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Gas

How can Europe and the world learn from the development of shale gas in the US?

Sep 26, 2013 in Gas


On 12 November in Brussels, CommentVisions is hosting a Live Debate on "Shale gas: a game-changer for Europe's energy landscape?" The aim of the event will be to examine the potential for shale gas extraction in Europe to change the energy supply landscape. It will look at the prospects for finding, extracting and marketing shale gas as well as considering the environmental effects and the arguments of shale gas opponents. (Click here to read more about the event)

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Jeffrey Seisler

CEO

Clean Fuels Consulting

Posted on: 26/09/2013

Basically I’m a believer in making sure energy development can be done responsibly and that all parties involved are ‘honest brokers’ about the opportunities and challenges, and addressing them both up front and without being defensive. Clearly there are some major concerns about shale gas and some major developments that make it ‘OK’ for the US, although the EPA is likely and appropriately going to develop some protective regulations.  In a way the debate comes down to one of regulatory angst: regulators want to regulate energy developers to be responsible and business wants the regulators out of their business.  If all businesses were truly responsible then the regulators would be less active.  But ‘responsibility’ often is a moving target defined more by profit than safety or environmental considerations.  So, for those countries where the geography and geology are favorable, ‘responsible’ fracking presents a great opportunity.  For other countries it might not be appropriate.  As is happening, fracking will evolve on a country-by-country basis.  My concern is in places where environmental protection is not reknown then fracking on a wide-scale will be problematic. 

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Hafez Abdo

senior lecturer in accounting and finance

Nottingham Business School

Posted on: 26/09/2013

The sweet dream of sorting out energy security concerns in Europe seems to be coming true by the new revolution of shale gas. If this dream comes true, Europe will enjoy cheap energy for years to come. The US was a pioneer in its ‘Dash for Shale Gas’ and investments of billion US Dollars has been made to get the Genie out of its battle.

However, there could be some differences between the US experience and any other countries’. This is mainly because when the US started its ‘fracking’ as it has almost extracted every possible commercial oil and gas resources it had in place; and with renewable energy still premature and costly facking was a cost- effective investment to undertake.

In the case of Europe, shale gas while may not have sufficient chance to compete against oil and gas in some countries such as Norway, it will have a good chance to compete in other countries like the UK, due to the maturity of the UK North Sea oil and gas fields. Also, Europe will benefit from the experience and technology that have been used in the States in extracting shale gas.

Still a bit of problems to overcome in Europe to make a boom in shale gas extraction, these are connected to stability of fiscal regimes in a number of countries such as the UK, sources of finance to boost investments in shale gas and the issues of CO2 emission and emissions taxes that may in fact restrict some shale gas projects in a number European states.

It is worth mentioning here that while shale gas may be a solution for national and international energy security concerns, it would be a short-term solution as shale gas production will peak one day. Renewable energy is the long term answer to energy security and Europe must keep a balance between investments in shale gas and renewable energy.

 

 

For some more inputs on shale gas please see my contribution on: http://theconversation.com/osborne-shoots-for-energy-security-but-shale-gas-is-no-silver-bullet-16244

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Robert Mair

Chair

Royal Society/Royal Academy of Engineering Report on Shale Gas for the UK Government, 2012

Posted on: 26/09/2013

There has been widespread public concern around hydraulic fracturing, or “fracking”, in the USA and allegations have been made about improper practice in the industry. Investigations are ongoing but so far no conclusive evidence has been found of any fracking chemicals in water supplies. However, I believe it is important that the UK, Europe and the world learn from the USA by ensuring that any fracking that takes place is managed and regulated effectively. 

In June 2012, the Royal Society and Royal Academy of Engineering published an independent review of the evidence to inform government policymaking about shale gas extraction in the UK. 

The review concluded that the major environmental and health and safety risks associated with fracking could be managed effectively in the UK as long as operational best practices are implemented and enforced through strong regulation. Environmental Risk Assessments should be mandatory for all shale gas operations so that risks are assessed across the entire lifecycle of shale gas extraction, including seismic risks (earth tremors) as well as risks associated with the disposal of wastes and abandonment of wells. 

Ensuring the integrity of every well must remain the highest priority to prevent environmental contamination. The probability of well failure is low for a single well if it is designed and constructed according to best practice. Studies in North America have used well data to identify key factors affecting leakage, especially the number of steel casings (that line the well to isolate it from the surrounding rock formations) and the extent to which these casings are cemented. It is important to make sure that there are enough cemented steel casings in place to prevent leakage, especially where the well passes through freshwater zones. In the UK, a greater number of casings tends to be used than is common in the USA. It is also best practice to cement casings all the way back to the surface, something which is not always done in the USA.

Monitoring of groundwater and air, as well as seismic monitoring, should also be conducted across the entire shale gas lifecycle: before, during and after operations. This is an important lesson to learn from the USA, since it has proved difficult to verify allegations of water contamination caused by fracking in the USA due to a lack of baseline monitoring. 

The UK has a strong history of regulating the oil and gas industry, which it is already drawing on for its existing and well established onshore industry. The regulatory system is therefore already well equipped for the development of small scale exploratory shale gas activities. However, attention must be paid to the way in which risks could scale up if a future shale gas industry were to develop nationwide. 

 

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Greg Bothun

Professor

University of Oregon

Posted on: 27/09/2013

In this article we critically examine the overall impact of harvesting shale gas located in the Marcellus Shale Basin as the principal means of reducing US greenhouse gas (GHG) emission that is associated with the generation of electricity.  We perform this examination from both a physical and legal/regulatory point of view.  From the physical....

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Barry Stevens

Managing Director

TBD America, Inc

Posted on: 28/09/2013

This piece provides a basic insight into the way climate change in conjunction with environmental and public health concerns have triggered a regulatory response by National, State and Local Governments. It will focus on shale gas regulations and not those pertaining to tight sandstones or coal bed methane.

A key element in the emergence of unconventional.... 

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Dr. Michelle Bamberger and Dr. Robert Oswald

Veterinarian,

and Professor of Molecular Medicine in the Cornell College of Veterinary Medicine (respectively)

Posted on: 04/10/2013

For countries that have not yet allowed unconventional extraction of gas, much can be learned from the US. In general, the development of shale gas should be looked upon as an experiment that has been taken out of the laboratory—literally, out of a building with four walls where experimentation is usually done—and moved into the countryside, close to homes, schools, workplaces and farms. It is an experiment in progress on a large scale, which some states such as Wyoming, Colorado and Texas have experienced since the late 90’s, whereas other states, such as Pennsylvania and Ohio, are only beginning to understand.
 
All good experiments must have baselines, and that has been a major problem for citizens living in shale gas states. Because of exemptions to federal clean air and water laws, drilling regulations have been largely left to the states to develop and enforce. Some states require the disclosure of nonproprietary chemicals used in drilling, but only after well completion. For example, the Texas Administrative Code (Title 16, Part 1, Chapter 3, Rule §3.29) requires the disclosure of chemicals not considered trade secrets on the web site, 
www.fracfocus.org. This disclosure is not required until 15 days after completion of hydraulic fracturing. Remarkably, these regulations are some of the strictest in the U.S., but clearly fall short of being adequate. In order to develop an adequate baseline in the event of future water contamination, homeowners would need to test for these chemicals prior to drilling. They need to know not only the chemicals to be used in hydraulic fracturing of a nearby well, but also those used in the drilling process itself (i.e., those chemicals most likely to contaminate aquifers). As for proprietary chemicals, the question arises as to whether an individual’s right to clean water is more important than a trade secret. State and federal regulations in the U.S. have clearly favored trade secrets. Lesson learned: Require disclosure of all drilling chemicals (hydraulic fracturing fluids, drilling muds, etc.) well in advance of drilling so that baseline testing can be done properly. This testing should include all chemicals, that is, no exemptions should be made for trade secrets. Finally, the cost of pre- and post-drilling testing at an independent laboratory with strict chain-of-custody should be borne by the industry but all of the results should be unedited and freely available to all interested parties.
 
Besides knowing exactly which chemicals to include in pre- and post-drilling tests, we must know how to interpret the results. That is, we must also know where to set the MCL (maximum contaminant level), the level of a contaminant above which health effects in people and animals are likely to occur. This might seem as if it should be easy to do, but it is difficult to impossible to answer for a few reasons. First, we must know what the chemicals are before we can set the MCL; secondly, as drilling muds and hydraulic fracturing fluids are composed of more than one chemical, we must know what the interactions are between these chemicals (1). That is, do interactions make them more or less potent? Finally, as endocrine disruptors make up a significant fraction of all known chemicals used in shale gas operations (2) and as endocrine disrupting chemicals may have low-dose effects that are different from high-dose effects (3), we must first understand the pharmacology and toxicology of endocrine disrupting chemicals. Lesson learned: Determine safe levels of individual chemicals and groups of chemicals in the laboratory before exposing the public.
 
Another question has cropped up since shale gas wells, compressor stations and processing plants made their debut on America’s farmlands, and that is, how do the chemicals produced by unconventional fossil fuel extraction move through the environment, and specifically, do they enter our food chain? Could plants and animals that are exposed to contaminants in the air, water and soil absorb these chemicals? Could these chemicals bioaccumulate, that is become more toxic after being absorbed by plants, then animals and finally people? On numerous trips through intensively drilled areas of Pennsylvania to document health impacts (4), we passed many well sites surrounded by cornfields and grazing cattle. No systematic efforts are in place to determine if air- or water-borne chemicals from drilling operations are present in meat or vegetables produced near drilling operations, compressor stations, or processing plants. We can cite individual cases where cattle exposed to drilling chemicals have entered the food supply, but the health implications are currently unknown. The situation has some analogies to the BSE crisis in 1989 where precautionary control measures were taken to prevent the spread of variant Creutzfeld-Jakob disease before completely understanding the epidemiology of BSE (5,6). Lesson learned: Determine routes of exposure and test for contamination of the food supply before jeopardizing the public health.
 
References
1.  Martin, O. V., Martin, S., and Andreas, K. (2013) Dispelling urban myths about default uncertainty factors in chemical risk assessment - sufficient protection against mixture effects? Environmental Health 12, 53.
2.  Colborn, T., Kwiatkowski, C., Schultz, K., and Bachran, M. (2011) Natural gas operations from a public health perspective. Journal of Human and Ecological Risk Assessment: An International Journal 17 1039-1056.
3.  Vandenberg, L. N., Colborn, T., Hayes, T. B., Heindel, J. J., Jacobs, D. R., Jr., Lee, D. H., Shioda, T., Soto, A. M., vom Saal, F. S., Welshons, W. V., Zoeller, R. T., and Myers, J. P. (2012) Hormones and endocrine-disrupting chemicals: low-dose effects and nonmonotonic dose responses. Endocr Rev 33, 378-455.
4.  Bamberger, M., and Oswald, R. E. (2012) Impacts of gas drilling on human and animal health. New Solutions 22, 51-77.
5.  Valleron, A. J., Boelle, P. Y., Will, R., and Cesbron, J. Y. (2001) Estimation of epidemic size and incubation time based on age characteristics of vCJD in the United Kingdom. Science 294, 1726-1728.
6.  d'Aignaux, J. N., Cousens, S. N., and Smith, P. G. (2001) Predictability of the UK variant Creutzfeldt-Jakob disease epidemic. Science 294, 1729-1731.

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Laura Parmigiani

Research Fellow

IFRI Energy Center

Posted on: 09/10/2013

There are probably several lessons that can be drawn from the shale gas development in the US.

The first one is that the energy sector confirms to be a long-term sector in which changes take 20-30 years to occur. The liberalization of the sector initiated in the 1980's coupled with a long-term strategy of energy diversification promoted since Reagan presidency have helped the "revolution" to take place. The results were astonishing but the basis were already there.

The second lesson is that a revolution never comes alone. When a revolution occurs, there are spill-over effects, both positive and negative. 

The positive consequences have been an increase in oil production in conjunction with the gas output. It has therefore pushed prices down and helped the revival of the US industry. On a geopolitical front, it shows that although evenly located, resources can be exploited if the right technology and a strong political support are there. And they can reverse the balance of power in the geopolitics of energy. The perspective of a self-sufficient US is reducing the nuisance power of historical producing countries (and in some cases their oil rents too! with major domestic consequences).

On the negative side, the US shale gas exploit reminds us that it is important to make a "ground-zero" assessment before starting hydrocarbon production in these proportions. It is rather difficult to correctly calculate the methane and CO2 emissions since the massive exploitation of shale gas resources. Europe and other countries (such as China) have the opportunity (and duty) to calculate and mitigate the impacts of these emissions. Flaring is not the solution.

