What are the major benefits of shale gas?
MCCURDY: The direct use of natural gas is an exciting opportunity for consumers not only because of the properties, the cleanliness, and certainly the affordability, but also because it has really provided opportunities for consumers to save money and to be more efficient; there are a lot of different uses out there. For direct use, transportation comes to mind. The US has actually lagged behind the rest of the world with alternative fuel vehicles and clean, natural gas vehicles, but thatâ€™s changing because of the abundance of shale gas, which is now affordable and domestic. Consumers are going to see the benefits there. Our utilities and producers are investing in the infrastructure in order to make fueling available, and the original equipment manufacturers, the auto industry and truck industry, are now building engines and automobiles that can run off of natural gas. So thatâ€™s going to be a huge potential market. It also increases US domestic security. Combined heating power will provide electricity generation, heat, and steam. We see that as an emerging market opportunity. We talk about affordability, cleanliness, and abundance, but one of the keys to improving our environment in the US is increasing efficiency. Natural gas appliances, vehicles, and heating are far more efficient than other sources where there is electricity. So we see real opportunities there.
Where do you see investment opportunities for natural gas related infrastructure?
MCCURDY: There are a couple of things. First of all, there are still Americans in the Northeast that have used home heating and oil as a primary source. The price of it is really pegged to crude oil, and weâ€™ve seen that spike. In comparison, natural gas prices have declined and will remain low for the foreseeable future, again, because of the abundance of shale gas. In the Northeast, we have governors and senators asking what they can do to help spur the expansion of the natural gas pipeline system in order to support businesses and homes and in order to reduce their costs and increase their competitiveness with other fuels. The other opportunity is in the transportation sector. There are 170,000 gas stations in the US, but there are fewer than 1,000 that provide fueling for natural gas. In order for natural gas to expand, the natural gas vehicles, whether itâ€™s in long-haul trucking, fleet vehicles, or even light-duty pickups and cars, there must be an availability of the fuel. We see our utility members investing rapidly. There has been an 11% annual increase in fueling capability. We also see companies that are looking at the entire interstate highway system and making sure that there are no gaps there for trucks and vehicles. The beauty of natural gas vehicles, as opposed to even electric vehicles, is the range. The range and performance is the same as a traditional gasoline vehicle, and yet the price is about half of what traditional gasoline is. The opportunities are market-driven as opposed to government imposed or government incentivized. It would be great to have the incentives to get to scale, but I think the price itself will be enough for the consumers to see the value. Waste Management Corporation, the large garbage trucks all over the country, is converting their entire fleet to natural gas, this is 18,000 trucks. You see AT&T and other companies moving in that direction also, so there is a real opportunity. In the utility business, in natural gas, we work with the states and the public utility commissions there. So it is incumbent upon them to not only work with us and improve the safety of our systems, but also to increase and enhance this infrastructure so that the consumers benefit. If you are going to make those investments, and these are long-term, major capital investments, do it when the price is low. At $2MMBTU, these are historically low prices and an opportunity to lock that in and build that infrastructure.
What are the major challenges you foresee for the industry as a whole?
MCCURDY: The biggest challenge is to make sure that the availability is there. The availability and abundance of natural gas, unconventional natural gas through shale development, is the game changer. The game change is that with this incredible abundance and supply, you have seen a reduction in price. Consumers are benefiting from the societal benefits and reduction in cost. Weâ€™re not fighting wars in other parts of the world; weâ€™re not importing foreign oil from nasty and hostile governments. This is a domestic resource that has given the US a second chance. We have an opportunity to try it again and get an energy policy right. The energy policy can be built on natural gas that is clean and abundant. Also, in combination with alternative fuels, whether itâ€™s wind or solar, we can have a cleaner future. I think the perception about how we produce natural gas, through hydraulic fracturing, is not as positive as it should be. In my home state of Oklahoma, they have fracked wells for as long as I can remember and done so safely. The combination of hydraulic fracturing and horizontal drilling, the ability to take a drill bit and go a mile down into the earth and then a mile horizontally and hit a tennis ball, is a combination of innovation and new technologies, which is changing the world. China is now going to be a gas producer, as well as other parts of the world; so itâ€™s changing the political equation. However, there are those who fear this because they are either opposed to the use of fossil fuels, or they are just misinformed. The industry didnâ€™t do a very good job, early on, of explaining to those who are not familiar with this industrial activity, that it was safe and that we needed to work with consumers and stakeholders to get them engaged in the conversation. Whether it was increased traffic, noise and dust, and how you deal with waste water, these are all learning processes that certain parts of the country hadnâ€™t experienced before. In Pennsylvania, with Marcellus Shale, New York, Ohio and West Virginia have all seen a huge benefit. I think the perception of the fracking has been played as a fear issue when it shouldnâ€™t be. The government, with the Obama administration, came late to it, but I think they realized the incredible economic opportunities and the one most positive message and development in our economy to date. Six hundred thousand jobs have been created because of natural gas development of shale gas. We now see the chemical industry bringing major investments from China and elsewhere back to the US. These are $10bn investments, with 10,000 jobs created in facilities that will take natural gas as a feed stock and use it to produce plastics and other things that we use every day. There, truly, is a remarkable story thatâ€™s at play here.
What is your overall outlook for the natural gas industry in America?
MCCURDY: Iâ€™ve been involved in public policy for a long time. My terms in congress were spent dealing with energy policy and also in defense and foreign policy. Now, watching the problem with debt and the slow nature of the recovery, I believe that this is the bright spot for the country. We shouldnâ€™t let those who have a different vision bring that to a halt. Again, the Obama administration has moved to take advantage of it. I think there is strong, bipartisan support. Itâ€™s the one fuel that isnâ€™t caught up in partisan politics today. So consumers benefit, the country benefits, and it is a remarkable opportunity. We get a second chance here.
The availability and abundance of natural gas, unconventional natural gas through shale development, is the game changer. The game change is that with this incredible abundance and supply, you have seen a reduction in price. Consumers are benefiting from the societal benefits and reduction in cost. Weâ€™re not fighting wars in other parts of the world; weâ€™re not importing foreign oil from nasty and hostile governments. This is a domestic resource that has given the US a second chance. We have an opportunity to try it again and get an energy policy right.