Last week I attended an excellent monthly breakfast program of the Washington Clean Tech Alliance. The April program featured a panel on the future of natural gas. I attended because I am very interested in whether the energy picture has changed as much as it appears, in the past three years.

In 2006 when I wrote my last book, Turning the Future Into Revenue, I began the energy chapter with the following words, “The world is running out of oil. Just in time.” At that time, two years before oil prices hit their (so far) historical high of $147 a barrel, investors and institutions were catching up to peak oil, the knowledge that at some point we will have used up half the oil in the world and started down the back side of the supply curve. The only question is when. It seemed to many observers, circa 2006-2009, that the halfway point had been reached. It is still safe to say that the cheap and easy oil days are mostly behind us, but the energy picture has become more complex recently.

Hydraulic fracturing of oil and gas bearing shale rock, or fracking, when combined with improved horizontal drilling has begun to push the peaks forward in time. The biggest change in the energy picture, we learned last week, comes from shale gas. At the same time I was writing about energy in 2006, the natural gas industry was warning utility commissions that big price increases were on the horizon, because of short supplies, increases that would take the price per million BTU’s to $14. The U.S. and Canada were gearing up to build port facilities to import liquefied natural gas. Today the price hovers a bit below $2, because there is a glut of gas being developed in the shale oil fields in North America, and instead of anticipating import facilities, the focus is on the need for export facilities.

This chart, from the Energy Information Agency, illustrates how much more natural gas is anticipated by 2035, and how much of that comes from shale fields. At the WCTA session that I attended, there was confidence expressed that the gas is there and recoverable. The larger concerns focused on how to develop sufficient demand for all the gas by switching much electricity production and transportation to natural gas. In addition there is concern that the price has been driven so low that exploration and development will slow, having become uneconomical.

On the risk side there are concerns about water supply, as it takes a lot of water to produce a barrel equivalent of natural gas. While gas is cleaner than coal or diesel at the point of combustion, there is concern that gas leakage at the well head can make it actually a dirtier fuel in terms of green house gases, although the industry assures us that this is a technical issue that can be fixed by best practices. And of course there is concern about long run contamination of ground water from fracking chemicals used to force the gas from the shale rock. Again, the industry assures everyone that the shale is so much deeper than ground water there is little chance of contamination through migration. However, since the fracking pipes are left behind when a well plays out, leaving a long term channel between layers of rock, it seems reasonable to predict that some migration will occur in the very long run.

Regardless of the long-term risks, it is pretty safe to assume that an energy hungry world will continue to develop these resources. Whether there is really a 100-year supply, as industry advertising insists, is open to conjecture. But, on the whole, natural gas appears to offer a cleaner and cheaper bridge to the long-term energy future.