While a lot of the political fodder during the 2014 election season focused on the “war on coal,” a bigger and even stronger show of force is transforming the nation’s economic landscape, especially in “war torn” Appalachia: natural gas.

The natural resource has emerged from the back burner of U.S. energy development and onto the hot seat. Over the last seven years, it has not only fueled new economic growth but it has also changed the way electricity is generated. Beyond the newfound abundance — a result of shale gas drilling technologies — the manufacturing sector has subsequently boomed.

To be clear, dry natural gas can be used for electric generation. Wet natural gas, or natural gas liquids that include methane, ethane butane and propane, are separated from the dry gas. Those elements are then used as feedstocks in the manufacturing and chemical processes to make universal products, like fertilizers.

Because of the advent of hydraulic fracturing, or fracking, developers are able to access the shale gas — unconventional natural gas — a mile or more beneath the earth’s surface where it is embedded in rocks. While the friction between producers and ecologists is heated, there is now a plethora of dry gas, making U.S. natural gas prices half of what they are in Europe and a third of what they pay in Asia.

Indeed, the shale gas revolution is marching on and creating jobs and prosperity in its wake — nearly 3 million new U.S. jobs by 2020, of which 1.7 million will be permanent, says consulting firm McKinsey and Company. Those benefits are dispersed around the United States but they have been especially fruitful for the Gulf Coast and the Marcellus Shale region, where 20 percent of the nation’s natural gas production now takes place.

At present, more than 180 chemical industry projects that are worth $117 billion have been announced, says the American Chemistry Council. That includes new plants and expansions of existing ones from companies based all over the world that want access to inexpensive gas.

Take West Virginia: Coal production has fallen by 32 percent since its peak in 2008. But natural gas has stepped up there, with the permitting of 2,300 wells, of which about 700 of them are currently active. Each of those active wells comes with a $5 million investment that flows into local economies.

“As one of four U.S. States with significant Marcellus acreage, West Virginia now has a tremendous opportunity to capitalize on its natural gas resources — at a time when demand for natural gas is growing faster than most other major energy sources, including oil,” says Randy Cleveland, president of ExxonMobil’s XTO Energy, in a speech.

IHS IHS Energy projects a $9 billion infusion into the state by 2035, which will employ 57,000 people in gas-related fields, or 7 percent of the West Virginia’s workforce. Average pay: $90,000 a year, similar to that of the coal sector. Meantime, the current coal industry workforce is 20,000 in West Virginia.

In Parkersburg, WV, for example, Brazil-based Odebrecht Oil and Gas is planning to build a $4 billion to $6 billion refining facility that would create 3,000 jobs. Specifically, it would be an ethane “cracker” that would split the raw material from natural gas before it would go into such products as plastics.

Meantime, the state’s coal plants in the southern section of the state are announcing layoffs, including a recent one by Alpha Natural Resources ANR -4.72%. On the same day as that communique, ironically, a Texas gas firm said it would pay $100 million to landowners in the northern part of the state for Marcellus drilling rights, an amount that will climb even higher, says the Charleston Gazette.

“It’s a wave that is growing, and it is far from having crested, and it’s going to sweep through the Ohio Valley like no other wave that has ever descended down through our valley,” says Jonathan Turak, a lawyer representing families sitting atop those shale gas deposits, the paper reports.

The news is similar across many areas of the country. The estimates of recoverable natural gas in the United States have grown from 200 trillion cubic feet in 2005 to 350 trillion cubic feet in 2012. The fuel could supply as much as half of all electric generation in two decades, up from about 30 percent today. Production, meanwhile, is expected to increase by 60 percent by 2035, says the U.S. Energy Information Administration.

No where has the debate over shale development been more spirited than in Colorado and in New York. As for Colorado, it has increased its production 139 percent from 2005 to 2012, reports the Small Business & Entrepreneurship Council, making the oil and gas business worth $30 billion there. As a result, 12,000 new jobs have been formed in Colorado over that time, the Denver Post reports.

“Oil and natural gas are huge boons to the state,” says Joshua Epel, chair of the Colorado Public Utilities Commission, in an interview. “So how do we reduce that friction and produce oil and natural gas in an environmentally safe way?”

He says that the state enacted clean air legislation premised on retiring a “tremendous” amount coal and using a “tremendous” amount of natural gas. To make the drilling process better and safer, Colorado’s Air Quality Control Commission would require producers to install the tools to capture 95 percent of methane gas leaks coming from wells and pipes, while also limiting the volatile organic compounds that lead to smog.

For it to be economically attractive, Colorado has entered into futures contracts with Anadarko Petroleum APC -1.54% Co. and Xcel Energy XEL -0.77% that limits natural gas price volatility. Anadarko is investing $2 billion into the state while Nobel Energy is making a $12 billion allocation there.

New York State, furthermore, has an even tougher battle. There, a fracking moratorium has been in effect since 2008 — with no signs of letting up.

Proponents of shale-gas drilling are pointing to a Yale University review that says development would add $100 billion to a national economy and that environmental concerns could be protected. Opponents, however, are citing a study from the Colorado School of Public Health that says those living near drilling sites are exposed to unhealthy conditions.

If the state allows drilling, it would alleviate the kind of fuel crunch and price spikes that occurred this past winter. Otherwise, the natural gas would still be imported.

Regardless, the New York Public Service Commission “has approved several collaborative proposals to expand the gas distribution system as a way to replace coal as a source for generating electricity, as well as making gas available to residential and business customers who currently use oil or propane,” says Chairwoman Audrey Zibelman, in an interview with this writer for a story that appeared in Public Utilities Fortnightly.

She adds that the commission has given a key utility there, National Grid National Grid, the ability to explore approaches to deliver more natural gas to customers located upstate. Such an expansion, Zibelman says, would provide “significant economic and environmental benefits to New York consumers.”

Whether natural gas is used to generate electricity or its elements are used in the chemical and manufacturing processes, the potential could be transformative, especially in Appalachia that has long heard the coal industry’s battle cries. If gas producers aren’t environmentally conscious, however, those dreams could go up in flames and smother an economic revival.

“sourced from Forbes.com Novemeber 24 , 2014”