern life possible. That all changed just 15 years ago with the Shale Revolution.
It had long been known that there were massive reserves of natural gas and oil locked up in shale formations across the United States. The problem is that shale isn’t permeable. Imagine a rock formation like Swiss cheese, with the empty spaces full of natural gas. You could sink a well down into such a formation, but because the natural gas exists only in pockets, anything outside the radius of the well couldn’t be reached. Underground oceans of energy were completely untapped while America was forced to import natural gas and oil at inflated prices and adjust its foreign policies to avoid upsetting various dictatorships and kleptocracies willing to use energy as a policy lever.
Many energy companies were largely focused on looking for more conventional fields abroad over shale formations. It took American ingenuity combined with innovation to figure out how to exploit shale formations. George Mitchell bet the farm on their ability to learn how to profitably extract natural gas from shale formations and his bet paid off. He combined hydraulic fracturing and horizontal drilling to enable the extraction of gas from previous unviable shale formations. A well is drilled down as normal, before the bit is turned to the side, and the remainder of the well drilled horizontally. Then, the operators pump a mixture of primarily water and sand into the well, raising the pressure in the shale fractures, allowing the trapped natural gas to flow through the new gaps and into the well.
Later innovations figured out how to drill additional horizontal wells for the same lateral one. Innovations like this keep production prices declining and make it impossible for price collusion by OPEC to undercut American production. This technique proved so productive that, according to the U.S. Department of Energy, 95% of new American wells drilled today are shale wells.
The accessibility of natural gas has also been good for the planet. Increased use of natural gas has accounted for 61% of total electrical grid emissions reductions in the United States since 2005. Thanks to our innovation, American natural gas is also some of the cleanest produced anywhere in the world. A 2019 study from the United States National Energy Technology Laboratory determined that American LNG exported to Europe is close to 40% lower emissions than Russian pipeline natural gas to the same destination. It’s also been fantastic for American customers, as the graph below with United States Energy Information Administration data shows.
America’s role as the world’s preeminent energy superpower is key to its position globally and to our standard of living at home. The natural gas industry is committed to continue providing America with the advantages offered by affordable, low carbon energy.