To the handful of petrochemical scientists, engineers and industry executives who have spent a lifetime trying to unlock America’s domestic energy potential, the country’s current shale-oil and -gas boom is the result of a half-century of technological trial and error. But to the rest of the world, it has seemed like an overnight miracle. In less than a decade, the United States has gone from importing $30 billion worth of natural gas to the cusp of becoming an energy exporter.
Thanks to improvements in hydraulic fracturing and horizontal drilling, wells can be dug into rock formations that are nearly 100 m thick and tap reserves that are nearly two kilometres wide. That has the potential to unleash enough oil and gas to power America for nearly a century—a feat unthinkable just a few years ago.
The golden age of gas, as it has been dubbed, is already reshaping the economies of newly energy-rich states from California to North Dakota. It is helping to rebuild America’s industrial landscape and holds profound implications for global politics. “North America has set off a supply shock that is sending ripples throughout the world,” declared Maria van der Hoeven, executive director of the International Energy Agency (IEA), which, in May, issued a prediction that America’s oil and gas boom “will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.”
If soaring demand from Asia and political instability in the Middle East has defined the last few decades of oil politics, the agency predicts that America’s shale-gas and -oil revolution will define the future. The transformation is happening faster than anyone would have predicted. After decades spent tracking the global price of crude, North American natural-gas prices have recently become unglued from the rest of the world, plunging from $13 per thousand cubic feet in 2008 to below $2 last year. (They’re now closer to $4.)
The glut of cheap gas has helped drive the U.S. economic recovery by slashing the price of natural-gas by-products—valuable petrochemicals such as ethylene, propane and butane—that are used to manufacture everything from shampoo, to window panes, to fertilizer. That has unexpectedly brightened the prospects of American manufacturers and farmers, who analysts estimate now have the lowest cost of raw materials in the world outside of Qatar. Less expensive materials could slash costs to manufacturers by as much as $12 billion a year by 2025 and create a million new manufacturing jobs, according to an analysis byPricewaterhouseCoopers.