Put the lights back on: shale gas has arrived

Fretting about an impending energy apocalypse has long been a diverting parlour game of the chattering classes. Projections are drawn up showing that the last drop of petrol will be squeezed into the last 4×4 in about 50 years’ time. It is said that Britain, forced by the European Union to retire a third of its coal-power stations, will soon be unable to meet its energy demands; the lights will go out within a decade. It seems almost a shame to spoil the gloom by discussing something that has already turned the American energy debate upside down: shale gas.

Held in your hand, a piece of shale looks distinctly unrevolutionary. It is a heavy black sedimentary rock found all over the world. Extracting gas from it has for years been seen as a fool’s game: technically possible, but sadly uneconomical. So shale took its place on the fringes of the energy debate — until a few years ago, when new extraction technology changed everything. Now, American discoveries in this field could overturn the global balance of energy power.

It turns out that America has vast deposits of gas-bearing shale. Since starting to bring these resources on stream, its gas storage facilities are now almost full, despite an early snow this winter. The glut of gas has sent the benchmark price of natural gas tumbling by about two thirds to $4.50 (per million British thermal units) over the last two years. These are real, tangible benefits. American gas reserves, expressed in years’ worth of supply, have risen dramatically. According to one estimate, shale gas has increased them by 20 years to 75 years. Gloomy predictions of energy shortage crises are having to be rewritten.