Recently I was engaging in one of my favorite pastimes — discussing the energy business with a member of the public — my brother-in-law, to be precise. He mentioned that his new home was 100% electric. Kitchen stove, oven, water heater, and furnace — all were powered by that magical flow of clean energy that comes right out of the wall. Having just returned from a conference on natural gas, I wondered how much of my brother-in-law’s electricity comes from gas-fired generating plants. Not much, I was told. Apparently, the evidence was nearby in the form of a railway line that seemed to be the main conduit of coal in central Georgia. Day and night, long trains of hopper cars filled with coal pass through town on their way to the local power plant.

How can that be, I thought? After all, hadn’t I just heard an executive from Shell state that gas is much more efficient for power generation? Isn’t it true that a new gas-fired generator station can be erected, inspected and commissioned in a mere 24 months, as opposed to 40-50 months for a comparably-sized coal plant, or 64+ months for a nuclear plant? Isn’t it the conventional wisdom that there exists a 250-year supply of domestic natural gas at present demand rates coupled with an estimated 270 GW of electricity demand through 2020? Isn’t it correct that carbon emissions from natural gas plants are at least an order of magnitude less than those from coal-fired plants?

So, what’s the problem? It’s not supply, according to Developing Unconventional Gas (DUG) conferees. One after the other, petroleum executives got up and described proven reserves in the billions of cubic feet and backlogs consisting thousands of drilling locations. These exist virtually all over the North American continent. Risk is as low as it’s ever been. In fact, one operator even characterized the Eagle Ford play as “A place where you can’t drill a dry hole.”

Technology providers listed all the new tools and techniques their companies have introduced to lower finding and development costs, and once the gas has been found and the field developed, the technologists attack lifting costs with similar results. Tools that improve drilling efficiency, tools that precisely place well bores in reservoir sweet spots and techniques that improve reservoir conductivity and maximize reservoir contact are being introduced in all markets. At the same time, drilling costs are going down, thanks to learnings from previous wells that are being applied to improve drilling and completion efficiency. Know the reservoir and use the knowledge to make the right decisions. No two shales are alike. Take the time to understand the differences.

According to one speaker, improvements are being made in all well construction areas — landing, placing, completing, and stimulating. One company that drilled its first shale well for US $7.5 million just a couple of years ago is drilling them in the same area for $4 million today. So, what’s the problem?

Price seems to be the consensus. Only a few fields enjoy break-even costs below the current commodity price. Many operators are waiting for sunnier weather, hedging their bets by drilling in the oily parts of their properties, only drilling gas prospects to maintain leasehold positions. Who can blame them?

The industry is not sitting on its hands. At the exhibition held concurrently with the DUG conference were several gas-powered vehicles. They represent a potential future demand — one exempt from coal industry competition. The biggest opportunity is in large fleets — taxis, school buses, local delivery trucks, refuse trucks, and similar vehicles offer the promise of cheaper fuel costs with lower emissions. The only impediment presently is lack of fuel supply points, but these are growing daily.

Although gas-powered vehicles represent a step in the right direction, the crown jewel is in power generation. Standing in the way is the influential coal lobby, and this elicited by far the best quote of the week. Commenting on his competitor’s reference to natural gas as “the crack cocaine of the power generation industry,” the irrepressible Aubrey McClendon, CEO of Chesapeake Energy retorted, “To compare coal to heroin is probably an insult to heroin.”

Always willing to put his money where his mouth is, McClendon exhibited what is probably the world’s first natural gas-powered motorcycle. If you want one, he’ll take your order.