 

Finally, as many reports have repeated, the same revolution cannot be replicated, and, in a way, it is for good. Air and water standards are not the same in every country, market rules differ, historical legacy of the hydrocarbon sector influences industry reactivity and public acceptance is a major issue that has to be seriously taken into consideration. Civil society has to be part of the entire process, especially in Europe, where cases of early involvement and information sharing with local populations, such as in Denmark, have proven fruitful.

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Christian Bos

Sr researcher

TNO

Posted on: 21/10/2013

Having been involved in gas exploration and production, including shale gas lately, for all of my 33 year career, I would like to share the following thoughts on gas in Europe, and more particular shale gas in Europe. My hypothesis is that society should appreciate better how important gas is as "renewable energy enabler". The BIG issue of renewable energy is its intermittency and the challenge it represents in terms of e-grid balancing. Balancing is the key to the energy transition, and gas is the key to balancing. No other source of flexibility can match gas in terms of costs and reliability. Other balancing solutions are MUCH more expensive and, perhaps, less reliable. And: e-grid balancing is simply a boundary condition, it is a must. As a consequence, gas is to be seen as the balancing instrument of choice that outperforms easily any other solution. If the CO2 emissions from combusting gas are a problem, then gas + CCS would be the preferred balancing solution. I challenge anyone to prove (make plausible) that other large-scale e-grid balancing solutions would be cheaper (and more reliable) than gas! (Note: 'pumped hydro' opportunities in Europe are inadequate: there is hardly any further development potential in Europe).

 

Let me now focus on shale gas. Why shale gas? Admittedly, it requires the construction of many wells and a surface infrastructure of pipelines between the well locations. The impact is mainly noise and traffic during site construction, and spatial imprint. I am convinced that the risk of leakage during fracking operations and during production operations is totally acceptable and controllable. Authorities have the necessary well design experience and monitoring procedures for licensing purposes. There is a sufficient experience in Europe with fracking. In the Netherlands alone we've had over 500 wells fracked without any detectable problem. The risks of fracking have been much overrated by fear mongerers. In conclusion: fracking can be done safely, also the 'Massive Hydraulic Fractures' required for shale gas. So again: why shale gas? The reasons are that we need gas to enable the energy transition and that indigenous gas from European gas fields is quickly depleting. In the Netherlands, the giant Groningen field is losing its flexibility and balancing capability very quickly. We need to find resources that replace the current gas production. Obviously, we can decide to import that gas from Russia, or from LNG, but that renders Europe more vulnerable (security of supply), and it deteriorates our balance of trade (thereby reducing our wealth). Moreover, domestic shale gas development would bring jobs to Europe.

 

The big BUT is: shale gas is far from proven in Europe. There is  much more research and testing to be done before knowing whether it can be exploited commercially. But to decide a priori to bin this opportunity, and not even research it, is emotional and, hence, irrational. National politicians may defuse nimby opposition by pointing out that we need gas to enable the energy transition, and by dealing with local politicians about benefits for the local population, especially in densely populated areas.

 

In conclusion:

1. Gas is to be seen as "renewable energy enabler", as it is by far the most efficient and effective source of flexibility to balance the electricity grids on a large scale. Renewable energy, because of its intermittency, puts a severe strain on these grids and imposes highly challenging balancing problems that must be solved, preferably by the most economic and reliable solution.

2. Europe needs to replenish its depleting indigenous resources of gas, in order to maintain an adequate source of flexibility to balance the e-grids.

3. Shale-gas can be produced safely.

4. Whether shale gas can be produced commercially in Europe needs to be researched.

5. Whether spatial imprint and the environmental footprint of well location construction is acceptable is a political decision and needs to be weighed against the pros of indigenous gas resource development and its enabling effect on renewable energy development.

 

My question to the panel would be: Do you agree with my above line of thought and, notably, that gas should be much more promoted as being the ‘renewable energy enabler’?

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Robert Howarth

The David R. Atkinson Professor of Ecology and Environmental Biology

Cornell University

Posted on: 22/10/2013

Shale gas is natural gas extracted from shale rock using high-volume hydraulic fracturing combined with high-precision directional drilling. Only in the past decade or so have these two technologies been successfully used to obtain the tightly held gas in shales, which was largely not accessible with older approaches. The result has been a boom in shale gas development: shale gas last year contributed 30% to total production of natural gas in the United States, up from only a few percent a decade ago. For a sense of how recent the shale-gas phenomenon is, consider that half of the shale gas ever produced has been produced in just the last few years. While many countries are considering shale gas development, to date commercial production has occurred only in the US and in British Columbia.

Because shale gas development is such a new phenomenon, the scientific evaluation of its environmental effects is also very new. The first peer-reviewed papers were published only in 2011. A flurry of papers have come out in the past 2 years, and many of these indicate large scale problems with air pollution and groundwater pollution. For instance, rural areas in the American west in states such as Utah and Colorado now have winter-time ozone levels that are higher than those in Los Angeles, high levels of benzene and other toxic and carcinogenic compounds are commonly measured in the air near shale gas sites, and many homes with private drinking water wells have high levels of methane contamination in their water that seems strongly associated with shale gas development. Analysis of data from wells in the Marcellus shale region in Pennsylvania shows that 6 to 7% of newly drilled wells have problems with structural integrity, such as leaks in their steel casings and concrete, which may contribute to this groundwater contamination.

My research has been on the greenhouse gas footprint of shale gas. Shale gas has been widely promoted as a bridge fuel, one that allows society to continue to use fossil fuels while producing less carbon dioxide than by using coal or oil. While it is true that less carbon dioxide is emitted from natural gas (shale gas or conventional gas) compared to other fossil fuels to obtain the same amount of energy, methane is the Achilles’ heel for gas. Natural gas is composed of methane, and methane is an incredibly powerful greenhouse gas. Even small emissions of methane from gas development can lead to a very large greenhouse gas footprint. In April 2011, I and coauthors Renee Santoro and Tony Ingraffea published the first comprehensive analysis of the greenhouse gas footprint that included methane emissions. Our conclusion? Shale gas may well be more damaging to the global climate than are coal and oil, because of potentially high methane emissions.

Industry pushback on our paper has been fierce, since our conclusion severely undercuts the bridge-fuel argument. Yet if anything, I am more convinced today that shale gas is a climate-damaging fuel than when we published our paper in April 2011. In our analysis, we used the best available data on methane venting and leakage, but most data came from industry sources and documentation was often poor. We called for better measurements of methane emissions, and in an amazingly short period of time, many scientific groups have done precisely this. Several of these studies are now being published, and others are being publicly presented at international science meetings. Most of the new data indicate methane emissions that are as high or higher than we originally predicted, particularly for studies performed by the US National Oceanic Atmospheric Administration and by teams led from Boston University and

Purdue University. A new study being published this month (September 2013) by an industry-funded group led from the University of Texas found emissions to be somewhat lower than we predicted, on the other hand, although close to what we had termed the “best-case scenario.” And indeed this new study probably does reflect the best case of what industry can do, when they are motivated to reduce emissions and are being carefully watched: the study only made measurements at sites and times when industry permitted them to do so. My evaluation of the accumulating evidence is that routine emissions from the natural gas industry – for both shale gas and conventional gas operations – are often high at well sites, at storage facilities, and from pipelines, particularly the distribution pieplines in urban areas. At least in the US, these distribution pipelines are often 80 to 100 years old or more and often consist of un-welded pieces of cast iron pipe butted end-to-end.

Our study evaluated the role of methane at two time scales, integrated periods of 20 and 100 years following emission. Methane is much more important in its global warming effects when viewed at the shorter time scale, since methane is removed from the atmosphere on the time scale of a decade. In our April 2011 paper, we gave equal emphasis to both time scales. Since then, a 2011 report from the United Nations and a 2012 paper published in Science by Drew Shindell of NASA have both emphasized the critical need to control methane emissions at shorter time scales. The average temperature of the Earth has risen by 0.7 oC over the past half century, and given current trajectories, we are on target to raise the temperature to 1.5 oC above the early 20th century baseline within 15 years or so and by 2 oC within 35 to 40 years. At these temperatures, we run an increasingly high risk of runaway feedbacks in the climate system leading to even further warming, due for instance to causes such as releasing natural methane now trapped in frozen formations in the Arctic. Simply controlling carbon dioxide emissions will not slow the global warming on this time scale, due to lag times in the climate response to carbon dioxide. The ONLY way to slow global warming over the coming few decades – and reduce the chance of runaway global warming – is to reduce emissions of methane and other short-lived radiatively active substances such as black soot.

From this context, natural gas is a disastrous fuel. Fossil fuels are the major source of atmospheric methane pollution globally, and the natural gas industry is responsible for most of this. Only by weaning ourselves from natural gas can we safely slow global warming. Shale gas at best perpetuates our use of natural gas, and quite likely has even higher emissions of methane than does conventional natural gas.

We have other energy choices. Many European countries are aggressively developing wind and solar power. In the United States, Mark Jacobson, I, and many other colleagues published a paper this past March laying out a blueprint to make the entire State of New York free of all fossil-fuel use within just a couple of decades. The plan calls for greater energy efficiency through replacing domestic and commercial heating by gas and oil with modern heat pumps, and through using electric vehicles in transportation. Wind, solar, and hydro sources would all provide the power. The economic savings through reduced health costs and fewer deaths are greater than the total cost of implementing this plan, and an estimated 4,000 lives would be saved each year in the State due to lower air pollution.

My advice to Europe is to stay clear of the false claims of shale gas as a bridge fuel. Rather, continue to move aggressively towards a 21st Century world where fossil fuels are shunned, and wind and solar power provide energy security, improved health, and reduced global warming.

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Patrick Laureys

Diplomat

DG European Affairs and Coordination at Ministry of Foreign Affairs Belgium

Posted on: 24/10/2013

A study of the US Energy Information Administration, published on the 10th of June 2013, assesses the potential of 137 shale gas formations in 41 countries outside of the US. There are a few things that stand out in this study if one focuses on Europe.  For one thing, it is noteworthy (and sobering) that none of the European countries feature in the top ten for technically recoverable shale gas. That in itself, and the fact that the resource estimate of the EU’s biggest “shale gas daydreamer” has been drastically reduced from 44 to 9 trillion cubic feet, may be the Universe’s way of telling the EU to choose the road less travelled. 

The study also clarifies the distinction between technically recoverable resources and economically recoverable resources, which are resources that can be profitably produced under current market conditions. The economic recoverability of oil and gas resources depends on factors such as the costs of drilling and completing wells, the amount of oil or natural gas produced from an average well over its lifetime, the prices received for oil and gas production as well as several above-the-ground factors, such as ownership issues for the subsurface and the availability of independent operators, contractors and experts. Comparing not only the technical but also the economic recoverability of shale gas in Europe to the developments in the US and Canada quickly becomes an exercise in frustration, as it becomes clear that many advantages besides purely geological factors exist and the harsh truth for Europe is that it can only play a game of trying to catch up, while knowing quite well that it never can. Some Member States will undoubtedly be more successful in trying than others. 

To make matters even more complicated, one could introduce the concept of the “political recoverability” of shale gas. The best way to visualize this concept is by having a look at the Argument Map on Shale gas production in EU Member States, drawn up by TNO, the Netherlands Organization for Applied Scientific Research. This map gives an excellent overview of the different arguments for and against shale gas production, along five different dimensions: energy, environment safety, economy and politics. These dimensions make up the political discourse in the EU on shale gas. If one looks at the shale gas debate in the different EU Member States one notices one similarity: a tendency for the general population to be on the “against” side of the arguments. This seems to be true for countries as culturally, politically and economically different as the UK and Bulgaria. 

But one also sees many distinctions. EU Member States are obviously not in agreement on the weight they give to each of the five dimensions. It is very unlikely that these different approaches, in combination with the uncontested principle that each Member States remains completely sovereign in the choice of its energy mix, will lead to a meaningful EU-wide policy on unconventional fossil fuels. The debates going on in the Technical Working Group of Member States on the environmental aspects of unconventional fossil fuels – headed by DG Environment - illustrate this. One of the policy questions put to the Member States for their consideration recently was: which option do you consider as the most appropriate to address environmental risks, provide reassurance to the general public as well as legal clarity and predictability to operators? I can’t help but think of the haunting but persistently unanswered question in Tom Robbins’ novel Still Life with Woodpecker: who knows how to make love stay? I won’t claim I have the answer. 

 

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Brook Lenker

Director

FracTracker

Posted on: 28/10/2013

The growing geographic extent to which shale gas and oil resources are being exploited across the United States and the intensity of those activities suggest there are many lessons to be shared regarding impacts, regulatory approaches,  industry methods, and the public’s response to all of it. The suite of potential impacts from unconventional oil and gas development is large and challenging to quantify. Water quality and quantity concerns gather much attention and there are growing fears of insidious effects on human health possibly related to air contaminants. The heavy footprint of the industry can mar the quality of life in communities and degrade forests and other habitat. The security of crops and livestock is another focus of research.

