Good article in the NY Times on a new drilling technology that has dramatically increased the world's supply of accessible natural gas.
The new method extracts natural gas from shale, a plentiful rock rich in organic material but only recently tapped as a energy source. The new drilling method fractures shale and uses horizontal drilling to collect the gas. A recent study by a leading energy analysis firm, Cambridge Energy Research Associates, shows that shale gas has doubled the world's known gas reserves. Great quote from their chairman:
"The projections suggest that the new method of producing gas “is the biggest energy innovation of the decade,” said Daniel Yergin, chairman of the Cambridge consulting group. “And the amazing thing is there was no grand opening ceremony for it. It just snuck up.”"
The emergence of shale gas has stunned the natural gas industry. According to a Reuters article, as recently as 2006 the industry believed the U.S. would be a large importer of liquefied natural gas by 2010. Instead, the U.S. has a natural gas glut and prices have fallen substantially over the last couple of years.
The new drilling technology is good news for the environment. Natural gas burns more cleanly and emits fewer greenhouse gases than coal or oil. And since India and China have a lot of shale, the hope is these countries will be able to reduce their dependency on coal for electric power generation.
We believe energy innovation will thrive in the coming decade in large part due to the need to reduce greenhouse gas emissions. This new energy economy will create lots of opportunities for small businesses. And, as this example shows, innovation can lead to lower prices.
We've started a project to track and forecast the impact of energy changes on small business and will be reporting on it regularly.
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