Sep 10, 2013 5 min read

PITTSBURGH – A consultant who studied the abundant output of natural gas from unconventional shale said Tuesday the United States should be “gas independent” in less than five years.

But Justin Carlson, senior manager for energy analytics company Bentek, added the United States needs to find markets for its new-found natural gas, much of which is sitting in capped wells because it has nowhere to go without additional infrastructure.

Carlson and several other speakers at the Penn State Gas Utilization Conference at the Omni William Penn told about 200 attendees that while infrastructure projects abound, the natural gas being extracted from the Marcellus Shale play and other unconventional shales around the country needs to find more markets.

“There’s been an increase in natural gas utilization, but it has been slow,” commented Bill Hall, director of the Shale Gas Innovation & Commercialization Center, as he opened the two-day conference.

“It’s taking a long time, in our opinion, to get there.”

According to Tom Murphy, co-director of the Marcellus Center for Outreach and Research, at the end of 2012, there were 6,245 unconventional wells drilled across Pennsylvania, “but half of the wells drilled are waiting to be put online.”

It isn’t that markets don’t exist.

The fuel is rapidly ascending in the power generation industry, noted Dr. Joseph Bowring, an independent analyst for the 13-state PJM Interconnection, which includes Pennsylvania. PJM, whose members include Duke Energy, First Energy and a number of other power companies, ensures that power is available for industrial, commercial and residential customers in one of the most heavily populated regions of the United States.

He said the use of natural gas as a fuel for power generation in PJM is up 40 percent over the past decade as a result of the abundance of cheap gas from the Marcellus play.

The increase is significant, as PJM is the largest wholesale competitive power market in the world.

According to Bowring, in 2011, coal accounted for 47 percent of PJM’s power generation, but in 2012 declined by 7.4 percent, while natural gas jumped 39 percent over the same period.

While the two fuels have given up some of their losses and gains due to price fluctuations, Bowring said gas-fired generators are the power plants of choice in PJM, a trend he said will continue in the years ahead.

While natural gas is making inroads as a fuel for the transportation market, Nick Jones, an energy advisor for Exxon-Mobil’s corporate strategic planning area, said natural gas is expected to penetrate the heavy duty vehicle market, but light-duty vehicles probably will continue to depend on hybrid and electric models.

Jones also predicted that shale gas will be a prominent fuel around the globe, not just in the United States.

By 2020, Jones, said, Exxon-Mobil sees the United States being a net exporter of natural gas, while all of North America will become a net exporter of the fuel by 2030.

Jones’ assessment was seconded by Sugandha Tuladhar, of the economic consulting group NERA, which was commissioned by the government to study the future of natural gas exports.

“Gas is right on the cusp of being able to supply all of our needs, as well as to be able to be exported,” he said. “There’s a lot of demand out there in terms of natural gas, particularly in gas used for electric generation.”

Back in the United States, the country is seeing the beginning of a manufacturing renaissance because of cheap, abundant natural gas, said Erica Bowman, chief economist for America’s Natural Gas Association, which represents the country’s largest oil and gas exploration companies.

She said there are more than 120 separate projects by American companies to “reshore” manufacturing involving everything from chemicals, aluminium and plastics.

But those projects should represent the tip of an iceberg, she added.

“There needs to be more demand for natural gas to take away this (vast) supply,” Bowman said.

But the big supply and its potential to create millions more manufacturing jobs over the next decade could be threatened by proposed rules by the Environmental Protection Agency that could curtail the production of natural gas, said Ross Eisenberg, vice president of the National Association of Manufacturers.

One of the biggest gainers in manufacturing is expected to be the American chemical industry, since ethane derived from wet natural gas is the feedstock for all types of plastics, including polyvinyl chloride, ethylene and glycol, said Roger Bernstein of the American Chemistry Council.

Despite the postive outlook for using natural gas, Bentek’s Carlson said much of the potential for natural gas will depend upon ample infrastructure.

While current projects like Sunoco’s Mariner West and Mariner East pipelines will help to move some of the Marcellus ethane and propane production to markets, Carlson said more needs to be done.

“We’re not doing enough to support production,” he said.