Other countries would be wise to judiciously study the findings of American academics and NGOs that may be at odds with what the world’s wealthiest corporations largely claim are benign practices. Their extreme political influence justifies skepticism or, at least, cautious interpretation. Resources like FracTracker.org and other groups can provide invaluable insights. Such work must continue so long as unconventional extraction is occurring and wherever it is occurring there must be robust oversight – something that, from my observation, seems woefully lacking.  

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Carlos Amador Bedolla

professor of chemistry

National University of Mexico in Mexico City

Posted on: 30/10/2013

Invisible hands do not live in conventional time. They will not wait until other parts of our human organs have understood the effects of our actions. Having developed the capacity to extract natural gas and tight oil from shale based on the breakthroughs of horizontal drilling and large-scale, multi-stage hydraulic fracturing (fracking), invisible hands needed only to get political approval for start drilling. Several hypothesis worked in their favor. First an economical one: gas shale will allow us to keep having cheap energy available. Second, a national security argument: gas shale will allow the USA to be energy independent. Third, an environmental one: natural gas produces less GHG than other fossil fuels. And several other hypothesis were just buried under these central three. These include hypothesis about (a) the actual production rates and amounts of available gas, (b) the geological effects of drilling, (c) the environmental effects of extracting and leaking methane, and (d) water usage and water contamination. When mentioned, these hypothesis were always favorable and soon to be scientifically supported. The organ in charge presumably, in the head was busy at work and soon will come up with the confirmation of the relevant hypothesis. 

These results have started to come out in the scientific tested, peer reviewed, currently being confirmed with new studies literature. And results do not look good for what the invisible hand assumed. (a) The output of a typical well drops more than 80% in its first three years, and 5 plays produce 80% of the total production [Hughes, Nature 494:307-308 (2013)]. (b) Conductive pathways and specific geostructural regimes connect shale regions to deeper formations with the accompanying transmission of gases [Warner et al. PNAS 109:11961-11966 (2012)]. (c) Between 4 and 8% of methane leaks during extraction, so unless leakage is reduced to less than 2% the GHG effects of methane are higher than from the use of conventional fuels [Howarth et al. Climate Change 106:679-690 (2011)]; the use of compressed natural gas in vehicles should reduce leakage by 45-70% below current estimates to have the same GHG effect as conventional fuels [Alvarez et al. PNAS 109:6435-6440 (2012)]. (d) Methane was detected in 82% of drinking water samples, with average concentrations 6 times higher for homes within 1 km radius from wells [Jackson et al. PNAS 110:11250-11255 (2013)]; Cl- and total suspended solids are found on surface water downstream wells [Olmstead et al. PNAS 110:4962-4967 (2013)].

 

The rational thing to do, say one set of humanity organs, is to not start drilling for shale gas and to stop what is already started. What we have to do without the energy available from this source is to start rethinking our dependence on so much energy. This rational applies to many other problems currently faced by humanity. But the invisible hand seems to act on her own… 

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Roland Festor

Director for European Union Affairs

International Association of Oil & Gas Producers

Posted on: 31/10/2013

In the United States, the development of shale gas extraction has brought about an energy revolution. In Europe, we are years behind America in this respect. We can therefore benefit from its experience and adapt it to our continent.

Since we don’t yet know how much shale gas resources we have in Europe, the priority should be to build a clear understanding of what the real potential is. To do that, EU and national authorities should encourage exploration.

Positive findings could make a real difference for Europe’s energy, economic and climate future.

In the US, shale gas has increased security of supply – Ten years ago, companies were building terminals to import liquefied natural gas (LNG). Now, they are asking the government for permission to turn around those terminals and export LNG. In Europe, shale gas production has the potential to reduce current dependence on expensive and politically sensitive imports – especially for countries which are heavily dependent on one single import source.

In the US, shale gas has triggered an industrial renaissance. Steel makers and chemical producers see new opportunities there because the use of domestic gas has lowered the cost of electricity. In Europe, shale gas could ease the hike of electricity prices that is crippling the competitiveness of our industries. Shale gas also has the potential of creating new jobs and re-launching economic growth.

In the US, the use of shale gas is leading to lower greenhouse gas emissions. Utilities are substituting coal with gas, which emits far less CO2. Meanwhile, Europe is currently using more and more coal, therefore complicating its emission reduction efforts. European shale gas production could reverse that trend and help to meet the EU’s greenhouse gas objectives.

Last but not least, in the US, the development of shale gas has helped energy companies to understand the management of risks. After years of production in the US, Europe will benefit from this broad experience and know-how: we will have the privilege of using technologies that have been fine-tuned over years, with more than two million wells that have been hydraulically fractured worldwide.

 

With these considerations in mind, we hope that public concerns can be better addressed and the technology accepted in our countries. 

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Ricardo Raineri

Alternative Executive Director

The World Bank Group

Posted on: 06/11/2013

(This paper reflects the author´s personal views only) The need for cleaner, secure and affordable energy sources is a challenge for any country with aspirations to become a developed nation. Energy is the engine that moves the modern world. Transportation, manufacturing, services, health, communications, tourism and many other industries and human activities depend on energy, and in an increasingly integrated and competitive world, access to secure and affordable energy sources is fundamental to sustain economic growth.

The main challenges that emerge on a global scale and of particular interest for the energy industry are

•Population growth

•Declining levels of poverty

•Global warming and environmental impacts

•More empowered population

The population reached 7 billion in the world, where only two decades ago total population was a little bit more than 5 billion, and in 1950 half of that. Thus, and if the last decades trends continue, by the year 2040 population will reach 9 billion. As well, it is expected that in the next decades, the places where population will growth the most are Africa, Middle East and parts of Latam.

With population growth, in the last decade we have also witnessed a large reduction in the levels of poverty. The percentage of the population, who lives with less than US$ 1.25 per day (PPP), has diminished from 43.1% in 1990 to 20.6% in year 2010, and in absolute terms, the number of persons living with US$ 1.25 per day (PPP) has diminished from 1,908 million in 1990 to 1,215 million en 2010.

A world with a larger population with higher standard of living, mostly in the emerging economies, is putting a large pressure in the energy markets. The citizens are demanding more benefits and services which are energy intensive. They also have more awareness of their reality, the environment, and have become more powerful and organized. Today, working with the communities and a proper management of the projects externalities are prerequisite for their successful implementation.

Every day we know of new evidence that the problem of climate change has an anthropogenic cause, mostly related to the burning of fossil fuels (see for example the draft paper of the Working Group I, IPCC Fifth Assessment Report, Climate Change 2013: the Physical Science Basis, September 30 2013). Between year 2000 and year 2012 CO2 emissions related with fossil fuels consumption increased by 36%, mainly associated with the increase in coal consumption. China has become the largest emitter of GHG, where in year 2012 accounted for 26.7% of global CO2 emissions, being followed by the US with 16.8%, India 5.3%, the Russian Federation 4.9%, Japan 4.1%, Germany 2.4%, and South Korea 2.2%. Furthermore, China itself has 66% of total CO2 emissions increase between years 2000 and 2012.

The problem of climate change and its anthropogenic cause is an issue of increasing concern, and signals are coming from different places, such as the observation that in 2013 the CO2 concentration level surpassed 400ppm, for the first time since the inauguration of the Volcano Mauna Loa observatory. At the same time, we are confronted with an increasing scientific literature which appraise the risks that we will confront, such as heavy rains, severe droughts, heat or polar extreme waves, rise in sea level, and changes in water supply and glaciers, among others.

Currently fossil fuels represent 87% of the primary energy matrix (not accounting the use of wood for cooking and heating in a more ancient way), where oil represents 33% of primary energy, coal 30% and natural gas 24%.

The first decade of the XXI Century has been marked by a sharp increase in oil demand, mainly from non-OECD countries. And in one decade, on a global scale, oil consumption has increased by 15%, from 78,470 thousand bbd in 2002 to 89,774 thousand in year 2012. Also, expectations are that at today`s consumption levels, current oil reserves will last for 50 years. The US is the main oil consumer in the world, and in 2012 represented 21.9% of total oil consumption, but down from the 25% share it had in 2005. Nevertheless, it is in the emerging economies where we should expect the largest growth in oil consumption, whose increase has more than compensated the reduction in oil consumption from OECD economies.

Among the emerging economies, China in 2012 accounted for 11.7% of world oil consumption, increasing from the 6.7% it represented back in year 2002. Thus, in one decade China almost doubled its oil consumption, and it appears that this trend will continue. Likewise, between year 2000 and 2012 non OECD countries have increased in almost 50% oil consumption, where China has 1/3 of oil demand growth for non OECD countries. Thus, and for a long time, we can expect that oil will continue to have a privileged place in the primary energy matrix on a global scale, playing a key role on transportation and power generation in many countries.

But, what about coal? Well, coal is the most abundant fossil fuel in the world, with proven reserves for more than 100 years. The US, the Russian Federation, China, Australia, India, Germany, Kazakhstan and South Africa, owns 87% of all available reserves. Between 2000 and 2012 coal consumption increased in 60%, being the fossil fuel that increased by large its participation in the primary energy matrix, and China is responsible of 86% of the increase of coal consumption. Today, China is the country that consumes more coal in the world, representing 50.2% of total coal consumption in 2012, and is followed by the US with 11.7%, India 8%, Japan 3.3%, Russian Federation 2.5%, South Africa 2.4%, South Korea 2.2%, Germany 2.1%, Poland and Indonesia 1.4% each. The largest challenge for this fuel to continue contributing in a large manner to the energy matrix is the increasing concern with GHG emissions and the harmful consequences on populations´ health and the environment.

Overall, for fossil fuels the main demands remain in how to build an economy low in CO2 emissions, and part of the answer can be in an increasing use of natural gas. Natural gas has gained an increasing share on the primary energy matrix, with a participation of 24% in 2012, up from a figure close to 15% back in year 1965. The main world consumer is the US with 22% of total consumption, then the Russian Federation with 12.5%, Iran with 4.7%, China with 4.4%, and Japan with 3.5%.

Technological innovations and a favorable investment environment in the US, have made accessible shale gas and oil, and have contributed to revert the declining trend of natural gas production that took place in the first half of the 2000s decade. In the US, and in the second half of the 200 decade, the proliferation of these new technologies has increased dry shale gas production from 0.3 cubic feet in year 2000 to 9.6 trillion cubic feet in year 2012, or an equivalent of 40% of the US dry natural gas production. IEA projections show that, by the end of this decade, the US will become a net natural gas exporter (IEA Annual Energy Outlook 2013). This increasing supply of natural gas has also lead to changes in domestic relative prices, where, in the second half of the first decade of the 21st century, natural gas became cheaper to oil and coal. A favorable business environment and technological changes in the US, have also favored the increase in expected natural gas reserves in North America and other places in the world.

Recent estimates of the EIA (“Technologically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States”, June 2013, plus EIA estimates for the US), assess the world technically recoverable resources of shale oil in 345 billion barrels and shale gas in 7,299 trillion cubic feet. Regarding conventional sources, these figures imply an 11% increase in total crude oil resources and a 47% increase in total natural gas resources, and opens huge opportunities for a world with more abundant natural gas resources, as the innovations in the shale natural gas revolution in the US are transferred to the rest of the world. The interest on shale exploration is becoming world wide spread, where Algeria, Argentina, Australia, China, India, Mexico, Poland, Romania, Russia, Saudi Arabia, Turkey, Ukraine, and United Kingdom are considering this technology.

Among fossil fuels, natural gas is the one with the lowest levels of GHG emissions, is more friendly to the environment, and has higher levels of acceptance within the population. Thus, with increasing available reserves, more competitive prices, it is expected that natural gas will play an even larger role on power generation, with the advantage of the higher flexibility of these power plants which makes them appropriate to complement other energy sources subject to intermittency, like wind, solar or other renewable. Conversely, the main concerns with the use of shale gas are the furtive methane emissions and the impacts on aquifers. 

Thus, today the challenge is how the countries moves from this new information, of technically recoverable shale oil and gas resources, into the extraction, processing and distribution of natural gas. Technically recoverable resources and economic recoverable resources depend not only on geological - under the ground conditions, but also on the innovations which can make available resources that previously were unimaginable; and mostly, on providing the incentives to bring in the monetary resources and knowledge needed for an extremely riskier activity which requires long term compromises in a dynamic context.

Countries have adopted different business models to secure access to energy. Some with a strong government participation, as owner of the resources and companies, and others with private ownership of the resources and the companies in charge of the different stages of exploration, production, transportation and delivery of the energy required. However, and no matter what is the business or contractual arrangement chosen by a country, at the end they face similar challenges, and it is how to bring the needed investments, innovations, technology and knowledge that are required to feed an industry which needs a long term commitment to succeed. 

