The price of gas at the pump is rising dramatically, but the cost of the other gas – natural gas – is going in the other direction.
Thanks to breakthroughs in exploration and extraction, natural gas is becoming plentiful in North America. Companies have uncovered vast reserves of natural gas deep underground in shale rock and developed a new drilling technique called hydraulic fracturing to retrieve it.
The bounty is so large that some drilling companies are saying the United States could become the Saudi Arabia of natural gas. ExxonMobil is running ads boasting that the United States may be sitting on enough gas reserves to last 100 years. Natural gas reserves in the United States are growing so quickly that the US Energy Information Administration keeps ratcheting back its forecasts of future prices.
The implications are enormous for the country and New England. Natural gas is the dominant fuel used for heating and cooling in homes across the country. It is also the fuel used to produce 40 percent of New England’s electricity. As new supplies of natural gas are found, homeowners are paying less to heat and light their homes.
NStar Corp. recently announced that the price of electricity it buys for some of its customers will hit a six-year low in July, thanks largely to declining natural gas prices. The company estimates the typical customer will save more than $2.30 a month, or about 3 percent of their bill.
“It’s a supply-side situation,” says James Daly, NStar’s director of electric and gas energy supply, explaining that growing supplies of natural gas, primarily shale gas, are having a dramatic impact on prices.
Environmentally, the growing supply of natural gas is a good news-bad news situation. The good news is that natural gas may be able to supplant other fossil fuels such as coal and oil that, when burned, are more harmful to the environment. The bad news is that dropping natural gas prices make it even harder for wind and solar projects to be price competitive.
Jeremy McDiarmid, Massachusetts director of Environment Northeast, acknowledged lower natural gas prices put more pressure on renewable energy developers, but he said state laws requiring a reduction in greenhouse gas emissions and the purchase of renewable energy should allow the industry to keep growing.
The other big environmental concern is the shale gas drilling itself. Hydraulic fracturing involves pumping more than a million gallons of pressurized water, sand, and chemicals into shale rock until the rock fractures, releasing the trapped gas. Drillers say the practice is safe and, at 10,000 feet below the surface, far away from the water table. But the jury is still out on their safety claims. A new study released this week by scientists at Duke University found that private water wells near drilling sites in Pennsylvania and New York had methane levels 17 times as high as those in non-drilling areas.