Fracking Gas Is Writing America's Energy Policy

Much of what the United States might have achieved through a visionary energy policy—lower prices, lower carbon emissions, less reliance on dirty coal and foreign oil—is coming to pass as a result of abundant natural gas from hydraulic fracturing, said the recently retired CEO of one of America's largest energy companies.
"We are backing ourselves into rationality, but it's only because of this incredible national blessing of cheap natural gas," said John Rowe, who retired 17 days ago as chairman and CEO of Exelon Corporation.
On Thursday Rowe told about 50 people at the University of Chicago's Harris School of Public Policy that natural gas is the only rational fuel for new energy plants and that it can replace archaic coal plants for relatively little expense.
"No one in their right mind in the market would build anything other than a gas-fired power plant right now," he said.
"Right now we think we can get huge quantities of gas through the fracking process and produce it at something like $4 per 1,000 BTU," Rowe said, compared to $8 to $10 for nuclear power or wind or $15 to $20 for solar.
Hydraulic fracturing wells extract gas by injecting water and chemicals into shale formations deep underground, shattering the shale to release trapped gas.
Fracking, as it is commonly known, has been blamed for poisoning nearby wells. Fracking fluids are believed to contain benzene, ethylbenzene, formaldehyde, methanol, naphthalene, polycyclic aromatic hydrocarbons, toluene, xylene, boric acid, hydrochloric acid, isopropanol, and diesel fuel.
The formula used at each well may be guarded as a trade secret.
Rowe asked analysts at Exelon to predict the impact on prices of more regulation of hydraulic fracturing. Analysts estimated environmental regulations could add $1 to the price, he said, "but not $2 and not enough to change any of your fuel choices for a very long time."
Gas prices could also rise if the United States begins to aggressively export its supply—a prospect made likely by higher gas prices overseas. But even an abundance of new export terminals could not deplete domestic supply enough to rival the price of other energy sources, he said.
"If prices stay in this $2 to $4 range, I've got to believe people will find places to build LNG (liquid natural gas) export terminals, but I doubt it will be anywhere large enough to affect the national versus overseas price discrepancies."
Exelon's nuclear-based value has been "hammered times two" by cheap natural gas, Rowe said, and gas prices are so low that "gas companies don't like it either."
Wind and nuclear power won't be able to compete with gas for at least 5 to 10 years, Rowe said, and coal is a "bad technology" even if it is "cleaned." With coal, said Rowe, "You're constantly rebuilding a really archaic system."
Cheap natural gas can more readily replace coal, and in fact, utilities have recently announced or accelerated the closure of several aging coal plants. Replacing old coal plants with new gas ones is "not a free scenario," Rowe said. "But it's not a very expensive one."
"This is a blessing for society, but it's a whole new challenge for the energy industry."