The case of Canada and the US provides good examples of what it takes to go from technically recoverable resources, of shale oil and gas, to economically recoverable resources. The structure of property rights, institutions, regulatory, and economic conditions play a key role. Institutions matter! The US and Canada are cases where the ease of access and contract structure provide adequate provision to the investors who expect a fair return, by providing adequate incentives for the search and the extraction of the resources. All within a regime of market driven prices, where the free forces of supply and demand interact to speed up or down the needed investments. All these is also complemented with the accessibility to numerous independent operators and supporting contractors who have the critical knowledge and expertise to perform the needed tasks; plus the existence of preexistence gathering and pipeline infrastructure; and the needed water for hydraulic fracturing. Thus, for a success story, countries should look up to create an enabling business environment which provides for the needed resources, technology and investments. In particular, issues related with voice and accountability, political stability, government effectiveness, property rights, rule of law, regulatory quality, control of corruption, financial markets, tax and royalty regimes, investors protection, expropriation risk, expatriation of benefits, cross border trade and capital flows, accessibility to skilled people, are all issues which affect the investment environment and the ease with which these new technologies can be transferred and the shale gas industry can be developed.

The ideas are here, but the main challenge is on the delivery side, in the sense of how countries move from good ideas and goodwill into action, and make the production of shale gas a reality. Among the key obstacles on the delivery side that some countries confront are on changing power balances, rights, and lifting the barriers which are put in place to protect power positions and rents attained under weak institutional structures, which at the end prevent the development of wealth and prosperity for all the population. The political will to transform underground resources into wealth and prosperity for the population should go in hand with the creation of the proper and legitimate institutional structure, which provides the incentives and property rights needed to attract the required investment, technological expertise and knowledge on a long term basis.

This paper reflects the author´s personal views only.

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Carlo  Stagnaro

Director of research and studies

Istituto Bruno Leoni

Posted on: 11/11/2013

The "shale gas revolution" in the US provides the rest of the world - especially Europe - with many useful lessons.

The most important ones have to with the role of human ingenuity and ignorance. Before unconventional resources changed the energy landscape in America, two political goals were seen as priorities: providing the country with cheap, reliable energy on the one hand, and reducing carbon emissions to mitigate global warming on the other hand. These two goals were considered inconsistent with each other: to some extent, they were so much in conflict that the way of prioritizing could be described as a proxy for her political ideas. If you believed that promoting economic competitiveness was a more urgent problem than fixing environmental issues, you were a right-winger; if you thought the other way around, you were a leftist. In both cases, the preferred policies relied on large government interventions. A right-winger would have aimed at the mirage of "energy independence", regardless to the potential environmental consequences; a leftist would have supported massive subsidies to green energies, even at the cost of harming the economy and creating a perverse incentive for energy-incentive businesses to move in jurisdictions with cheaper (and often more polluting) energy.

Then came the revolution, and all suddenly changed. Unconventional gas is both cheaper and cleaner than any realistic alternative to it. From an economic point of view, it fuelled a new wave of industrialization in America, making US products more competitive in global markets and created the condition for the country to turn from net importer to net exporter of natural gas (even though political resistances still have to be overcome). From an environmental point of view, the switch to gas (especially in power generation) allowed the United States to cut its carbon emissions much more than the most radical "green deal" - and even more than how Europe did, despite the EU's self-proclaimed leadership in environmental policies.

In practice, most policies were both wrong and ineffective, because they relied upon the unstated assumption that there would be no innovation outside the subsidized technologies. Such policies would have been sound to some extent - if they didn't presuppose that the policy-maker owns information about the future that, in fact, cannot be available in their entirety to anyone. But as long there is a demand, entrepreneurs will strive to supply the demanded goods. All over the world there is a strong demand for cheap, sustainable fuels. Government policies were able to provide, at best, expensive, sustainable energy, or cheap, polluting energy. Market forces proved able to deliver cheaper, cleanerenergies. The lesson we should draw from the revolution is that, if we want a goal to be met, we better rely upon the "animal spirits" of capitalism, rather than on the goverment's fatal conceits.

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Barry Stevens

Managing Director

TBD America, Inc

Posted on: 12/11/2013

The Arctic: A New Tropical Paradise

From world wars to weapons of mass destruction, the 20th and 21st century had events of major worldwide concern. Yet, the news this week about “Arctic Temperatures Reaching the Highest Levels in 44,000 Years” makes all other events pale in comparison……………..

 Yes, there will be naysayers, so be it. The truth is all around us today. The fact of the matter is these major climatic changes will affect everyone on the planet in a not so favorable way. It may be almost impossible to stop. I doubt even if the entire world would quantitatively stop using carbon-based fuels today, would the positive effects be seen in a few decades. We are on a freight train out of control with no one taking substantive action to bring it under control.


Go to: http://barryonenergy.wordpress.com/2013/10/25/the-arctic-a-new-tropical-paradise/

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Juergen Schieber

Professor of Sedimentary Geology

Indiana University

Posted on: 02/12/2013

May be it is best to approach this topic by summarizing a bit of the history of shale gas development in the US and the current debate in the US about the merits of shale gas development. Although the development of shale gas in the US has garnered international attention only in the past few years, it is worth pointing out that the “story” actually had quite humble beginnings. It all started in the 1980’s when the owner of a comparatively small Texas-based oil and gas company, George Mitchell, realized that in order to fulfill his natural gas delivery contracts to power plants he would need to find new supplies because his conventional gas fields were being depleted.  That there was natural gas in the Barnett Shale (of northern Texas) had been known for some time, but it had always been considered impossible to produce economically. It is George Mitchell’s legacy that he persisted in the face of multiple failures (it took more than a decade) to back a team of engineers and geologists to find a way to economically produce gas from the Barnett Shale. The combination of horizontal drilling within gas bearing shales, and hydraulic fracturing of these shales to tap into a large enough surface area within them, was what made economic gas production from the Barnett Shale (and all other shale gas plays since then) possible.  George Mitchell was a very wealthy man when he finally passed away this year, but for the better part of a decade his competitors were merely amused by his seemingly quixotic quest.  Only after it had been proven (by Mitchell Energy) that shales can produce gas economically, did larger (and very large) companies get interested and engaged in the feeding frenzy that became what is now known as the “shale gas boom” in the US. Whereas Mitchell Energy quietly ramped up its shale gas operations around the turn of the millennium, the so called “majors” in the oil and gas business (ExxonMobil, Chevron, Shell, etc.) started to put serious money into their shale gas operations only about 5 years ago. So, the current shale gas juggernaut is not so much a story of big money trying to push some profitable innovation onto the rest of the world, but instead a story of big money trying to catch up to innovation that had been flying under the radar for close to a decade. 

For Mitchell Energy it took imagination and persistence to make shale gas development a reality, and it involved taking significant financial risks and investment. As others tried to duplicate this success story in the Barnett and elsewhere (Haynesville, Eagle Ford, Marcellus, etc.) it also has become increasingly clear that shale gas development does not favor the “one size fits all” approach. Every shale play is different, and the parameters that make a shale play work economically (such burial history, organic matter content, type of organic matter, diagenetic cements, pore characteristics) are sufficiently different from place to place to require in each case careful geologic analysis (petrography, porosity and permeability analysis, petrophysical characteristics, etc.) in order to avoid failure and costly mistakes.

As pointed out above, hydraulic fracturing of gas bearing shales is a key ingredient for making shale gas production economically feasible. Also known as “fracking”, the process is much maligned and mis-understood. It is, however, not a new, unproven, and hazardous process that endangers lives and livelyhoods. On the contrary, had it not been for the development of hydraulic fracturing in 1949, our supply of oil and gas over the past half of a century would have been much tighter, and energy prices would have soared to levels that we don’t really care to imagine. In the US and elsewhere, hydraulic fracturing of conventional oil and gas wells is par for the course, and has been so for at least half a century. How to do this is well understood, and it has been done without adverse effects so many times that it probably can be considered just as safe as airline travel. And “fracking” is not only used in oil and gas production. In Germany (and elsewhere in Europe), for example, the method is also used to improve the effectiveness of water wells, waste water disposal wells, and to “stimulate” geothermal wells. 

Unfortunately, in the US as well as in Europe, as the debate about shale gas production has become more heated, the facts have taken a back seat to emotions. Today, the way different interest groups define what “fracking” is has become part of the problem. State regulators and oil and gas professionals mean with “fracking” the actual process of fracturing the rock surrounding the well bore. When the topic is reported on in the media, however, or when it is discussed by interest groups that oppose shale gas development, “fracking” often becomes a term that encompasses all aspects of drilling, such as casing the well, the actual “fracking”, and various other part of the operation.  The big concern that many opposing groups cite as a motivation for their opposition is the contamination of groundwater resources, and if one choses to do so that concern is actually something that can be reasoned about rationally. 

In order to have sufficient pore pressure for gas production, the “fracked” horizontal portions of the wells are typically at depths of 1.5 km’s or deeper, and the induced fractures may extend as much as 400 meters from the well bore. Thus they are typically at a depth of 1 km or more from the surface. Also, because of stress field changes as we get closer to the earth surface, upward propagation of fractures would in any case end at about 750 meters depth. The ground water that supposedly is threatened by “fracking”, however, commonly occurs much shallower, typically at depths shallower than 300 meters. Based on these basic facts it is rather unlikely that fracked rock volumes and groundwater reservoirs are over going to overlap, and the basic parameters that we need to know to calculate their separation are not difficult to come by. There are of course much cited instances of gas making it into groundwater, like those in Dimock, Pennsylvania, but that particular case had nothing to do with fracking. Methane from a much shallower methane producing stratigraphic interval (which had not been “fracked”) migrated upwards along the drill casing and thus was able to connect with an aquifer at about 200 meters depth. The problem could have been prevented with improved drilling and cementing practices, but there was no regulatory requirement in Pennsylvania at the time. Closer regulation of gas drilling could minimize this type of problem, and in fact industry representatives that I talked to would welcome consistent and clearly laid out requirements for drilling because it levels the playing field among operators (cutting corners would no longer confer a competitive advantage). Given the large cost for shale gas wells (10-15 million dollars), it is not in the interest of the operator to design a well by ignoring complications like fault zones or unusually deep freshwater aquifers. Doing one’s geologic “homework” and following regulations is considerably cheaper than loosing a well or getting sued for contaminating an aquifer. If operators fail to do what is required of them there is nothing to prevent government agencies from imposing penalties at levels that will weed out shoddy operators and leave shale gas production in the hands of companies that can do so responsibly.

            What we do not need is a climate where we are so fearful of shale gas production that we deprive ourselves of the opportunity to get the facts to make a rational decision on this matter. In the US, the issue whether fracking was safe or not did not arise immediately. Gas shale development had its beginnings in states like Texas and Louisiana where a long history of oil and gas production made for a citizenry that was reasonably familiar with the oil business and did not see this latest development as an existential threat. Thus, by the time gas shale exploration moved into regions unfamiliar with large scale drilling operations (such as Pennsylvania and New York) and was viewed more critically, there were already facts on the ground that could not be reversed easily. So, in the US the merits can and are debated, but a shut-down of shale gas exploration is unlikely. In Europe on the other hand, hydrocarbon exploration and production is in most places something that is unfamiliar, and thus we have a public that is overall not as well informed and as John Billings remarked more than a century ago, “The less we know the more we suspect”.

            However, given that general scientific literacy in Europe is higher than in the US, it would be advisable that we do gather the facts about shale gas potential in Europe, do calmly evaluate the risks to the public, and only then make decisions about shale gas exploration that could affect the economic well-being of an entire continent. It is likely that expert analysis concludes that there are areas where shale gas exploration is not advisable, and others where the risks are low or negligible. But to know that is only the first step in a longer decision making process. An evaluation of economic feasibility would be next, and most likely at that point we will have an exploration “landscape” where only very specific areas of Europe would have to be concerned with shale gas exploration at this point in time. Another reality is that shale gas exploration in the US is favored by geology, because large areas of productive rocks are essentially flat lying or only modestly deformed, whereas in Europe prospective rock units are of smaller areal extent, and generally have suffered more tectonic deformation. Together, these two factors disadvantage a good number of European shale gas prospects, and at current gas prices a good many of them lack economic feasibility for some time to come. But in order to make informed decisions, we need to get the facts, and these can only be obtained by drilling into these rocks, collect core samples, and even do a number of fracturing tests to evaluate rock performance. We can debate the merits and dangers all we want, but without facts and data it is a rather pointless exercise. If there is economic potential in Europe shale gas deposits, we need to know about it. Only once we have this knowledge can we make sound decisions on whether to forego the attendant opportunities for the sake of real or perceived “greater safety”, or whether we want to translate the economic advantages into a worldwide more competitive European economy and better employment prospects for the people of this continent.

