SPECIAL REPORT • ENERGY
Passing on gas: Environmentalists say unconventional energy should be left alone
Critics of shale gas drilling frequently cite its numerous and drastic environ- mental risks to argue for tighter regu- lation. Fracking can cause mini-earth- quakes that allow gas and chemicals to seep into groundwater. Above-ground spills of chemicals like benzene used in the process kill wildlife. And the truck- loads of equipment required for drilling need roads that carve up the country- side and burn fossil fuels on the way. The documentary Gasland, an
Academy Award-nominated public- relations nightmare for the shale gas industry, put many of these arguments on film. New York filmmaker Josh Fox tours some of America’s most prolific shale gas sites, documenting claims that nearby wells have turned tap water into black sludge or – in several dra- matic pieces of footage – made faucet water flammable. Industry group Energy in Depth con-
tested Fox’s claims, calling Gasland, “politics at its worst, art at its most con- trived, and contradictions of fact found around every bend of the river.” Though the industry has launched a
counter campaign to convince the public that fracking is safe, popular opposition to shale gas drilling is mounting. New York state approved a temporary ban on drilling last year, and the EPA began a two-year investigation into environmen- tal and health impacts.
Greenwashing Studies have also questioned the indus- try’s mantra that unconventional gas generates half the carbon emissions of coal. Cornell University Professor Robert Howarth argues that when the thousands of truckloads of equipment transport required for fracking each well are taken into account, shale gas exploitation may produce more green- house gas than oil drilling and possibly more than coal mining. In China, however, the biggest en-
vironmental problem with shale gas exploration is the millions of gallons of fresh – not salt – water required to frack each well, only about one-third of which returns in brackish form to the surface.
34
China has 22% of the world’s population but only 7% of its fresh water. Jay Ewing, who oversees well com-
pletions for Devon Energy, said water is the industry’s biggest challenge. He said Devon has been recycling flow- back water and filtering out solids like chloride salts since 2005. “The technology still has a long way
to go to develop the ability to recycle all of our waste water that we produce. There’s a lot of trial and error going on, but it is not a simple technology that’s going to happen overnight.” Faced with an environmental back-
lash, drilling companies in North Amer- ica and Europe profess that more tech- nological development is needed. The CEO of oilfield services com-
pany Schlumberger admitted as much to investors last year: “Looking at shale gas in particular we are convinced that the brute force approach established in North America will not be practical overseas, either from a financial or an operational standpoint.” Recent innovations have made ex-
traction more sophisticated: 3D seismic imaging allows drillers to target reser- voirs more accurately, for example. Petrohawk is developing a “choke
method” to lower initial production costs and extend the life of shale wells, while oifield services company GAS- FRAC has patented a “waterless frac” that uses liquefied petroleum gas as fracturing fluid. But some analysts are skeptical. “I
suspect if they were very successful, we would have heard about it by now,” said Bill Holland, editor of Platts’ Gas Daily.
Flip-floppers
Share of world energy consumption 30.00
25.00 20.00 15.00 10.00 5.00 0.00
UNPOPULAR: US environmentalists protest fracking in the Marcellus
berian Altai region. If it becomes clear
that unconventional gas cannot meet a significant proportion of China’s aggres- sive gas consumption targets, the dynam- ic of negotiations with Russia could shift, said CLSA’s Hewitt. “You hear two very different versions
of the story, one where China says I don’t need any incremental significant pipeline gas up until 2015 – or towards 2020 I should say – whereas the Russian view is [that] they’re desperate, they’ve gotta buy. Te reality is probably somewhere in the middle.”
Close contender
CNOOC, China’s smallest national oil company, has also boosted its exposure to unconventional gas through acquisitions. Te company purchased shale gas acreage in Texas, Colorado and Wyoming from Chesapeake Energy and CBM blocks in Queensland, Australia from Exoma last year.
Tese acquisitions could arguably be
1990 1995 2000 2007 2015 2020 2025 2030 2035 India
China Source: EIA United States
aimed at increasing reserves and securing a supply for liquefied natural gas (LNG) imports. However, CNOOC also bought a 51% stake in the mainland’s largest CBM producer, China United Coal Bed Methane Corporation (a subsidiary of China Coal), a clear sign that CNOOC is quietly moving its business onshore and into competition with PetroChina and Sinopec. “Tey didn’t hang a flag out and
shout ‘Here I am!’ … But when you talk to them, they will say, ‘We are permitted
Axis Title
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68