A mix of chemicals, sand and high-pressure water is injected deep into the ground where they break apart shale rock and release trapped gas.
The main shale field being tapped in the US is the Marcellus, which stretches through West Virginia, Pennsylvania, New York and parts of Ohio. The area believed to contain recoverable gas covers 250,000 square kilometres through the eastern Appalachian Basin.
The shale gas breakthrough is important for the wind market because natural gas is wind energy's closest competitor and gas prices typically set the benchmark for average energy prices. US natural gas prices have dropped below $4 per thousand cubic feet at the wellhead, compared with more than $11 in 2008.
When gas prices are high - as they were a few years ago - wind energy projects look attractive to utilities. But when prices are low, which is the case at the moment, wind energy looks relatively costly. This largely explains why wind developers have struggled over the past two years to secure power contracts necessary for project construction.
In the doldrums
A lack of long-term federal policies such as a federal renewable electricity standard or a long-term enactment of tax credits or subsidies is challenging wind. But some experts believe gas prices bear the main responsibility for the US wind market's problems. The new shale deposits do not bode well.
"The real story is this shale gas. It's flooded the market and they haven't touched half the shale deposits here in the US and haven't even begun to touch the shale gas that's available in Canada," says Andrew Redinger, managing director and group head of the alternative energy group of KeyBank Capital Markets.
Redinger arranges debt financing for building wind projects in the US. The timing for shale gas taking off has been especially poor for wind in the post-economic collapse and credit crunch - and at a time when the Obama administration was hoping to provide major backing for renewable energy.
"Six months after we pass the stimulus bill and get renewables going, all of a sudden it seems like out of nowhere there was a technology breakthrough and we can get gas out of shale far cheaper than anybody thought. No one ever saw the amount of natural gas that they're now predicting from these shale deposits," says Redinger.
Recent estimates in the Marcellus shale field say the reserves could be valued at around $1 trillion and represent two years of America's current total national gas consumption level.
Drop in construction
Low gas prices throughout the country have taken a toll on wind projects, particularly in areas that relied heavily on gas. Texas - traditionally the strongest wind market in the US - has seen a precipitous drop in project construction and gas has been the main culprit elsewhere.
"People are trying to read this natural gas situation," says Mike Skaggs, executive director, Nevada Commission on Economic Development. "How low can the prices go? Where are those prices going to head? If prices stay current ...
it's going to get in the way of the development of wind power."
Amy Berry, a spokeswoman at Spanish wind turbine manufacturer Acciona, says the doomsday scenario of cheap shale gas for years or decades to come is off the mark. She expects that, as the negative impacts of shale development continue to come to light, the sheen will wear off and stiffer regulations will increase its cost.
Natural gas fracking operations in the US are currently exempted from controls under the Environmental Protection Agency (EPA) and the Clean Water Act. A law, known as the Halliburton loophole, was reportedly inserted into a 2005 comprehensive energy bill at the behest of then-vice-president Dick Cheney and former CEO of engineering multinational Halliburton. Gas companies are not required to disclose the toxic chemicals injected underground, and residents have reported methane smells and odds tastes in local groundwater.
In November, the EPA brought a lawsuit against Halliburton demanding to know the exact mix of chemicals used in the fracking cocktail that is forced underground. The EPA asked nine companies earlier this year for such data and all complied except Halliburton, which argued that the request was too broad and would involve too much paperwork - but has since filed some data with the EPA.
Berry hopes that, as the EPA and other regulators discover more about fracking they will put the technology on a much tighter leash, which should put greater emphasis on its environmental duties and prevent it from greatly depressing gas prices.
"It's one of those things where people didn't really understand it, there was a lot of gas to be had and a lot of leaseholders were signed up and making money just sitting on this," she says. Now these potential impacts have come to light, she adds, there is more concern about the effect they may have on the environment.