            So, what can Europe and the world learn from the US when it comes to shale gas development?  First of all, we should not hobble the entrepreneurial spirit with so much regulation that oil and gas companies that try to understand these rocks are forced to throw in the towel because it simply “is not worth trying”.  Secondly, gas shales are highly variable and each has to be evaluated on its own merits. This basic fact is not only key for economic gas production, but also plays a significant role in the associated risks and how to control them. Third, without fundamental geologic and geotechnical data about a given shale gas prospect, discussions about its merits or disadvantages will turn into a pointless argument that serves only one thing – to cling to the status quo out of ignorance.  At the moment all we know is that there is a potential for substantial shale gas production in a variety of places outside the US, and this potential is something that may provide a competitive advantage to Europe (as well as other locales) and therefore could be critical for future economic growth. Simply saying no to shale gas before the facts are known seems not advisable.  Shale gas development may well turn out to be a fundamental “game changer” for the US economy, and the world economy is rather unforgiving when it comes to poor planning for the future.

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Tom Markowitz

Consultant

Enerhope

Posted on: 03/12/2013

Shale gas and gas from fracking can and will provide a low cost, readily available, environmentally superior energy source for the next 10-20 years. Natural gas will extend from stationary uses to surface and marine transportation. The Western World's dependence on the Third World for energy resources could be erased by the development of shale gas and fracking gas. Greenhouse gas emissions from natural gas are much lower per unit energy than emissions from petroleum-based  fuels or from coal.

However, the benefits of any new technology will eventually be overwhelmed by growth in population and demand, unless we can establish sustainable values in our society. Arthur Jevons was right.

 

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Grzegorz Pytel

Expert, Oil & Gas

Sobieski Institute

Posted on: 10/12/2013

Shale gas: it's what's in the head not what's in the ground.

 

A few years ago the first successes of the US shale gas developments on a large scale, i.e. steady and significant rump up of the production, were met with scepticism if not disdain. Politicians and policy makers in Europe did not take them seriously. Some competitors, such as Gazprom, even made contemptuous comments. A few years later, with the economic crisis in the background, shale gas developments in the US proved to be a huge success. Economic revival, including cheaper energy bills, bringing energy intensive industries back to the US, more jobs, less reliance on the outside world, more security, to name a few. It showed that shale gas can be developed in an economic way on a commercial basis. But this is where a European lesson from shale gas developments in the US ends. Europe is a bystander, wallowing in its economic crisis and expensive energy, planning to make it even expensive through climate policies.

 

Who owns the gas?

 

In the background of the US success is the fact that mineral rights belong to private landowners. They own the resources below the ground. This has two profound implications. Firstly it is in direct interest of landowners to develop the resources, to make most of them. Therefore a typical "not in my backyard attitude" to industrial developments which is so prevalent in Europe, gives way to "yes, in my backyard please, I want to maximise the potential of my land". As a result a "social licence", i.e. local social conditions conducive to shale gas developments, is by far more a difficult issue in Europe than it is in the US.

 

Secondly if mineral rights belong to a state as it is in Europe, companies developing shale gas have to deal with state officials. This is a corruption prone arrangement and the current scandal in Poland of officials taking bribes for handling licence applications should not come to anyone as a surprise. Moreover deals between private companies and a state are very tricky: anything that later may appear as a bad deal for a state, can have immense political implications. We enter the realm of "exploitation" and "theft of national wealth". The dividing line between what with the benefit of hindsight can be perceived as such, or as a just bad business deal, or actually as the right outcome, is impossible to establish convincingly in such probabilistic business setting as natural resources industry. Such is the nature of this beast. Therefore state officials, especially in Central and Eastern Europe for which the idea of exploitation of natural resources by private investors is new, are unwilling to negotiate or see the other side of the arguments. They are in no win situation and their political and career risks are immense.  This is a recipe for a stalemate, which - as predicted back in 2010 and 2011 - we observe in Poland now.

 

Productivity matters

 

When the shale gas developments started accelerating in the US around a decade ago, the oil services industry there was ready for it. In the face of decline of conventional hydrocarbons exploration and production activities, many hundreds of rigs, well over a thousand, were available at very attractive rates. "Drill, baby drill" is maybe a caricature of the situation, but the attitude was buccaneering, and the tools were available. This created a push on productivity. Shale gas explorers could get more for their dollars. This, combined with the deregulated US internal market, created a background for small and medium size innovative companies to start pushing the technological and operational boundaries - which late George Mitchell first pushed a couple of decades ago - even further. And there is also a "do-it", pioneering attitude in the US business in general. By comparison oil services market in Europe is far from being truly competitive and in countries like Poland controlled by a state monopoly. The number of land drilling rigs in Europe is dismal, less than a hundred.

 

Generally, neither companies exploring for shale gas nor their host state authorities in Europe realise that they are in economic double whammy, compared to the situation in the US. Generally the productivity of the US economy is higher than of European countries, especially those in Central and Eastern Europe. Therefore operating and financial risks in the US are generally lower across the entire economy. This situation is compounded by the fact that private companies and corporations which dominate the US oil and gas market are also far more productive (across all sectors) than their state controlled counterparts or so-called "national champions", which dominate oil and gas business in continental Europe.

 

It's what's in the head

 

The above ground risks of companies exploring for shale gas in Europe are huge. These are: unfriendly and unpredictable legal and regulatory environment, low productivity, problems with social acceptance in the areas of operations, etc. Based on historical data of oil and gas industry, above ground risks constitute around 75%-80% of all investment risks. (The resource availability risks, i.e. what is in the ground and whether it can be exploited from technological perspective, are in the region of 20%-25%.) Facing these challenges, the European countries do not appear to understand them.

 

Likewise most companies exploring for shale gas do not understand that such is a state of affairs: i.e. the European countries governments and the EU officials do not understand the business effects of high above ground risks. There is not much effort to create more competitive and deregulated markets to lower above ground risks in Europe. Instead the governments and the EU authorities are bent on creating new regulations, holding talking shops or starting initiatives in Brussels such as technological platforms, which will create even more barriers. Locally, the resource nationalism and local market protectionism is rife in oil and gas industry in Europe. This is killing the shale gas industry before it was even  conceived on continental Europe.

 

The resources of shale gas in Europe (especially in Poland and France) can be huge. And companies can even believe in this. The gas below the ground in the US and Europe is not chemically that different. Even if technical, technological and operating challenges are different in the US and Europe, the last 150 years of oil and gas industry have shown that companies are not afraid to face them. But they need the right above ground conditions to do so. Clearly in the US and Europe, chemically the gas is nearly be the same: but the industry is completely different. Shale gas business is not really about what is in the ground. It is what's in the head.

 

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Michael Bradshaw

Professor of Human Geography

University of Leicester, UK

Posted on: 12/12/2013

The first thing I would say is that we need a better understanding of the nature of the “Shale Gas Revolution” in North America, I say North America because developments in Canada are part of the unfolding story. So, what can we say about the nature of shale gas development in North America? 

 

First, this is not something that has happened overnight. Although the rapid increase in unconventional gas and oil production is a recent phenomenon, the underlying developments go back to the late 1970s when the US government’s concern about falling domestic conventional oil and gas production and increasing import dependence resulted in funding for research and development in relation to unconventional fossil fuels. This was then supported by tax credits for unconventional gas production. Both government-funded and commercial activities were important in the development the technologies and techniques that today have resulted in US unconventional oil and gas production.

 

Second, shale gas is unconventional because of the way that the methane molecules are trapped in the source rocks, not because the techniques that are employed in production are unconventional. The technologies of hydraulic fracturing and horizontal drilling are well-established and commonplace in conventional oil and gas production and have been used throughout the global oil and gas industry. The late George Mitchell, who died last August at the age of 94, is widely seen at the originator of the shale gas revolution. It was Mitchell Energy that combined developments in hydraulic fracturing to develop techniques in 1998 to allow the commercial production of shale gas from the Barnett shale inn Texas.  Mitchell Energy’s successes soon attracted attention and in 2003 Devon Energy brought the company for $ 3.5 billion. By then the shale gas revolution was gathering momentum. In 2000 shale gas represented 1% of US natural gas production, today the figure is 30% and rising.   

 

Third, there is undoubtedly a particular set of circumstances that has enabled the rapid commercial development of shale gas production in the US and it is important that this is understood. I have already mentioned the role of government support and tax credits, to that we can add the abundance of freely available geological information about shale deposits in the US; a well developed oil and gas service industry that enabled the rapid ramp up of drilling operations; private ownership of subsoil rights that provided landowners with a clear financial incentive to allow drilling on their land; a well developed national gas pipeline grid and an open competitive gas market based on gas-to-gas competition that enabled shale gas producers to bring their gas to market at low cost (this is not ubiquitous across the US) ; the availability of cheap finance capital that enabled small and medium sized companies to finance the purchase of licenses and subsequent drilling operations. 

 

It is often suggested that that the absence of one or more of these factors in Europe and elsewhere means that the US experience will be difficult to replicate. It is worth noting that this has not stopped shale gas development in Western Canada. Thus, there is no reason why the lessons can’t be learnt and new solutions developed to suit local conditions. For example, in the UK the industry has suggested a voluntary code of practice to provide financial incentives to the communities affected by shale gas drilling operations. This is a response to the fact that the state, and not the surface landowner, owns the subsoil rights. Shale gas critics simply see this bribery.

 

Third, although there are a host of environmental problems associated with shale gas development, none of them are new and none of them are unique to shale gas production. Here there are obvious lessons to be learnt from the US experience. Undoubtedly, the regulatory exemptions afforded the industry by the Bush Administration have created the perception that shale gas production has not been subject to rigorous control in the US. However, control over onshore oil and gas drilling is a state jurisdiction and there are different regulatory regimes in the various states where shale gas production is underway, there are also some states where it is still prohibited—New York State for example. A bigger problem is the lack of baseline environmental monitoring that has made it very difficult to establish if particular problems—such as groundwater pollution—are a result of drilling operations. Partly because of this, the environmental impacts of shale gas development are highly contested in the US and there is much that can be learnt from studying the evolving situation at both the Federal and State levels. A final point to consider is that the US does not have a national climate change policy and while there are national and city-level initiative in relation to greenhouse reduction and carbon trading, this does not equate to the situation in Europe where there are legally-binding decarbonisation targets that influence energy policy. This is significant because, as the environmental groups rightly point out, supporting and promoting the development of fossil fuels runs contrary to the intent of contemporary energy strategy. Elsewhere, in China for example, the expansion of domestic gas production is seen as decarbonisation strategy as it would displace further increases in coal consumption, which has much higher carbon dioxide emissions. 

 

Fourth, Europe’s higher population density is often citied as a reason why the US experience will be difficult to replicate. This assertion requires further study.  At present, in Texas there is shale gas production within urban areas, such as Fort Worth. That said; the development of the Marcellus Shale in Pennsylvania is probably a better analogue in terms of population density and land use, but even there population densities are much lower than in Europe. What is clear is that shale gas production is a much more invasive form of production than conventional gas. While individual well pads may be no bigger than a football field and the fracking period may be relatively short—dependent on the number of well drilled at an individual pad—and the production footprint is minimal; the rapid decline rates associated with shale gas means that numerous wells are required to maintain production at a regional or national scale. As a result, the cumulative impact of shale gas development is much more significant than conventional gas and this fact does not seem to be appreciated in Europe. The actual number of pads that will be required is dependent on the productivity of the shale deposits—something we won’t know about until further exploratory drilling has been conducted. A recent analysis by Howard Rogers at the Oxford Institute for Energy Studies has estimated that in the UK, after 10 years a production level of 8 bcma is achieved by drilling 300 wells each year from (from 25 new pads a year, each with its own drilling rig). That means thousands of wells over a the decade, to sustain a level of production that is equivalent to about 22% of current UK production and about 12% of total UK gas supply.  This suggests that assessment of the environmental and economic impact of shale gas development in Europe will need to address the cumulative consequences of a substantial level of drilling activity if it is to contribute significantly to European energy supply. In the UK one drill pad and a less than a handful of wells has caused controversy and a national debate over the wisdom of shale gas development.

 

Fifth, and finally, the shale gas story in North America has already had a significant impact on European gas markets and it is far from over. In less than a decade the US has gone from contemplating substantial imports of liquefied natural gas (LNG) to compensate for falling domestic production to anticipating the export of LNG to global markets. Europe benefitted from the loss of the US LNG market as suppliers diverted their cargoes to Europe, which allowed Europe to benefit from lower cost LNG, which promoted the diversification of their gas supply. Then a combination of falling European gas demand as a consequence of recession and growing demand in Japan following the Fukushima disaster meant that much of this footloose LNG went to Asia. Most recently, as the US coal industry has lost market share to shale gas in the power generation sector, cheap US coal has been exported to Europe where it has forced gas out of the power generation mix—because European gas prices are much higher than the US and because the ETS is not working. The next phase will see the arrival of US LNG on European markets, bringing further diversification and competition in European gas markets. It remains to been seen if indigenous European shale gas production will be part of the supply mix; however, it is unlikely to be available until the 2020s and most experts expect that it will do no more than compensate for falling conventional production. Thus, any notion that a shale gas revolution in Europe will promote US-style energy independence is fanciful.

