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Natural Gas Boom Prompts Questions in Congress on the Industry’s Future

The domestic natural-gas boom couldn’t have come at a better time for President Barack Obama. His first term started amid a recession and with a legislative failure to cap U.S. greenhouse gas emissions, but ended with natural gas hitting historically low prices that helped fuel an energy and manufacturing jobs comeback.

The Energy Information Administration — the Energy Department’s statistical arm — in most scenarios projects the United States will balance energy imports and exports between 2020 and 2030, thanks to the boom. And the United States has been the world’s top natural-gas producer since 2012.

But the fortunes brought in by the current glut could evaporate quickly. Increased demand might lead to price spikes, and pipeline constraints may prevent some markets from enjoying the newfound bounty. New scientific research about the amount of climate-warming methane emitted during natural-gas production and transmission also could spell trouble for continued reliance on the fuel as the United States moves to shrink its carbon footprint.

The key to the industry’s future lies partly in how it responds to growing grass-roots movements to mobilize opposition to drilling and pipelines, according to policy advocates and those with a stake in the industry.

“Frankly, I think the biggest threat to the future of unconventional gas development in the United States is sloppy production practices and lax regulation that end up convincing local communities that the risks … in their communities are unacceptable,” said Mark Brownstein, who manages the Environmental Defense Fund’s work on natural gas issues.

There are at least five big issues that will determine how long the U.S. can sustain its leadership position in natural gas — and whether staying on top makes sense in the context of global climate change.

Grass-Roots Efforts

Gas infrastructure proposals are increasingly becoming the focus of grass-roots campaigns focused on the environmental impacts of building infrastructure for fossil fuels — a phenomenon America’s Natural Gas Alliance President and CEO Marty Durbin has dubbed the “Keystonization” of infrastructure projects, a nod to the tactics that have successfully stymied the Keystone XL oil pipeline. Activists have paired broad concerns about climate change with worries about immediate environmental impacts within communities to create movements against individual projects, and they’re getting attention.

Fracking opponents now regularly picket outside the Washington headquarters of the Federal Energy Regulatory Commission, which has jurisdiction over interstate gas pipelines and liquefied natural gas facilities, to protest what they say is the agency’s rubber-stamp mentality over projects that endanger water quality in communities and lock the country into carbon-emitting energy sources for decades.

“FERC is supposed to regulate the gas industry, yet it constantly approves dangerous fracked gas projects like interstate pipelines, compressor stations and liquefied natural gas projects,” one activist group said in May.

Energy companies have taken notice, including Dominion Energy, which has begun building a gas-export facility at the Cove Point LNG terminal in Maryland.

“Their objective is to overrun a well-tested, open, transparent and effective regulatory model, where opposing views have an appropriate role and a strong voice, in an attempt to bring all development to a dead stop,” said Diane Leopold, president of Dominion Energy.

Methane Worries

Concerns about drinking water contamination dominated the early years of the fracking boom, a process by which a cocktail of water, chemicals and sand is blasted underground to free hydrocarbons trapped in shale formations. But now, the extent to which methane — a greenhouse gas with a much greater global warming potential than carbon — is leaking throughout the system is raising alarms.

Government officials are seeking to quantify how much methane is leaking, and if the gaps aren’t plugged, scientists say it could undermine the climate benefits of natural gas .

The Obama administration has indicated more stringent methane limits will be necessary to meet the U.S. pledge to cut greenhouse gas emissions. The EPA is slated to propose stricter limits this summer on methane emissions from new oil and gas wells, as well as processing and transmission systems. And the Interior Department is expected to offer its own proposal by July to clamp down on the venting and flaring of gas on public lands.

Infrastructure, Distribution

Government officials and industry leaders alike have bemoaned the slow pace of adding more pipelines to places such as the Bakken shale formation in North Dakota to satisfy demand for oil and natural gas and to supplement routes in the Northeast.

The Obama administration made transmission, storage and distribution systems the focus of the first edition of the Quadrennial Energy Review. The study, released in April, calls for agencies to encourage states to upgrade aging, leaky pipelines that the federal government generally does not oversee.

Price and Supply

The big question is how much natural gas will cost in the coming years as consumers and industries boost demand.

One factor will be how much gas is ultimately shipped to countries that are not free-trade partners, where companies need export approvals from the Energy Department and FERC. The EIA predicted last year that more exports would mean higher domestic prices, a prospect some Democratic lawmakers say should rule out export licenses.

Depending on the level of natural gas in the global market, said former Sen. Byron Dorgan, a North Dakota Democrat, the resource could develop an international price like oil — the price for which is still largely dictated by OPEC. “Whenever you’re riding that roller coaster that someone else controls, you need to be concerned,” Dorgan said.

Congress, Dorgan said, should pass bills to make fuel diversity — with a focus on renewables — a central tenet of energy policy. The House and Senate Energy committees hope to advance broad energy legislation this Congress for the first time since 2007, though both are expected to emphasize infrastructure over clean energy.

A Bridge or a Habit?

Environmentalists and others envision an energy future where natural gas plays second fiddle to wind and solar power, along with better transmission lines and widespread battery storage. But with so much cheap gas around, they worry that government won’t do enough to promote such zero-carbon resources.

“In some ways, the biggest climate risks around natural gas have to do with becoming too complacent and failing to invest in the science of the future,” said Michael Levi, an energy and environment fellow at the Council on Foreign Relations.

What could be politically realistic, Levi said, is for Congress to shore up safety measures around natural gas production and infrastructure. That could help keep industry and government from losing the public’s trust in a resource that has quickly made a low-carbon future look more easily attainable than ever before.

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