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Perhaps the initial euphoria over the prospects for a massive increase in natural gas supply -- both in the U.S. and globally -- were a bit premature.
The reason? The new techniques -- such as hydraulic fracturing -- to access the gas from previously hard-to-access or untapped beds are causing environmental problems, the chief of which is the contamination of drinking water wells, and water supplies, The New York Times reported. The Times added that so far the incidence of groundwater contamination is thin, but environmental groups counter that's because governments have been slow to monitor the drilling boom and are not looking hard enough for contamination.
Natural gas companies acknowledge the validity of some concerns, The Times added, but they argue that their technology remains fundamentally safe.
Energy Analysis: Obviously a setback for natural gas, as the technology to tap the new gas must be sensitive to drinking water supplies. Hence, drilling operations have to be refined, and, if necessary, activity in areas that could lead to groundwater contamination must be ceased. The U.S. Environmental Protection Agency is investigating various contaminated wells and sites.
New natural gas drilling and related technology have the potential to create an enormous, cleaner, domestic, and comparatively-cheap energy source, but no natural gas site is worth contaminating wells or other groundwater supplies. Hence, investors should take a wait-and-see approach concerning the potential for additional gas supplies pending EPA review of the contaminated sites and what (if anything) can be done to make the technology groundwater safe.
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