 

The final point to make is that the shale gas industry in North America continues to involve. In recent years production from dry well has been uneconomic and gas production has been supported by the exploitation of wet gas that has associated with natural gas liquids. Natural gas production has also expanded in areas where shale oil development has expanded, but many of these are in location not connected to the gas pipeline network, resulting in substantial amounts of gas flaring. A combination of growing concerns about the environmental consequences of unconventional fossil fuels and tough economic conditions is forcing the industry to invest in new technologies and business models to reduce the environmental footprint and drill down costs. Pad drilling with multiple wells being drilled from a single site; the reduction of the amount of water used in hydraulic fracturing and the reuse of returned water, closer monitoring of methane emissions; and more sophisticated geological modelling to identify ‘sweet spots’ are all helping to lower cost and impact. In part this has been enabled by the evolution of the industry with fully-integrated shale gas companies developing, along side the arrival of the major with their state-of-the-art technologies and deeper pockets. Thus, the US business model has moved away from the original reliance on relatively unsophisticated small-scale operations. Again, the on-going evolution of the industry in North America requires careful scrutiny as the direction of travel is addressing many of the concerns that are seen as barriers to development in Europe and elsewhere.

 

So, to conclude, my message is simple: there is much that Europe and elsewhere can learn by a careful analysis of the development of shale gas in North America. However, we should avoid thinking that for shale gas to be developed elsewhere it must replicated the conditions that first enabled it to emerge in the US. Rather, we should learn from those lessons and develop a shale gas regulatory regime and industry structure suited to local conditions and capabilities. But we also need to recognise that those local conditions will likely mean that it will take longer and cost more to develop shale gas potential in Europe and it may even be the case that full scale commercial development of shale gas in a particular regional or national context proves either too costly to compete against alternative supplies of gas and/or too controversial to gain the necessary ‘social licence to operate.’ In short, turning the geological assessment of gas in place into proven reserves and commercial production is subject to a host of ‘above ground’ concerns that are locationally specific, thus geography will matter as much as geology when it comes to assessing how far the US shale gas revolution will travel.

 

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Eugenia Gusilov

Managing Director

Romania Energy Center (ROEC)

Posted on: 15/12/2013

The economic and energy security arguments in favor of shale gas are compelling, however the European public remains largely skeptical and unconvinced that shale gas benefits outweigh environmental and health risks. Despite this, I think Europe and the world are in a privileged position because they can build on the experience of the pioneers (United States and Canada) and they can use the weaknesses pointed out by the American practice to strengthen their own regulatory frameworks and put in place targeted preemptive measures (mandatory baseline water testing, mandatory green completions and mandatory EIAs). The US experience with shale gas teaches Europe that a liberal regulation is not the way to go because lax regulation leads to a higher likelihood of accidents. Strong regulation and strict enforcement are required from the very beginning and, thanks to the American experience the areas of vulnerability are known. This is not to say that Europe should kill the fledgling shale gas industry with overregulation, but it should pay close attention and not shy away from stepping in to fill the legislative gaps or correct inadequacies.

The EU institutions are under pressure on this topic and the Commission is expected to present its views on shale gas regulation this December. The current review can result in three scenarios: a Directive for unconventional resources; an upgrade of existing legislation; or maintenance of the status quo. In my opinion, the first outcome would be most desirable, the second - most probable, while the last - unlikely. If the Commission decides in favor of a shale gas regulation package, it should come with a tough system of penalties and fines in case of accidents, high enough to dissuade operators from cutting corners and ensure sufficient funds to clean up any possible environmental accidents. This will send a strong signal to the public that unconventional resources across Europe will not be exploited at the expense of public health and environment. In my opinion, mandatory EU wide rules would be much more effective than voluntary compliance with industry standards no matter how high these are.

 On the topic of BAT, I would add that, to date, public debate has neglected almost entirely a key topic – that of the latest technological breakthroughs. The next generation technologies are not a matter of distant future, but are already on the market and can simultaneously deliver economic and environmental benefits and should be actively promoted. Unfortunately, this is not happening. One such technology is propane-based fracturing or fracturing with liquid petroleum gas (LPG) which does not require the use of water. Not only that it bypasses the problem of water altogether (thus having the potential to dismantle one of the biggest public fears related to shale gas projects – that of groundwater contamination), but it also seems to result in increased well productivity. It also has the advantage of not mobilizing naturally occurring radioactive material (NORM) that can sometimes be present underground, which sounds like a true win-win solution for both industry and public. Herein lies a truly golden opportunity for Europe to emerge as a champion of these latest technologies and take on a role which would fit perfectly with and consolidate its leadership in climate change and environment matters. The solution is not to shut the door to European shale gas, but pursue it with newer and better technologies. Of course, you cannot force companies to go with one technology or another, but governments, national authorities and European institutions have tools at their disposal (fiscal and administrative incentives, energy policies and regulation) to steer the private sector towards these technologies, encourage their use and reward their faster uptake. 

 

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Reza Rezaee

Department of Petroleum Engineering

Curtin University

Posted on: 19/12/2013

The source of natural hydrocarbon (oil and gas) from conventional reservoirs is decreasing rapidly. At the same time global energy consumption is growing sharply in a way that conventional reserves cannot solely assure this demand. Therefore there is an inevitable need for some other sources of energy.  

At the current technical situation, expensive clean-sustainable energies cannot compete with the relatively cheap non-renewable fossil energies. So the immediate alternative for energy would be unconventional oil and gas resources. There are many types of unconventional resources such as gas hydrate, tar sand, oil shale, shale oil, tight gas sand, coal bed methane, and of course shale gas. Shale gas, has been the major target of gas exploration and production in the US and some other countries. Based on recent EIA report there is an estimate 7,299 trillion cubic feet (Tcf) of technically recoverable resources of shale gas within the 41 countries occurring in 137 basins. 

After successes in shale gas production to the point where the US now produces more shale gas than from the conventional sources, other countries are following the same path. 

But to be successful in the exploration and development and to produce gas in commercial scale from shale gas reservoirs three major parameters are learned to be considered:

1.A vast knowledge on the different aspects of shales in order to map shale gas sweet spots in each sedimentary basin,

2.Have access to enough infra-structure (e.g. drilling rigs and hydraulic fracturing facilities) to drill many vertical and horizontal wells and conduct multi-stage fraccing jobs,

3. Resolve shale gas environmental issues and challenges such as high water demands and possible contamination risks posed by hydraulic fracturing fluids and wastes.

 

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Leonie Reins

FWO Research Fellow, European Energy and Environmental Law

KU Leuven

Posted on: 01/01/2014

What can the European Union learn from the development of shale gas in the US? Certainly that shale gas can be a game changer in terms of the creation of jobs, falling energy prices and increasing economic wealth. Also, however, that there is increasing public opposition in light of perceived negative environmental impacts with the technology.

The United States is by far the biggest producer of shale gas, has the longest history of extraction and is the only nation hosting companies exploiting shale gas commercially. It has become the driving force behind the worldwide shale gas boom. The United States therefore not only has the technical knowledge but also experience with the regulatory angle of the activity. This expertise is fundamental for the European Union. Al the more so given that the impacts of the activity on the environment are not entirely certain, and that no commercial exploration drillings have been undertaken in the European Union. Consequently the effectiveness and coherence of the European regulatory regime has not been assessed in practice.  

US regulatory trial and error cannot, however, simply be carbon copied  to the European situation. Even if also in the US the issue of overlap between States and federation exists, the European questions of subsidiarity and proportionality, Member States’ sovereignty, Union’s competences  and the Member States right to determine their own energy mix complicate the legal discussion of whether and how to regulate shale gas exploration and extraction on a European wide basis. 

Over and above commonalities and differences in the regulatory landscape, shale gas extraction is subject to an entirely different spatial landscape in the US. Whereas in the United States space is generally abundantly available, the potential drilling sites in the European Union are relatively close to other industry activities, protected areas or residential areas. These aspects evidently ought to have an impact on the law-making process. Further, the geographical characteristics of shale gas formation differ, thus the legal framework might need to be adopted to the individual shale. In general, European environmental standards and environmental awareness are perceived to be higher than in the United States; the European Union and Member States such as Germany are often seen as pioneers in environmental standard setting. Thus, even if a measure is considered to be a best practice in the United States, this does not automatically mean that it meets with European expectations of a high level of environmental protection. (This must not be generalized, however a number of individual US States are at a par to the EU when it comes to environmental protection).

The experience gained in the United States is crucial in determining the way forward for the activity in the Union, however as always, cheese must not be compared with chalk.

FROG at: www.fraclawblog.com

 

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John Williams

Senior Principal

Pöyry Management Consulting

Posted on: 06/01/2014

Following the success of shale gas in the US, there has beenmuch discussion about the development of shale gas in Europe.Can the success of the US be replicated? Can Europe overcome public and political resistance and gain a social licence to operate? Can the regulatory framework be developed to be both effective and efficient?

 

The differences between the US and Europe have been well documentedin this debate but there has been little consideration of the potential impacts of shale gas on the energy markets and on the wider European economies. Pöyry previously carried out studies for Ofgem, the GBregulator and in 2012 conducted a more detailed examination of the GB market.Although these studies looked at the potential impacts on wholesale energy prices, the macroeconomic impacts were not addressed.

 

In 2013, The International Association of Oil and Gas Producers (OGP) approached Pöyry to examine this specifically.In collaboration with Cambridge Econometrics, Pöyry has developed a methodology for assessing the potential shale gas production in the 28 EUcountries between 2020 and 2050 under two scenarios - Some Shale and Shale Boom. The production scenarios were then compared against a third No Shale Scenario in order to assessthe energy market and Macroeconomic impacts.

 

The study has found that net employment gains (direct, indirect and induced jobs) in EU28 could reach 1.1 million by 2050 under the Shale Boom Scenario.In the same scenario, GDP could increase by €3.8 trillion and tax revenues could increase by up to €1.2 trillion. Security of supply could also improve with the production of EU28 shale gas and reduce import dependency from around 89% to 62% in 2035. Average annual wholesale energy prices could reduce over the period considered by up to 14% in the Shale Boom Scenario and by up to 6% in the Some Shale Scenario. The reductions in wholesale energy costs, as compared to the No Shale Scenario would, in turn, reduce household energy costs and improve industrial competitiveness.

 

The report, launched in Brussels in November 2013, is the first to assess the potential impact of shale gas on the economies of the EU28 countries.

The study has received wide-spread coverage in the general and specialist media.

 

It can be downloaded from

 

http://www.poyry.co.uk/news/poyry-study-investigates-macroeconomic-effects-european-shale-gas-production

 

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Keisuke Sadamori

director of Energy Markets and Security

IEA

Posted on: 13/01/2014

• It is going to be very challenging to copy and paste the US shale experience. Let me explain why.

• You need three things for a shale revolution: good geology, a supportive energy policy framework, and an oil and gas industry that can make things happen. The US and Canada have a uniquely favourable combination of these three.

• There are very good shale geologies elsewhere, such as in Argentina or Mexico, but these countries would need a more open and investor-friendly policy environment (the reforms being pursued in Mexico represent a step in the right direction).

• In Europe and China the shale resources are deeper and drier, leading to higher production costs.

• In Europe, in addition, there is generally social resistance to hydraulic fracturing, or fracking. While Poland and the UK are moving ahead with plans to use hydraulic fracturing to unlock shale gas resources, several European countries have banned the practice. It is worth noting that we at the IEA believe that the technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way, although we also believe that if the social and environmental impacts are not addressed properly, there is a very real possibility that public opposition to drilling for shale gas and other types of unconventional gas will halt the unconventional gas revolution in its tracks.  

• Shale gas also needs large-scale development with mass manufacturing methods. The US has an ecosystem of large oil and gas companies, smaller, entrepreneurial independents and an oil-field-service value chain that has stronger engineering capabilities than the rest of the world combined. China and Russia have the fundamentals to build up such a corporate ecosystem, but neither has the full set of competition-oriented, open-access policies of the US that played the key role in facilitating shale development.

• The challenges I’ve mentioned are illustrated in the IEA’s World Energy Outlook. According to the central scenario of the WEO, there will be little non-North American shale development before 2020 due to the much earlier stage of exploration and the time needed to build up the oil-field-service value chain. Beyond 2020, the scenario sees large-scale shale gas production in China, Argentina and Australia.

