Fracking Cuts Greenhouse Gases

A decade ago, if the Environmental Protection Agency (EPA) wanted to make realistic cuts to climate-changing carbon dioxide (CO2) emissions they should have thought about pumping water, sand, and chemicals into deep, mile-wide wells to blast open supplies of oil and natural gas. The process, known as “fracking,” has had a direct impact on CO2 reductions in the U.S., according to a study in the Environmental Science & Technology Journal.

Advances in natural gas production have allowed drillers to produce eight-times the amount of gas from each well, causing prices to plummet. Low natural gas prices have incentivized electric utilities to switch from dirtier coal to cleaner-burning gas.

Prior to recent innovations, if producers wanted to extract natural gas they merely drilled down (vertically) to shallow pools of natural gas. But technological advances now allow companies to drill vertically and then horizontally to open up gas-rich shale formations over a mile wide. In other words, instead of drilling eight vertical wells, companies can now drill one well with the ability to hydraulically fracture (frack) long, horizontally drilled wells into otherwise difficult to access shale formations.

A gold rush of shale gas plus the ability to get eight-times the amount of energy from one well has caused gas supplies to skyrocket, driving down prices. With low prices, companies are fleeing the historically inexpensive and dirty coal-fired plants and maximizing natural gas plants, which emit roughly half the greenhouse gases. According to the study, the U.S. emitted nearly 9% less CO2 (the chief greenhouse gas) in 2009 than it did in 2008, mostly because gas prices dropped from $12 per million British thermal units in June 2008 to less than $4 per MMBtu in September 2009. During that time, the cost of generating electricity from natural gas plants fell an average of about 4 cents per kilowatt. With avarage natural gas prices at $2.30 MMBtu today, it is safe to say this trend will continue. Utilities are shutting down coal-fired plants at record pace and replacing them with new or expanded gas-fired plants.

If you told regulators and analysts a decade ago that the U.S. would be converting liquified natural gas (LNG) import plants into export plants by the end of the decade because of newly discovered vast supplies of natural gas they would have laughed at you. Likewise, if 100 years ago you told someone that scientists would create a substance called plutonium, figure out how to immerse it in water to create steam, and run turbines using that steam to create electricity to power our homes with essentially zero emissions you probably would have been checked into a facility. Or, if you told someone in 1970 that something called the internet would be created that would allow you to type a letter and send it across the world instantly without cutting down a tree to produce paper they most likely would have thought you were describing a Sci-Fi movie.

But this is what happens as technology improves. Why is this important? Regulators are usually concerned with environmental benefits but not that interested in cost. They are unable and unwilling to concede that good things can happen if energy markets operate unfettered. This is just another example of how government planners cannot predict how technological advancements bring about environmental benefits and make energy cheaper for everyone.