State Department official says U.S. shale-gas boom has ‘transformed global energy markets’

A senior State Department official said Tuesday that the U.S. boom in producing natural gas from shale rock formations could pave the way for other countries to expand development that allows displacement of carbon-heavy coal.

David Goldwyn, the coordinator for international energy affairs, was bullish about global shale-gas potential in remarks with reporters during a State Department conference in Washington, D.C., devoted to international coordination on the resource.

“The U.S. shale-gas phenomenon has transformed global energy markets. Because we have discovered and we have the technology to develop efficiently large quantities of gas from shale, global prices of liquefied natural gas have decreased. Gas has become cheaper. Gas is now competitive with coal on a BTU basis, which means that countries that might use coal can now not make an economic choice, but on a competitive basis choose gas for their next level of power generation,” he said.

He said plentiful shale-gas supplies can help increase energy security, giving nations — including China and India — the ability to diversify and expand energy sources, and slow greenhouse gas emissions (burning natural gas emits fewer greenhouse gases than coal or oil).

"In Eastern Europe in particular, it’s really diversity of supply; it’s a national security issue," Goldwyn said.

Goldwyn said a major goal of the conference is working with other countries to help stand up the needed regulatory structures for development. “We have, in our country, an umbrella of laws and regulations that makes sure this is done safely and efficiently. We have federal regulation of air and water. We have state regulation of land use and water. We have the capacity to monitor and to regulate. And even then, there’s the need for enforcement,” he said.

“So what we did was we gathered all these agencies together for two days to explain all of these things to governments,” Goldwyn added. He said there were 20 countries represented at the conference.

But the conference comes as environmental activists say U.S. shale-gas production is endangering water supplies due to the industry’s use of a drilling technique called hydraulic fracturing. It involves high-pressure injections of chemicals, water and sand to break apart rock formations and enable trapped gas to flow.

The U.S. EPA is currently studying the environmental and health effects of “fracking,” — the House Energy and Commerce Committee is also probing the drilling method. Drillers won exemptions from key Safe Drinking Water Act mandates in a 2005 energy law.

Goldwyn, however, seemed confident that U.S. and state-level regulators are proceeding carefully with development.

“While hundreds of thousands of wells have been drilled successfully in the United States so far, the lesson that we want all these countries to understand is that you have to have technically competent people operating and you have to have laws and regulations in place first,” he said.

“We also heard a lot about the evolution in the states about new requirements for disclosure when – of what’s in the fluids. We heard new things from the companies about the move to use organic and green fluids in the process and about new technology for making the operations safer,” he later added.

—This post was updated at 5:11 p.m. on Aug. 24.