The material below first appeared in a report by the Shale Gas Production Subcommittee for the U.S. Department of Energy in 2011.

FROM SHALE GAS PRODUCTION SUBCOMMITTEE 90-DAY REPORT

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The Subcommittee believes that the U.S. shale gas resource has enormous potential to provide economic and environmental benefits for the country. Shale gas is a widely distributed resource in North America that can be relatively cheaply produced, creating jobs across the country. Natural gas—if properly produced and transported—also offers climate change advantages because of its low carbon content compared to coal.

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Domestic production of shale gas also has the potential over time to reduce dependence on imported oil for the United States. International shale gas production will increase the diversity of supply for other nations. Both these developments offer important national security benefits.¹

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The development of shale gas in the United States has been very rapid. Natural gas from all sources is one of America’s major fuels, providing about 25 percent of total U.S. energy. Shale gas, in turn, was less than 2 percent of total U.S. natural gas production in 2001. Today, it is approaching 30 percent.² But it was only around 2008 that the significance of shale gas began to be widely recognized. Since then, output has increased four-fold. It has brought new regions into the supply mix. Output from the Haynesville shale, mostly in Louisiana, for example, was negligible in 2008; today, the Haynesville shale alone produces 8 percent of total U.S. natural gas output. According to the U.S. Energy Information Administration (EIA), the rapid expansion of shale gas production is expected to continue in the future. The EIA projects shale gas to be 46 percent of domestic production by 2035. The following figure shows the stunning change.

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The economic significance is potentially very large. While estimates vary, well over 200,000 jobs (direct, indirect, and induced) have been created over the last several years by the development of domestic production of shale gas, and tens of thousands more will be created in the future.³ As late as 2007, before the impact of the shale gas revolution, it was assumed that the United States would be importing large amounts of liquefied natural gas from the Middle East and other areas. Today, the United States is essentially self-sufficient in natural gas, with the only notable imports being from Canada, and expected to remain so for many decades. The price of natural gas has fallen by more than a factor of two since 2008, benefiting consumers in the lower cost of home heating and electricity.

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Endnotes

¹The James Baker III Institute for Public Policy at Rice University has recently released a report on Shale Gas and U.S. National Security, available at: http://bakerinstitute.org/publications/EFpub-DOEShaleGas-07192011.pdf.

²As a share of total dry gas production in the “lower 48,” shale gas was 6 percent in 2006, 8 percent in 2007, at which time its share began to grow rapidly—reaching 12 percent in 2008, 16 percent in 2009, and 24 percent in 2010. In June 2011, it reached 29 percent. Source: Energy Information Administration and Lippman Consulting.

³Timothy Considine, Robert W. Watson, and Nicholas B. Considine, “The Economy Opportunities of Shale Energy Development,” Manhattan Institute, May 2011, Table 2, page 6.

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