The document discusses three key assumptions about natural gas: that reserves will last 100 years thanks to fracking, prices will remain low, and it is cleaner than other fossil fuels. It summarizes data on current and projected US energy consumption, CO2 emissions, and natural gas production trends. Experts argue reserves have been overstated, well productivity declines rapidly, and the marginal cost of production is higher than claimed. While natural gas will remain important, its ability to replace coal significantly for electricity or oil for transportation is limited, even with increased production challenging geologically and environmentally. It may not be the "clean bridge fuel" assumed due to full lifecycle emissions and inability to scale to required energy levels.

2. Key Investigative Points:
• Assumption #1: That, thanks to new techniques for
hydraulic fracturing and horizontal drilling of shale, we
have sufficient natural gas resources to supply the
needs of our country for the next 100 years.
• Assumption #2: That the price of natural gas, which
has historically been volatile, will remain consistently
low for decades to come.
• Assumption #3: That natural gas is much cleaner and
safer than other fossil fuels, from the standpoint of
greenhouse gas emissions and public health.

3. Figure 1. U.S. energy consumption by source projected through
2035.

4. Figure 2. U.S. energy consumption by end-use sector projected
through 2035.

5. Figure 5. U.S. natural gas consumption by end-use sector
projected through 2035.

6. Figure 8. U.S. CO2 emissions by fuel projected through 2035.

7. Figure 9. U.S. CO2 emissions by utilization sector projected
through 2035.

9. Figure 16. U.S. natural gas supply by source in the latest EIA
Annual Energy Outlook.

10. Figure 10. Number of U.S. producing natural gas wells versus
the average productivity of each well from 1990 through 2010.

11. Figure 11. Annual number of successful U.S. natural gas wells
versus total U.S. dry gas production 1990 through 2010.

12. Figure 12. Price of natural gas in the United States versus
European gas (incl. Russia) and Asian LNG.

13. Figure 13. Shale gas plays in North America.
Image: Government of Canada, The National Energy Board, Energy Briefing Note: A Primer for Understanding Canadian Shale Gas (2009).

14. The Hype on Shale Gas
“I believe natural gas can and should be the driving force for
how this Congress can take bold action to free our country
from the death grip of high prices for imported oil, thereby
improving our economy, enhancing national security and
helping the environment.”
“I believe U.S. natural gas producers can increase supplies by
5% per year for at least the next decade and that assumes
there is no more access to public lands and waters than there
is today.”
[That’s 63% in 10 years!]
(Chesapeake Energy CEO Aubrey McClendon,
Testimony to Congress, July 30, 2008)
(Aubrey McClendon, CEO Chesapeake Energy and former Chairman of American Clean Skies Foundation
who commissioned The Navigant Consulting Inc. study on natural gas, testimony to Congress July 30, 2008)

15. Analyst Arthur Berman on Shale Gas
(Washington DC, October, 2010)
“Shale plays are marginally commercial at best.”
“Average well life much shorter than predicted and the volume
of commercially recoverable gas has been greatly overstated.”
“The plays have consistently contracted to a core area that
represents 10-20% of the resource that was initially claimed.
The manufacturing model has failed.”
“These are not low-cost plays: the marginal cost of production
for most companies is $7.50/Mcf based on regulatory filings
“Reserves have been greatly over-stated and 80% of booked
reserves are undeveloped.”
(from Art Berman’s ASPO-USA presentation in October 2010)

16. Figure 14. Schematic diagram of a horizontal shale gas well.
Image: Copyright (c) The Analysis Group, 2011. Used with permission.

17. Figure 15. A waste pit in the Catskill Mountains containing
drilling fluids from the hydraulic fracturing process.
Photo Copyright © 2010 J. Henry Fair

18. Figure 17. Forecast growth in U.S. shale gas production in the
2009, 2010, and 2011 EIA reference case forecasts.

19. Figure 19. Historical U.S. gas prices compared to European gas (incl. Russia)
and Asian LNG prices and the EIA forecast of U.S. gas prices through 2035.

20. Natural Gas Production in the United States
by Well Vintage at Yearend 2006
(60% of Production from wells drilled in past FOUR YEARS)
60%
From
Most
Recent
FOUR
YEARS
(data copyright IHS Energy, Diagram prepared and copyright by EOG Resources Inc., 2006)

21. Figure 18. Historical and projected U.S. gas production and drilling rates for
the EIA forecast and author’s best estimate of the drilling rates that would be
required to achieve the EIA forecast, based on historical performance.

22. Figure 7. U.S. electricity generation by fuel projected through
2035.

23. Figure 20. Location and relative size of U.S. electricity
generating capacity by fuel

24. Figure 27. Cumulative additions of coal- and natural-gas-fired generation
plants in the United States over time according to the number of plants
commissioned in each period and their generating capacity.

25. Figure 21. Amount that U.S. Lower-48 natural gas production would have to
increase to cover the electricity generated by coal in the EIA Annual Energy
Outlook 2011 forecast.

26. Figure 22. Comparison of Howarth et al. estimates for shale gas, conventional gas ,
and coal in terms of carbon emissions per unit of heat versus Global Warming
Potential using the estimates of the IPCC and Shindell et al. on 20- and 100-year
timeframes.

27. Figure 23. Comparison of CO2 equivalent emissions per kilowatt-hour for the
mean shale gas emission estimate of Howarth et al. compared to surface-mined
coal for both the existing coal and gas electricity generation fleet and best-
technology coal and gas.

28. Figure 24. Comparison of future CO 2 equivalent emissions per kWh, if a 40%
reduction is achieved in current methane emissions, for the mean shale gas
emission estimate of Howarth et al. compared to surface-mined coal for both the
existing coal and gas electricity generation fleet and best-technology coal and
gas.

29. Figure 4. U.S. oil consumption in the transportation sector by
end use projected through 2035.

30. Figure 28. Amount that U.S. Lower-48 natural gas production would have to
increase to cover the oil burned by light and heavy vehicles in the EIA Annual
Energy Outlook 2011 reference case projection.

31. Key Take Aways:
„ The ability of natural gas to substantially replace coal for electricity
or oil for transport in the longer term is limited.
„ Maintaining and growing natural gas production as projected by the
EIA will require higher prices and will be a capital intensive, geological
and environmental challenge. Yet, even if achieved, will not allow for
significant replacement of coal or oil in current
business-as-usual projections.
„ The mantra of natural gas as a “clean bridge fuel” to a renewable
energy future is highly suspect, because of its environmental footprint
on the landscape, lack of ability to scale to required energy input levels
and full-cycle greenhouse gas emissions.
„ There is no “Free Lunch” when it comes to fossil fuels. They will be
very important inputs going forward but must be objectively deployed
in an environment that maximizes conservation and efficiency.