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Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States

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  • Wang, Qiang
  • Chen, Xi
  • Jha, Awadhesh N.
  • Rogers, Howard

Abstract

Extraction of natural gas from shale rock in the United States (US) is one of the landmark events in the 21st century. The combination of horizontal drilling and hydraulic fracturing can extract huge quantities of natural gas from impermeable shale formations, which were previously thought to be either impossible or uneconomic to produce. This review offers a comprehensive insight into US shale gas opportunities, appraising the evolution, evidence and the challenges of shale gas production in the US. The history of US shale gas in this article is divided into three periods and based on the change of oil price (i.e., the period before the 1970s oil crisis, the period from 1970s to 2000, and the period since 2000), the US has moved from being one of the world's biggest importers of gas to being self-sufficient in less than a decade, with the shale gas production increasing 12-fold (from 2000 to 2010). The US domestic natural gas price hit a 10-year low in 2012. The US domestic natural gas price in the first half of 2012 was about $2 per million British Thermal Unit (BTU), compared with Brent crude, the world benchmark price for oil, now about $ 80–100/barrel, or $14–17 per million BTU. Partly due to an increase in gas-fired power generation in response to low gas prices, US carbon emissions from fossil-fuel combustion fell by 430millionton CO2 – more than any other country – between 2006 and 2011. Shale gas also stimulated economic growth, creating 600,000 new jobs in the US by 2010. However, the US shale gas revolution would be curbed, if the environmental risks posed by hydraulic fracturing are not managed effectively. The hydraulic fracturing is water intensive, and can cause pollution in the marine environment, with implications for long-term environmental sustainability in several ways. Also, large amounts of methane, a powerful greenhouse gas, can be emitted during the shale gas exploration and production. Hydraulic fracturing also may induce earthquakes. These environmental risks need to be managed by good practices which is not being applied by all the producers in all the locations. Enforcing stronger regulations are necessary to minimize risk to the environment and on human health. Robust regulatory oversight can however increase the cost of extraction, but stringent regulations can foster an historic opportunity to provide cheaper and cleaner gas to meet the consumer demand, as well as to usher in the future growth of the industry.

Suggested Citation

  • Wang, Qiang & Chen, Xi & Jha, Awadhesh N. & Rogers, Howard, 2014. "Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 1-28.
  • Handle: RePEc:eee:rensus:v:30:y:2014:i:c:p:1-28
    DOI: 10.1016/j.rser.2013.08.065
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