Frigid weather across the United States has resulted in a recent increase in demand for heating fuels. Not too long ago, Americans thought that they would be in need of greater natural-gas imports from Canada, the Middle East, and other areas to meet increasing demand, inasmuch as natural gas is the main heating fuel in the U.S. But thanks to a large deposit of shale rock containing natural gas (the deposit stretches from New York to West Virginia[i]) and thanks to a drilling technique called hydraulic fracturing, there is now ample domestic natural gas to meet both residential heating demand and industrial and electric utility demand.  And not only is this area of the U.S. endowed with natural gas resources, but other shale deposits of natural gas are located in Texas, Arkansas, Louisiana, among other states.[ii]

Largely owing to shale gas discoveries, estimated reserves of natural gas in the United States in 2008 were 35 percent higher than in 2006.[iii] Further, because of shale gas production, net imports of natural gas are more than 30 percent lower and domestic production of natural gas is 12 percent higher for the first 9 months of 2009 than they were during the same period of 2007.[iv] Shale gas has made up for declining pipeline imports of natural gas from Canada and slower than expected increases of liquefied natural gas,[v] some of which is being diverted from U.S. markets to China.[vi] Expectations are that production of shale gas will make the U.S. the world’s largest producer of natural gas, overtaking Russia, whose demand plunged as a result of its economic decline.[vii]

U.S. Natural Gas Shale Deposits

There are several natural gas shale deposits in the United States: two of the largest being the Marcellus Shale and the Barnett Shale deposits.  The Marcellus Shale is a sedimentary rock formation located in the Eastern United States that contains significant quantities of natural gas. The area extends from southern New York, across Pennsylvania, and into western Maryland, West Virginia, and eastern Ohio. The first Marcellus well began production in Washington County, Pennsylvania, in 2005. Between then and 2007, more than 375 gas wells were permitted in Pennsylvania. With proven reserves currently at 50 trillion cubic feet, recent estimates are that Marcellus might contain more than 500 trillion cubic feet of natural gas.[viii]

Source: Marcellus Shale – Appalachian Basin Natural Gas Play

Barnett Shale is located in north Texas and its reservoir underlies the cities of Dallas and Fort Worth, plus at least 17 counties totaling 5,000 square miles.  The field, with 2.5 trillion cubic feet of proven reserves, may contain as much as 30 trillion cubic feet of natural gas resources.[ix]

Two other notable shale plays are in north central Arkansas, the so-called Fayetteville Shale, and in northwestern Louisiana, the so-called Haynesville Shale.[x] The Fayetteville Shale play stretches across Arkansas from approximately Fort Smith east to beyond Little Rock. It is approximately 50 miles wide from north to south.[xi] Original gas in place in the Fayetteville Shale is estimated at 52 trillion cubic feet with recoverable reserves of 41.6 trillion cubic feet.[xii]

The Haynesville Shale came into prominence in 2008 as a potentially major shale gas resource and has recently been estimated to contain 250 trillion cubic feet of recoverable gas. Production has boomed since late March 2008.[xiii] Because of the size and location of the Haynesville Shale play, there has been speculation of exporting some of that gas, in the form of liquefied natural gas, from Louisiana ports.

Horizontal Drilling and Hydraulic Fracturing Technology

There are two key technologies that allow the recovery of natural gas from shale rock—horizontal drilling and hydraulic fracturing.  Shale rock contains pore spaces where most of the recoverable gas is located. The gas has difficulty escaping through the pore spaces because they are tiny and poorly connected. Shale rock also contains fractures that break through the rock allowing gas to flow. These fractures intersect other fractures, producing a network of fractures. Given the fracture network and a proper drilling technology, such as horizontal drilling, natural gas can be obtained from a very large volume of shale with just a few wells. A single well can recover gas from many acres of surrounding land.

For example,  the fractures in the Marcellus Shale are vertical. A horizontal well is drilled perpendicular to the fractures, intersecting a large number of the fractures.  Some horizontal wells in the Marcellus Shale have initial flows that suggest that they are capable of yielding millions of cubic feet of gas per day, making them some of the most productive gas wells in the eastern United States.[xiv]

A second method—a technique known as “hydraulic fracturing”—is used to increase the number of fractures  This method uses high-pressure water or gel to induce fractures in the rock surrounding the well bore.  Hydraulic fracturing is done by sealing off a portion of the well and injecting water under very high pressure into the isolated portion of the hole. The high pressure fractures the rock and pushes the fractures open.  To prevent the fractures from closing, several tons of sand is pumped into the pressurized portion of the hole and into the fractures, keeping them open and improving the permeability of the shale.[xv]

While these technologies have been around for years, recent advances have allowed their use in producing natural gas from shale formations.[xvi]

Jobs and Tax Revenues

In 2006, the natural gas development of the Barnett Shale was responsible for creating 55,385 permanent jobs and is estimated to have contributed $490.9 million in revenues to the state of Texas, as well as $227.7 million to local governments.[xvii] The economic benefits, however, are growing even faster than expected.  At the end of 2007, permanent jobs in natural gas development had increased to 83,823 (8.9 percent of total jobs in the Forth Worth area), and annual output had increased to $8.2 billion, up from $5.2 billion, an increase of over 50 percent in just one year. Texas also increased its revenues in 2007 from Barnett Shale activities to an estimated $715.5 million, and revenue to local governments increased to an estimated $378.7.[xviii] Economic projections indicate that by 2015 the Barnett Shale may be responsible for more than 108,000 jobs.[xix]

In 2007, Fayetteville Shale yielded $1.8  billion  of  direct  expenditures, total  economic  output  of  $2.6  billion, and employment  of  9,533  people.  Tax  revenues  from  operations  in  the  Fayetteville  Shale, though not as  significant as those for Barnett, were more  than  $54.6  million  in  revenues and more than $7.0 million in sales tax generated for cities and counties.[xx]

