Got Gas? A quick look at the United States’ emerging shale gas market



What the frack is fracking?

Fracking (or hydraulic fracturing) is the process of extracting natural gas from shale rock layers deep within the earth. Fracking makes it possible to reach natural gas deposits  in shale plays that were once unreachable with conventional technologies.

Why is natural gas such a hot topic right now?

Technological advances and the expansion of hydraulic fracking have made previously untapped sources of oil and natural gas available. Traditional geographic energy markets – such as Texas – were early adopters of this technology, followed by North Dakota. But the Midwest is the next major source of undeveloped resources, with large gas deposits in Ohio, Pennsylvania and West Virginia.

Horizontal Drilling Rig

Meredithw at en.wikipedia [CC-BY-SA-3.0-2.5-2.0-1.0 or GFDL], from Wikimedia Commons

How is this affecting the energy market?

The large opportunities we’ve seen this year reflect the availability of new sources of natural gas that will provide price stability for years to come. We have seen strong activity in the natural gas-fired power plant and fertilizer markets. Utility companies are diverting some of their power generation away from coal-fired assets to gas-fired, taking advantage of lower costs and meeting new environmental regulations.

What are some of the obstacles to growth in these markets? What does the future hold?

Many of the areas where these large deposits of shale gas exist are new markets for the oil and gas industry, and these areas don’t have the necessary infrastructure to gather, distribute and process the gas. Construction of a network of pipelines and gathering facilities has already begun in these areas; however, there is still significant capacity that needs to be established. Once this network of infrastructure is in place, the gas can be further processed into valuable inputs like ethane and propane that can be used in the chemical and plastics manufacturing industries. The construction of gas cracker plants and plants for manufacturers that use their products represent significant opportunities in the future.

Fast fracking facts (say that fast three times!)

• Production in northeastern Pennsylvania recently passed 2 billion cubic feet per day, up from 0.4 billion cubic feet per day in early 2010

• By 2035, total U.S. gas production is expected to increase to 27.9 trillion cubic feet, up from 21.6 trillion cubic feet in 2010

•Since 2009, more than 72,000 gas and oil jobs have been produced from the increase in horizontal drilling and fracking for natural gas in Pennsylvania alone

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A.C. Braun

posted by A.C. Braun

Skanska USA business development manager

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