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Frank Umbach

Associate Director

European Centre for Energy and Resource Security

Posted on: 20/01/2014

Russia’s annexation of Crimea and its continued destabilization strategy of Ukraine’s eastern and southern regions have fueled the EU’s discussion at a further diversification of its gas imports and a greater use of its domestic energy resources. Europe’s declared interests include both imports of U.S. LNG exports and the promotion of exploring its own shale gas resources. But up today, both options have been heavily disputed in the EU-28 member countries mainly due to perceived environmental risks and vested interests by other energy industries like the nuclear one in France or the renewable energy industry in Germany, which also play an important role in opposing shale gas projects in Europe.

American shale gas production is expected to increase from 34% of total US natural gas production in 2011 to 49% in 2035. U.S. Energy Information Administration (EIA) has forecasted that the U.S. will become in 2016 a net-exporter of LNG, in 2025 a net pipeline exporter and in 2021 an overall net exporter of natural gas

The development of unconventional gas in the U.S. since 2006 has not only triggered a revolution in the U.S. energy markets, but if has also become the tipping point of a fundamental change in global gas markets. It laid the groundwork for an expanded role of natural gas in the world economy, which prompted the IEA to envisage a “Golden Age of Gas”-era with unconventional gas being a “game changer”. It has already transformed the global gas markets, which were in the past rather “sellers’ markets” into “buyers’ markets”.

But Europe has been reluctant to recognize the widespread geo-economic and geopolitical impacts on and implications for their own regional gas markets and energy policies. Some countries in Europe (Poland, United Kingdom, Romania, Lithuania, Spain and Ukraine) have become very interested at the exploitation of their own unconventional gas resources, whereas others have adopted different kinds of moratoria(Bulgaria, Czech Republic) or even a ban on the fracking technology (France) and the production of shale gas due to perceived environmental risks. But if the other countries are able and willing to exploit those resources, it can enhance their energy supply security by reducing the volumes of expensive and sometimes unreliable gas imports. The International Energy Agency (IEA) in Paris expects that at least nearly half of the increase in global gas production to 2035 might be covered by unconventional gas if the industry can receive a “social license to operate” within stringent regulatory regimes to satisfy public environmental and social concerns. Europe has estimated total recoverable reserves of unconventional gas between 33 to 38 trillion cubic meters (tcm).

Despite the fact that they are many important differences between the U.S. and Europe’s need to be taken into account such as the often more difficult geologies, much less developed service industry and infrastructures, much higher population density, leading to much more perceived environmental concerns and Nimbyism, and that the states in Europe own the resources below the ground, the U.S. experiences teach Europe specific positive lessons to learn which can be adopted to the specific circumstances in Europe. 

Overall, the EU and its EU-28 member states need to take a much more strategic perspective into account by balancing the three major objectives of its energy triangle into a coherent strategy: security (of supply), affordability (economic competitiveness) and sustainability (environmental dimensions):

1.The U.S. shale gas revolution has been very much driven by the revolution of the fracking technology. Both the U.S. Energy Information Administration as well as the larger U.S. oil and gas companies such as ExxonMobil, Chevron and others had all overlooked and underestimated the U.S. unconventional gas resources and their technically recoverable potential until 2006.

2.The historical lesson with new fossil fuels is that both availability and production levels increase – rather than decrease – in the first phase for a longer period. The U.S. shale gas revolution has dramatically reduced its import dependence on LNG supplies from politically unstable regions such as the Middle East. With the share of LNG versus pipeline gas rising worldwide, the EU-27 will also benefit from expanding unconventional gas production in various ways. It will open-up new sources of LNG imports, including from the U.S. and countries for whom exporting gas is totally new. Given that the world’s and Europe’s unconventional gas resources are much larger than the remaining conventional ones, which has increased the future availability of natural gas from 56 years to 150-250 years (more than the remaining coal resources), the prospects for exploiting unconventional gas  looks very promising both in Europe and the rest of the world. 

3.Development of unconventional gas reserves in the U.S. has brought increasing foreign direct investment (FDI), created up to 2.2 million new jobs, reduced dramatically energy prices for the industries and helped to strengthen energy diversification. The European energy-intensive industries have become increasingly concerned about the fact that the gas production glut in the U.S. has reduced its natural gas prices by more than two-thirds since 2008. In Europe, gas prices have remained relatively expensive due to the oil price linkages and Russian long-term contracts with “pay-and-take”-clauses. 

4.The cheap U.S. gas prices have already led to a remarkable revival of U.S. energy intensive industries and manufacturing. A report of the U.S. Department of Energy has concluded that LNG exports would broadly benefit the U.S. economy by generating up to US$47bn in new economic activity by 2020 with little impact on domestic natural gas prices. IEA has warned that the gas price difference may last for at least the next two decades and expects that the EU and Japan will lose around one-third of their current share in global energy-intensive industries by 2030 due to its lasting shale gas revolution. 

5.The next generation of “super-fracking”-technologies, presently already tested by Schlumberger, Halliburton, Baker Hughes and others, promise to prolong the fracture conductivity, to use half the water of current fracking procedures, and therewith release the reserve and halving the local surface traffic necessary to service the operation, and to decrease the costs up to 70%, from US$2.5 million per well down to just US$750,000 as some industry-technology analyses promise. These new drilling technologies in combination with new imaging as well as completion technologies are helping the pro¬ducers to explore more deeper, complex and challenging unconventional gas reservoirs in a more environmental-friendly way. As the past two years already highlight, new unconventional oil and gas drilling rigs with its increasing automation will make the drilling process much more safer, faster and cheaper, increase the drilling efficiency and volume rates as well as reduce the number of wells to be drilled in one gas field. ExxonMobil has already developed non-toxic fluids specifically intended for the geological conditions in Germany, albeit they still need to be tested under field conditions. 

6.How much of Europe’s estimated total recoverable reserves of unconventional gas between 33 to 38 tcm depends ultimately on the presently conducted test drilling in the individual European countries, the further development of the fracking technology and solving the perceived environmental risks as well as the European governments’ political will and leadership to actively support and promote the exploration of their domestic unconventional gas reserves in the public debates and to highlight the manifold benefits. According to the present best-case scenarios, a reliance on its own shale gas resources can contribute to almost half of the EU’s total gas production and meet around at least 10% of the EU gas demand by 2035.

7.Although the U.S. shale gas revolution cannot be replicated in Europe with the same low costs of shale gas production and will not reach the same volumes as those of North America, it is expected to be a competitively-priced source of energy, in particular compared to that of imported Russian conventional gas from its new and very expensive gas fields in the remote region of Yamal and Siberia with even longer distance for pipeline transportati¬on. According to new geological studies, some of the unconventional gas resources in European countries have been reduced (i.e. Poland, France), but others have been significantly increased (i.e. UK, Germany, Romania, Bulgaria, Spain, Netherlands).

 

Environmental Risks and Concerns:

1.In the past five years, U.S. carbon dioxide emissions decreased by 13% to the lowest levels since 1994 due to the coal-to-gas switch, new energy saving technologies and a doubling of renewable energy production. It is even more impressive if one takes into account that the real GDP in 2012 was 55% higher and the U.S. population 17.5% larger than in 1994.

2.The share of coal in the U.S. energy mix fell from 22.5% in 2007 to just 18.1% in 2012. Over the same time, total U.S. energy consumption has been reduced by 6.4% towards 2007. But in the longer-term, the U.S. would have to phase out gas in electricity generation to meet its emission targets unless carbon capture and storage (CCS) is available at a low cost for widespread use.

3.An impressive number of new scientific studies of 2012 and 2013 have all confirmed empirically that most of the perceived environmental risks in the public debates are clearly overestimated and that stringent regulatory efforts, the use of new technologies and best management practices by the industry and independent regulatory oversight can manage, control and regulate the environmental challenges and that those risks are not really be much higher than conventional gas drilling.

4.In comparison with the U.S. environmental policies and legislation in the past, EU regulation is more robust and European shale gas is more likely to be developed by interna¬tio¬nal oil companies, which have a much better track record in managing environmental im¬pacts. However, this will come at certain, but affordable cost. But the EU even does not need a totally new regulatory framework but rather implementing the already existing one more forcefully. Moreover, Europe’s better experiences and more regulated environmental legislation as well as leading environmental technologies promise a significant export potential to other countries and regions in the next years and decades due to their interests to replicate the U.S. shale gas revolution. 

5.The IEA in 2012 and the European Commission last January by recommending “minimum principles” for shale gas exploration and production to ensure adequate environmental and climate safeguards have defined rules to regulate the con¬troversial shale gas industry in order to minimize the en¬viron¬mental risks of the technologies. They have also underlined the need for full transparency, particularly in the use of chemicals, measuring and monitoring impacts and pro-active engage¬ment with local communities to addressing public concerns. The IEA estimated that the application of these rules would increase the overall financial cost of a single shale gas well-development by just 7 %.

6.With further technological improvements the potential to develop more environmentally friendly drilling technologies will enable the oil and gas industry to find a way to cope with the many environmental risks, reducing these obstacles over time.

7.Even the latest report by the Intergovernmental Panel on Climate Change (IPCC) has concluded that shale gas can help the world to avoid dangerous climate change and be very consistent with low-carbon development if it replaces current world average coal-fired power plants with modern, highly efficient natural fas combined-cycle power plants.

Cheaper European shale gas will help break Europe’s dependence on Russian gas, which will become the most expensive for Europe due to the new gas fields in even more remote and difficult regions. By ignoring or denying the positive strategic dimensions of the European use of its domestic unconventional gas reserves, in the short and mid-term, the alternative would be increased gas imports from Russia plus much more LNG from often politically unstable producer countries outside of Europe. This “alternative” would not only worsen Europe’s energy supply security, but also create a much worse CO2-footprint. If lifecycle analyses are taking into account by including emissions not just from the production process, but also the long transport way through thousands of kilometers of pipelines, CO2 emissions would be around 30% lower with domestic shale gas resources in comparison with Russian gas pipeline imports, particularly from the new Russian fields which are further away and much more expensive. The alternatives to domestically-produced shale gas would therefore lead to higher gas prices, reduced security of supply and higher CO2 emissions. In other words: the use of domestically-produced unconventional gas serves all three major objectives of the “energy triangle” (or “energy trilemma”): supply security, economic competitiveness and even environmental/climate protection.

 

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Bret McNab

Attorney

Bowles Rice LLP

Posted on: 27/01/2014

Shale gas is and will be a significant aspect in the development of energy across the world. Here, in the United States, we have seen an expansion in the growth of shale gas from the Eagle Ford shale play in Texas to the Bakken play in Montana and North Dakota to the Marcellus Shale play in Pennsylvania and West Virginia and most recently, the Utica Shale play in Ohio. More importantly, with this we have seen the creations of new jobs, the benefits of more cost effective technology, and new technology. Some of these benefits include pipelines, natural gas powered vehicles, natural gas power plants, and ethane cracker plants. However, with all of this progress, it has not come along without criticism.

One of the first lessons to be learned is to educate the general public about hydraulic fracturing. Many people do not understand exactly what “fracking” is and how it works. Simply put, “fracking” is a two-step process: (1) Involving the horizontal drilling of the well bore; and (2) the actual “fracking” or puncturing of the Shale formation by the use of fluids to allow for the escape of the natural gases or oil. Moreover, horizontal drilling and “fracking” are not new sciences, each of them have been used for over half a century, and “fracking” became a huge success with the Barnett Shale in Texas in the 1990’s. The actual reason for the use of the hydraulic fracturing is that technology has improved and now extraction of these gases is cost-effective. 

Moreover, and mentioned above, corporations, energy associations and government need to do more to educate the public about the common misconceptions of “fracking.” In order to educate the public about fracking, these groups need to advocate their position by publishing the results of scientific studies on “fracking” and its effect on the environment. Additionally, these corporations and associations need to provide assistance to the public about this science through readily available sources such as websites, blogs, Facebook, Twitter, other social media, which play a significant role in how we Americans receive our news. Furthermore, these groups need to be accessible to the public through social media but also through informational meetings and other forms of public discussion. The lesson here is to advocate and educate the public about hydraulic fracturing to show the benefits of the boom from shale plays.

Another lesson that the world can learn from the development of the shale gas is the lack of current infrastructure may stall the rapid growth. For instance, in Ohio and many other states, drillers have been limited in the amount of possible production because of the lack of midstream infrastructure for transportation of the shale gas to market. However, these states have continued to lay more pipelines and invest the creation of processing facilities to help streamline the expansion. Like Ohio or any other state, each country around the world will face its own challenge with infrastructure and demand. This is without a doubt an issue that will be faced by many countries in developing each of their own shale plays and warrants consideration.

