Controversy over the release of methane gases, potential threats to health and the falling price of oil all threaten to undermine the fracking industry. As prices fall, the arguments for renewables could become overwhelming. By David Rogers
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In his fifth State of the Union address last January, Barack Obama once more gave the presidential seal of approval to the extraction of oil and gas from shale beds using hydraulic fracturing, or fracking for short. The benefits, he said, were many and great: the sudden access to clean shale gas had been one of the principal causes of restarting the US economy after the 2008 slump. It had brought America “closer to energy independence than we’ve been in decades”, and was encouraging businesses to invest “almost US$100 billion in factories that use natural gas”. In the future, fuelling stations would be built to “shift more cars and trucks from foreign oil to American natural gas”. It would, he said, be the “bridge fuel” that would replace coal and allow low-carbon growth to take place while renewable sources of energy were being perfected.
Previous speeches had been even more enthusiastic. Back in March 2011, when the fracking industry was still in short trousers, he told an audience at Georgetown University that “recent innovations have given us the opportunity to tap large reserves – perhaps a century’s worth of reserves – in the shale under our feet”. And in his 2012 State of the Union address he stated baldly: “We have a supply of natural gas that can last America nearly 100 years.”
The excitement was understandable. In 2000, shale gas made up 1% of US natural gas production; 10 years later it was more than 20% and the Energy Information Administration (EIA) predicted that by 2035, 46% of America’s natural gas would come from fracking. As of now, two million wells have been sunk, and 19 out of every 20 new boreholes are for hydraulic fracturing.
And yet, despite the wholehearted support from the Obama administration and these astonishing statistics, all may not be as it seems. In fact, there is a strong possibility that only three or four years after it began, the shale gas revolution is in serious difficulties. The reason is that a number of commercial, environmental, geological, political and geopolitical factors have combined to cast doubt into many minds as to the desirability and viability of fracking. And one of the US’s largest and most influential states – New York – has banned it altogether.
How “clean” is shale gas?
One of the principal arguments advanced by Obama is that shale gas can replace coal while the US ramps up the production and deployment of wind and solar power. This argument is certainly plausible – the UK made a similar “dash for gas” at the beginning of the nineties and claimed that it was decarbonizing energy generation – but a growing number scientists have recently cast doubt on it.
The first of them was Robert Howarth, a professor of ecology at Cornell University. He published a paper in April 2011 arguing that shale gas actually had a greater effect on global warming than natural gas and other fossil fuels.
He told SALT: “We focused on methane emissions, because natural or shale gas is mostly methane and methane is an incredibly potent greenhouse gas. People sit there going, ‘well, the carbon dioxide emissions are a lot less than coal’, and that’s perfectly true, but the methane is much higher than coal. We did the best job we could of estimating what those methane emissions were. It was hardly rocket science, but nobody had done it before.”
‘The idea that we might have 100 years of gas, as Obama said in his State of the Union address, is simply not true. The data didn’t support that at the time. It’s been terrifying for me to watch because you’d like to have a national energy policy that’s based on data. I know they’re political decisions, but they have to start with the facts and if you get the facts wrong then they can lead to disaster,’ Robert Howarth, Professor of Ecology, Cornell University
The consequences of Howarth’s paper were spectacular. Usually, he says, a high-visibility paper will generate follow-up research over the course of five to 10 years. “In this case, my paper came out in 2011 and probably 10 others were published in the next eight months that re-analyzed our approach. A lot of other scientists got interested in the controversy so there was a huge increase in people going out and getting new primary data. Studies published in the past year say that we were probably right but that we were a little too conservative: things are worse with shale gas. There are certainly people who still disagree with me, but I would say that of people who work in this area 75% agree and 25% disagree.”
However, the most spectacular result was when Howarth’s research was used by France’s parliament when it voted to impose a nationwide ban on fracking. “The French parliament used it as a major part of its decision making, says Howarth, “and they did consult with me to make sure that they understood what I was saying.”
A bridge too far?
Other scientists are more sympathetic to the bridge fuel argument. Robert Jackson, an earth sciences professor at Stanford University, said: “The US$10 billion greenhouse gas question is the extent to which shale gas reduces coal use compared with how much it reduces renewables. When people say ‘bridge’, do they mean 25 years, 50 years or 100 years? I think the main factor is how quickly the cost of renewables drops – we will realize that wind and solar are as cheap, or cheaper, than shale gas, use less water and produce less pollution, so the argument for renewables will be unanswerable. But, meanwhile, we’re hurtling towards temperatures that are much higher than anybody thinks is safe because of the rise of emissions in China and India and the lack of action in places like the US.
“If we couple natural gas to renewables in the short term, I think it can make an important contribution. I think a 25-year timeframe is reasonable. I’m a co-chair of the Global Carbon Project, and at current rates we are only 20 or 30 years away from overtopping the 2°C threshold, and really we’re on a trajectory to reach 3-5° this century unless things change radically.”