An economic impact analysis on Haynesville Shale indicates that state revenues may reach $1.8 million in 2009, $229.5 million by 2015, and $615.5 million by 2023.[xxi]

Since exploration and drilling in most of these shale plays is new, the extent of the economic benefit is not known and is dependent on the amount of activity at the play. Some studies (e.g., Potential Economic Impacts of Marcellus Shale in Pennsylvania) have compared the economic benefits to those of Barnett Shale, where more data are available for economic assessments.[xxii]

And it seems that the benefits of U.S. innovation in shale gas technology and experience have impacted global politics. The Chinese would like to use the experience gained by the U.S. to determine the potential of shale gas in China and to conduct joint technical studies with the U.S., in order to accelerate the development of China’s own shale gas resources. This is the new “U.S.-China Shale Gas Resource Initiative,” recently launched by the presidents of the two countries.[xxiii]

Criticism of Hydraulic Fracturing

Critics of hydraulic fracturing want it to be regulated by the Environmental Protection Agency (EPA), because they contend that toxic fluids pumped into the ground during fracturing may seep into nearby ground water supplies. However, no actual case of water contamination has been connected to hydraulic fracturing, and U.S. states, which currently regulate hydraulic fracturing, believe that it should remain under their jurisdiction, where regional and local conditions are best understood and where local governments have 60 years of experience. [xxiv] Further, the great majority of hydraulic fracturing activities take place at depths far below any existing groundwater sources that could reasonably be considered underground sources of drinking water.[xxv]

Because of such claims, the EPA conducted a study, released in 2004, in which they concluded that hydraulic fracturing did not threaten water supplies.[xxvi] In February 2009, former U.S. Energy Secretary and current Democratic Governor Bill Richardson of New Mexico introduced a plan to ease unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.[xxvii]

However, some environmental groups and members of Congress are still pressing the EPA to regulate hydraulic fracturing. Current law exempts hydraulic fracturing from EPA review under the Safe Drinking Water Act. A bill to repeal that exemption has been proposed but not enacted.   Supporters of the bill, however, were able to include funding for an additional study of hydraulic fracturing and its impact on drinking water in EPA’s 2010 funding bill, which was signed into law on October 30, 2009.[xxviii]

Another issue that has been raised is the amount of water used to obtain shale gas. A recent study, however, found that shale gas used the least amount of water when compared to producing and transporting other energy sources. Shale natural gas requires only 0.60 to 5.80 gallons per million Btu. In comparison, nuclear generation requires 8 to 14 gallons to produce the same amount of energy, and conventional oil requires 8 to 20 gallons.  The energy source that requires the most amount of water is plant-based biodiesel from soy, requiring 14,000 to 75,000 gallons of water per million Btu of energy produced.[xxix]


U.S. shale gas resources have significantly increased U.S. reserves of natural gas and increased U.S. production of natural gas, the cleanest of the fossil fuels from a greenhouse gas perspective. Its future, however, may be threatened by unnecessary regulation by the EPA of hydraulic fracturing, a technology needed to increase the permeability of the shale rock. Though hydraulic fracturing has been used for years in coal bed methane mines, it is now being attacked by environmentalists as contaminating ground water, although there has been no documented case of such contamination. With fossil fuels providing 84 percent of our current energy, and a projected 78 percent of our energy in 2035,[xxx] natural gas production is important for meeting heating needs as well as industrial and electric utility demand. The Chinese recognize its importance and have signed the U.S.-China Shale Gas Resource Initiative to help promote the industry in China using U.S. expertise.

[i] Marcellus Shale-Appalachian Basin Natural Gas Play,

[ii] Ibid.


[iv] Energy information Administration, Monthly Energy Review, Table 4.1,

[v] Energy Information Administration, Short-term Energy Outlook, December 2009,

[vi] Reuters, “Qatar diverts LNG to higher-paying China from U.S.”, October 27, 2009, AndPR/idUSLR15622520091027

[vii] U.S. Overtakes Russia as the Biggest natural Gas Producer, January 12, 2009,,

[viii] Marcellus Shale-Appalachian Basin Natural Gas Play,

[ix] Barnett Shale,

[x] Ibid.

[xi] About the Fayetteville Shale,

[xii] The Fayetteville Shale,

[xiii] Haynesville Shale,

[xiv] Marcellus Shale-Appalachian Basin Natural Gas Play,

[xv] Ibid.

[xvi] and .

[xvii] The Barnett Shale Formation of North Texas and Oklahoma,

[xviii] Drilling for Dollars: An Assessment of the Ongoing and Expanding Economic Impact of Activity in the Barnett Shale on Forth Worth and the Surrounding Area,

[xix]Barnett Shale,

[xx] University of Arkansas, Projecting the Economic Impact of Fayetteville Shale Play for 2008-2012,

[xxi] An Economic Impact Analysis of the Haynesville Shale Natural Gas Exploration, Drilling and Production, August 28, 2008,

[xxii] Potential Economic Impacts of Marcellus Shale in Pennsylvania: Reflections on the Perryman Group Analysis from Texas, Penn State,

[xxiii] Statement on U.S.-China Shale Gas Resource Initiative, November 17, 2009,


[xxv] American Petroleum Institute, Hydraulic Fracturing,



[xxviii] The Dallas Morning News, EPA to study impact on hydraulic fracturing on drinking water, December 16, 2009,

[xxix] Deep shale gas uses the least amount of water, January 12, 2010,

[xxx] Energy Information Administration, Early Release of Annual Energy Outlook 2010,

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