Sept. 24, 2012
-- Huge leaps in hydraulic fracturing technology, “fracking,”
have occurred in the past four years. Now, as a result, new regions of the United States are beginning to present themselves as not only viable, but abundant oil and natural gas drilling sites. A crystalline example of this, is that in the past few years the Marcellus Shale region in northeastern Pennsylvania and upstate New York has opened up as an oil and gas hotspot. The ability to drill in previously untapped areas completely hinges on litigation – the issue of legally opening the state to the oil and gas industry. On the whole, states have been very open to the idea of allowing oil and gas companies to come into their territories to drill. However, opposition is still high in certain places. In Pennsylvania, the Philadelphia City Council placed a moratorium on drilling in the Marcellus Shale region because of somewhat inconcrete environmental concerns. That moratorium is currently being debated and renegotiated. On the contrary, in North Carolina legislation was passed this past July, by a narrow margin of a single vote, which will open shale plays in the state to oil and gas companies. Geologists estimate that North Carolina contains roughly 1.7 trillion cubic feet of natural gas, concentrated in just three counties!
The United States oil and natural gas industry is in the midst of a boom, as a direct result of these aforementioned fracking improvements. Drilling in a new region spurs development, and also creates jobs – at a time when American citizens are still desperate for employment. One industry that will progressively expand in the United States – as our natural gas resources are utilized on a large scale – is the chemical industry. Chemicals that are natural gas-derivatives, in the past, have been manufactured in Middle Eastern countries where natural gas has been less expensive than in the United States. However, recently, natural gas has become as cheap domestically as it has ever been abroad. Expect chemical companies to relocate domestically, focusing on undeveloped areas with large shale plays.
Another source that will increase U.S. natural gas production and generate jobs, is Mexican demand for natural gas. Petroleos Mexicanos (Pemex), Mexico’s state-sponsored oil and gas monopoly, has begun cutting natural gas supplies to some of its largest customers by as much as 45% to cope with increasing demand from households and steelmakers alike. Pemex, for the most part, has failed to tap into Mexico’s abundant natural gas reserves, forcing it to turn to imports from the U.S. in order to keep up with demand. The country’s oil and gas pipelines are functioning at ~95% in an attempt to cover shortfall, but many Mexican businesses are still regularly forced to work through outages that can sometimes last hours. In response, two new gas pipelines that would connect central Mexico with Texas and Arizona – where plentiful shale gas supplies would welcome an outlet – are being rushed through planning and development.
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