Why have companies found it necessary to drill two million wells in the US? The answer to this question indicates another peculiarity of the shale gas industry. There are a lot of unproductive wells, and the ones that are productive have a much faster decline curve than their conventional counterparts. In December last year, Nature magazine cast doubt on Obama’s century of cheap gas claim, and the view of Adam Sieminski , the director of the EIA, that “there is no doubt at all that production can continue to grow all the way out to 2040”.
Tad Patzek, the head of the University of Texas’ department of petroleum, told Nature that the drive to extract shale gas as fast as possible and export it to the rest of the world meant “we’re setting ourselves up for a major fiasco”. Most of the EIA’s projections were based on the assumption that fracked wells have the same 20-year decline curve as conventional gas, but with shale gas, 90% is gone in the first 18 to 24 months.
Howarth said: “The new studies that have come out are pretty convincing, and although we have increased our natural gas supply short term we can keep it going only for another decade, maybe two; for the oil, a lot of people are saying that those fields are peaking already. The idea that we might have 100 years of gas, as Obama said in his State of the Union address, is simply not true. The data didn’t support that at the time. It’s been terrifying for me to watch because you’d like to have a national energy policy that’s based on data. I know they’re political decisions, but they have to start with the facts and if you get the facts wrong then they can lead to disaster.”
Health and safety
If the scientific evidence is troubling with respect to the effect of shale gas on global warming and on the amount of gas and oil that can be extracted, at least these two factors cancel each other out, to some extent. What is equally troubling is the absence of evidence on the effect of fracking on human health. And although France made its decision on the basis of climate change, most other regulators will be more influenced by this question.
Jackson said: “When we talk about bans, it’s not greenhouse gas, it’s health that makes the difference. That’s why the water issue is so important, and the emission of volatile organic compounds from wellheads. There have been no human health studies. There have been a handful of exposure studies, but even in the US we have no health studies and absolutely no long-term health studies.”
He points out that the decision to ban fracking in New York state, despite the presence of substantial gas bearing shale, was taken by the health department of the state government. “It’s not surprising that a health department would look at the lack of data and say ‘we need more time’.”
Jackson’s said: “What’s different about hydraulic fracturing is that it’s an intensive industrial process that happens in thousands and thousands of places and everyone is a potential mistake and a potential battleground, even though in many cases it goes perfectly well and people are happy with how it’s gone. But I have some photographs showing the close proximity of houses and these industrial fracking operations in Pennsylvania and Fort Worth.”
Data collected by Jackson’s researchers suggest that up to 10% of wellpads have serious air emissions and water problems. Although this might be regarded as a reasonable failure rate, the fact that fracking involves so many wells so close to where people live means that the total number of problems is large.
The business case
The final problem with fracking is that it relies on oil being relatively expensive most of the time. One of the largest shale oil fields in North America is the Bakken in North Dakota, and one company, Continental Resources, owns the mineral rights for about one million acres of the state. However, with oil prices at US$60 a barrel, about 70% of its wells operate at a loss, according to an analyst’s note from ITG Investment Research.
‘If we couple natural gas to renewables in the short term, I think it can make an important contribution. I think a 25-year timeframe is reasonable. I’m a co-chair of Global Carbon Project, and at current rates we are only 20 or 30 years away from overtopping the 2°C threshold and really we’re on a trajectory to reach 3-5° this century unless things change radically,’ Robert Jackson, Professor of Earth Sciences, Stanford University.
This has led to much speculation that Saudi Arabia is using the cheap oil weapon to force companies like Continental out of business. If so, the real targets are those who invest in fracking: all those wells and that extraordinary expansion requires immense investment predicated on the assumption that over time, energy prices can only rise. If the Saudis can create a credible threat that prices may remain low for years at a time, hydraulic fracturing will look like a risky bet. In other words, the perception has been created that even if oil prices do recover to a level that makes fracking profitable, they could be forced back down in the future. So much for America’s energy independence …
Is it all over?
The decision to ban fracking in New York will probably have some effect on international opinion, but according to Cornell’s Howarth, it will not influence oil states like California, Texas and Oklahoma that think they understand the oil industry. Fracking will probably continue in these areas at a reduced rate, and scientists such as Stanford’s Jackson argue that this is not such a bad thing, as long as companies are sufficiently well regulated, best practice is followed, wells are monitored, research conducted and problem companies identified. At the same time, he says, measures should be put in place to aggressively promote renewables – ideally involving some way of charging for carbon.
It will also not prevent some nations from going ahead: China and Argentina, for example, have advanced plans to exploit their immense deposits of shale. However, what is clear is that that the dream of turning the clock back to the 1920s and reliving the golden years of the oil industry is over.