The last lesson to be learned is the hard question of what regulation should be imposed. Here, in the United States, individual states are subject to Federal laws on most aspects of shale gas, in which the Federal law places the standard on which these activities must be regulated, but allows each State to strengthen the laws if they choose. Specifically, in the United States, there is New York who established a moratorium on hydraulic fracturing similar to France’s ban in Europe. On the other hand, states like Illinois, Ohio, Pennsylvania, and West Virginia continue to adapt their regulation on hydraulic fracturing as it progresses. For instance, many states have set out guidelines for well construction, well casing, spacing, disclosure of chemical additives, waste water treatment, recycling of “frack water,” and of course, water quality. Each of these issues merits careful thought when determining what type of regulation must be imposed and will face harsh criticism from detractors and advocates of shale production.

These are just a few brief concerns that can be learned by the development of shale plays in the United States and there will be more lessons learned as the United States continues with its expansion. It is important for Europe and other nations to keep a watchful eye on the evolution of the shale plays in the United States and consider how each issue and subissue may impact their own growth.

 

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Richard Gard

Freelance Consultant

Posted on: 03/02/2014

Water Supply Quantity and Quality  

The fracking process requires water – A lot of water. In the US and increasingly Europe, concerns are being raised over the impact of shale gas extraction on both water quantity and water quality.

Europe is a densely populated continent with many existing demands on its water resources. The shale gas industry and national governments will have important questions to answer as they assess both the feasibility and desirability of exploiting their shale gas reserves in an environmentally sustainable way.  

Questions will have to include; Where will the increased volumes of water come from? How will they make sure the water is free of industrial chemicals when it is returned to the environment. How will the industry work with water authorities to ensure the risk of potential industrial accidents is kept to an absolute minimum.

The prospect of increased water demand for use in the fracking industry comes at a time when water resources in many parts of Europe are already under pressure.  A range of factors including population expansion, changing climate and increasing farming and industrial use have all had an impact on water resources across the continent.

In the case of the UK even before the prospect of shale gas extraction, the water industry was facing resourcing challenges. With some parts of the country receiving surprisingly low levels of rainfall – areas of East Anglia, the region immediately north of London, have less than 700mm of rainfall each year. When this is combined with an increase in severe weather events and a population set to expand rapidly in the coming decades, the industry had already been asking itself how to continue to meet the need for safe drinking water in an environmentally responsible way.

The memorandum of understanding signed between the UK water industry (Water UK) and the onshore operators group (UKOOG) in November last year commits both industries to share information on, amongst other things, impacts on water quality and quantity and management processes for waste water.

The UK Water industry’s initial quick rejection of fracking a few months earlier came from a conservative industry’s assessment of yet another threat to a finite resource.  With shale gas forming a central plank of the current British government’s future energy policy the water the water industry’s new approach is not perhaps surprising but it is never-the-less welcome.

Hopefully the co-operation will include looking at lessons learned from the US experience so that the relationship could, at the least, provide useful information on the kind of challenges other European countries might face from operating in a more densely populated environment and at best could provide a template for best practice in the industry in a European context.

For some EU countries such as the Netherlands, and some of the German states water resources issues and environmental management have particularly strong political importance, and current moratoria on shale gas development are understandable in this context. However, with Europe increasingly looking at its future energy supplies many countries will be considering the potential of shale gas as an energy resource. Practical research on water quality and quantity issues, such as is currently underway in the UK, will be essential to this process.

There are clearly lessons for Europe to learn from the US experience – the re-use of industrial waste water, for example, has developed in recent years out of environmental concerns – and the sharing of best practice of this sort will be essential. But if water quality and supply concerns are to be investigated effectively they will need to be applied to a specifically European set of political, population and environmental circumstances.

 

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Arthur Berman

Director

Labyrinth Consulting Services, Inc.

Posted on: 10/02/2014

Europe Should Start Thinking Unconventionally About Developing Its Unconventional Gas

This is what Europe and the rest of the world should learn from unconventional shale gas development in the United States:  shale gas should be pursued for strategic and not for commercial reasons.  

Shale gas is a commercial failure in the U.S.  The push to export gas from North America acknowledges that the higher prices in European and Asian markets are necessary to make projects commercial.

The Barnett, Fayetteville, Haynesville and most of the Marcellus shale plays require gas prices much higher than $4 per million British thermal units (MMBtu) in order to be commercial.  Claims of break-even prices at less than $4/MMBtu are dishonest because they exclude basic costs of doing business that cannot be charged to any other profit center than the well.  

Most European countries use relatively small volumes of natural gas compared to the U.S. and other major consuming countries of the world (Figure 1).  It, therefore, seems reasonable for Europe to consider developing its own unconventional gas resources as a strategic venture and not to be dependent on imported gas.  While it may be expedient to consider allowing integrated oil companies (IOCs) to drill and develop these resources, it may be worthwhile to think about joint venture projects with service companies with experience in the drilling, completion and development of North American shale gas.  

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1. European daily natural gas consumption. Source: BP 2013 Statistical Review.

 

It is important to recognize that the relatively small gas volumes required by the countries of Europe may not satisfy the threshold needs of IOCs for reserve replacement.  It is equally useful to consider that many of the environmental effects of shale development to which some Europeans object apply principally to large-scale development projects that exceed the consumption levels of most countries in Europe.

Because the cost of drilling and producing are higher than in the well-developed and highly competitive industry structure of North America, break-even prices in Europe will be higher at least initially.  This reinforces the potential attractiveness of partnerships with service companies that provide the very infrastructure responsible for the price difference.

Recent aggression by Russia in Ukraine has produced a different consciousness in Europe about natural gas supply security.  Many have called on the U.S. to alleviate these concerns by exporting natural gas to Europe.  The reality, however, is that American exports cannot begin for at least two years and volumes will be too small to help Europe according to estimates by the U.S. Energy Information Administration (EIA) even assuming the unlikely case that all U.S. exports go to Europe (Figure 2).

Figure 2.  Forecast of U.S natural gas exports. Source: EIA (2013).

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2.  Forecast of U.S natural gas exports. Source: EIA (2013).

 

It makes sense for Europe to re-consider its natural gas supply needs and risks in light of events in Ukraine and previous actions by Russia that created energy insecurity for Europeans.  Standard approaches relying of foreign companies to develop its natural gas resources have not met with much success to date. Perhaps it is time for Europe to begin thinking unconventionally about developing its unconventional gas resources.

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Tanya Heikkila and Chris Weible

School of Public Affairs

University of Colorado - Denver

Posted on: 24/02/2014

Hydraulic Fracturing Politics – Lessons from the U.S.

Hydraulic fracturing has been one of the most salient and controversial issues to capture the attention of the news media, governments, community activists, environmental organizations, and scholars around the world. Hydraulic fracturing is a technology that involves the injection of water, sand, and propants (a mixture of various chemicals) to crack shale and “tight” formations and release natural gas and oil.  Recent advancements in this technology, along with horizontal drilling techniques, have made it economically viable to access enough shale oil and gas reserves thereby changing global politics, economies, and energy supplies.  Although the potential production of shale oil and gas has been widely discussed in Europe and the United Kingdom, these resources have not yet been developed to the extent seen in the United States, which has witnessed a rapid expansion of shale drilling. For example, according to the U.S. Energy Information Administration, shale gas production from the Marcellus Shale in the Pennsylvania increased from zero in 2007 to 2,042,632 million cubic feet in 2012. 

The expansion has led to contentious political debates over the risks, benefits, and regulatory issues associated with shale development, particularly the hydraulic fracturing process. Based on research we have conducted on the politics of shale gas development in the United States, several lessons might be drawn for the European context.

1.Expect contentious politics.  In the United States, the political debates over hydraulic fracturing have been some of the most contentious and divisive in the history of environmental and energy policy in the country. One of the reasons for this level of divisiveness is that basic value conflicts about the future of a society including its energy security, economic development, and environmental protection underlie these debates.  Value conflicts are inherent in the hydraulic fracturing issue because it involves the potential for both great economic benefits and serious environmental and public health risks. Additionally, the technique involves various scientific and technical unknowns and, for what is known, the science and technology is extremely complicated to understand and communicate. This uncertainty and complexity makes it particularly difficult for individuals and organizations that hold competing political values to find common ground on this issue.  

2.Prepare to navigate across levels of governments.  Hydraulic fracturing is an issue that simultaneously has local, subnational, national, and international implications. In the United States, the local issues commonly center on the siting, nuisance issues, and local economic impacts of drilling and well operations. Subnational, or state-level, issues often involve questions around regulation of risks, protection of air and water supplies, state level severance taxes and industrial development, as well as the appropriate role of state versus local governments in regulation.  The issues that have arisen most commonly at the national level in the U.S. involve some debates over national level regulations for industry practices (e.g. “green completion”) and regulation on public lands, but are also often tied to broader questions around whether hydraulic fracturing contributes to energy security or exacerbates climate change.   The result has been heated political debates within and across levels of government.  Strategies for successfully navigating the issue must recognize its multi-level focus in communicating to the public, designing regulations, and understanding the politics.

3.Deal with issues of representation.  Modern democracies depend upon representation in governance. Because of the stakes involved and the scope of the issue, a sizeable proportion of the population cares about this issue and yet is not directly engaged in learning about all the different aspects of hydraulic fracturing, from the political to the technical.  The result is a challenge to democratic governance and a need for developing effective communication strategies and trust between people actively involved in the issue and those people observing or impacted by their decisions.  Even in direct citizen involvement through referenda and initiatives, the challenge remains in how to communicate the benefits and risks to a broad population and how to engage key stakeholders in process that promote learning for informed decision making.

4.Policy agreements are possible. Despite the challenges associated with hydraulic fracturing, policymakers and interested stakeholders with competing interests can and have been able to reach agreements on some governance and regulatory decisions.   With input from diverse and competing interest groups, regulators in Colorado, for instance, have recently passed rules on disclosure of fracturing fluids, setback regulations, water quality monitoring, and methane air pollution.  Whether or not these rules have adequately addressed the concerns with hydraulic fracturing, and shale development more generally, is still a subject of debate in Colorado.   Like Colorado, many other states and across the U.S. have been able to adopt policies and rules on a range of issues such as severance taxes, drilling technologies, setback standards for well siting, disclosure of hydraulic fracturing fluids, wastewater disposal, and well abandonment.  While studies have begun to document where, what types and when these regulations have been established (e.g., see “The State of State Shale Gas Regulation” report by Resources for the Future), less is known about their effectiveness and their impacts on the industry, government and communities.  Understanding the longer-term effectiveness of these policies therefore remains a future task for academics, policy analysts, and regulators.  At least in the short term, the leaders involved in hydraulic fracturing are reaching agreements and making progress in regulating this contentious issue. 

 

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Barry Stevens

Managing Director

TBD America, Inc

Posted on: 21/08/2014

Two years ago (06/15/2012), an AP report, Fracking-Earthquake Report Suggests Low Risk For Large Tremors,  by Seth Borenstein stated, “The controversial practice of hydraulic fracturing to extract natural gas does not pose a high risk for triggering earthquakes large enough to feel…..” 

Building collapse-shale tremors

But these less than formal announcements failed to quell the public’s concern over the relationship between hydraulic fracturing wastewater disposal in deep injection wells and the rash of seismic activity near disposal sites. Fast-forward to today (08/18/2014)! Seth Borenstein in “Less shake from artificial quakes, fed study says,” announced the results of a study by U.S. Geological Survey geophysicist Susan Hough - “Man-made earthquakes, a side effect of some high-tech energy drilling, cause less shaking and in general are about 16 times weaker than natural earthquakes with the same magnitude……..”

In closing, the study seems sound and somewhat consistent with reports from the Texas Railroad Commission (TRC).  Yet, the TRC, which has been ridiculed for siding with the oil and gas industry on controversial issues, has announced this week in the Star-Telegram, “After months of disappointing decisions — or mostly indecision — in response to a rash of seismic rumblings in North Texas that some studies have linked to hydraulic fracturing, the Texas Railroad Commission ….. approved new proposed rules that would require oil and gas drilling permit seekers to provide additional information, including data on a region’s seismicity and any history of earthquakes recorded by the U.S. Geological Survey, before drilling new injection wells. 

Nevertheless, as a resident of Tarrant County, Texas living on top of the Barnett Shall Play and a proponent of environmentally safe hydraulic fracturing that ensures public safety, it is hoped the report reflects reality. In any event, it is just an issue of managing risk, which we can and no different than any other human activity.

The opinions expressed in this article are solely those of the author Dr. Barry Stevens, an accomplished business developer and entrepreneur in technology-driven enterprises. He is the founder and President of TBD America Inc., a global technology business development group serving the private and public sectors in energy, fuels and water industries.

 

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