At the same time that natural gas is being promoted as an environmentally preferred fuel with expectations of rising use, future environmental requirements may constrain U.S. supplies. A desire to reconcile contradictory environmental objectives has led the U.S. natural gas exploration and production (E&P) industry to call for a better understanding (and better balancing) of the costs and benefits of environmental requirements that may confront it.

The use of systematic "cost/benefit analyses" is one approach that many claim can assist in characterizing explicitly and quantitatively (and ultimately balancing) the environmental and economic impacts of environmental initiatives. This paper presents a methodology, currently under development by the U.S. Department of Energy (DOE), that could allow the costs and benefits associated with alternative environmental compliance requirements affecting natural gas E&P operations to be more systematically and comprehensively analyzed within a total market context, while still accounting for the site-specific geological and engineering aspects affecting operator economic decision-making. Through presentation of this developing analytical capability, the authors hope to begin a dialogue on potential methods for considering the costs and benefits of proposed future environmental requirements on the U.S, gas industry.

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